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Andrew Bridgen (North West Leicestershire) (Con)
1. What steps he is taking to deliver parity of esteem for mental health services.
The Minister of State, Department of Health (Norman Lamb)
Parity of esteem has been set out in law, and we are delivering it for people. More than 2.6 million people have entered talking therapy treatment through the Improving Access to Psychological Therapies programme since 2008, and we have secured an additional £120 million over 2014-15 and 2015-16 to support the introduction of the first ever waiting time standards in mental health services.
Andrew Bridgen
According to the recent chief medical officer’s report, mental illness is responsible for 70 million sick days a year, at an estimated cost to the economy of around £100 billion a year, so parity of esteem is essential. What more can be done through early intervention to help people with mental health illness by preventing their chronic problems from becoming acute?
Norman Lamb
My hon. Friend is absolutely right about the importance of early interventions. Next year, we are introducing for the first time a six-week maximum waiting time standard for access to psychological therapies to start treatment for conditions such as anxiety and depression, and a two-week standard for starting treatment for those suffering a first episode of psychosis. I am also calling on every FTSE 100 company to sign up to Time to Change, so that they can show leadership in how they deal with their employees.
John Woodcock (Barrow and Furness) (Lab/Co-op)
It is one thing to say it, but completely another to do it. I am sure that the whole House will recognise improvements that happen, but does the Minister understand the scale of the crisis, not simply in the NHS but in the education system where more and more young people are increasingly finding that they simply cannot get anything like the support they need at increasingly difficult points in their lives?
Norman Lamb
I completely agree with the hon. Gentleman about the importance of children and young people being able to access treatment and support. If the truth be known, it has always been like this. It has always been the Cinderella of the Cinderella service, which is why we established a taskforce this summer, bringing in a whole load of experts and, importantly, consulting children and young people so that we can develop a modern health service for the mental health problems of children and young people. We hope to report early next year.
Dr Sarah Wollaston (Totnes) (Con)
19. As the Cabinet taskforce sets out on this important work, will the Minister reassure me that it will bear in mind the important finding of the Health Committee’s inquiry into CAMHS—Child and Adolescent Mental Health Services—that it is the tier 1 and tier 2 services that really make the difference in preventing the need to access the service when children are much more unwell?
Norman Lamb
I very much appreciated and supported the findings of the Health Select Committee report into children and young people’s mental health services. The hon. Lady is absolutely right that we need to focus far more on preventing ill health and preventing a deterioration of it. If we can get into schools and work much better at maintaining people’s mental well-being, we can achieve much better results.
Mrs Emma Lewell-Buck (South Shields) (Lab)
Despite what the Minister says, in South Shields, financial challenges have contributed to the closure of Bede wing mental health ward. This means that acute in-patient services are no longer provided in our borough. Can the Minister explain why mental health services are, in fact, being eroded under this Government?
Norman Lamb
Over the past decade and a half, there has been a very substantial reduction in bed numbers, and it is a trend that we should thoroughly support because we want to move away from institutional care towards supporting people at home in their communities. With children’s mental health, we have invested an extra £7 million this year to ensure that children get access to beds close to home when they need them.
Paul Burstow (Sutton and Cheam) (LD)
Will the Minister ensure that the taskforce he mentioned considers the evidence that one in five mothers suffers from mental health problems during pregnancy or within a year of giving birth because the costs of that to society are massive and three quarters of those costs are borne by the child and subsequent generations? Is it not time to make sure that we focus on perinatal mental health because it can make such a big difference?
Norman Lamb
I very much agree with my right hon. Friend. Accompanied by my hon. Friend the Member for Torbay (Mr Sanders), I visited a brilliant perinatal mental health service in Torbay recently. My right hon. Friend is absolutely right. The London School of Economics has done a lot of work, showing evidence that if we invest in perinatal mental health, we get a return on the investment, but most importantly, we change people’s lives. I am determined to pursue that.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
The Minister talks about parity of esteem, but it is under this Government that mental health budgets have been unfairly cut, and 1,500 beds and 3,300 nurses have been lost. He has already received a damning Select Committee report on child and adolescent mental health services. Ill people are being locked in police cells, or are travelling hundreds of miles to find a bed. The Minister could not have brought about more disparity if he had tried—and now we hear that there is to be yet another review. He is the Minister in charge. I ask him again: what action is he going to take today?
Norman Lamb
Inexplicably, when the last Labour Government introduced access and waiting time standards, they left out mental health. That was an extraordinary decision, and it drives where the money goes. The introduction of mental health waiting time standards next year, for the first time ever, will help to achieve equality for mental health. We have also published a vision of the next five years explaining how we will secure genuine equality for mental health, which is something that the last Labour Government did not achieve.
Mrs Cheryl Gillan (Chesham and Amersham) (Con)
The Minister will know that the statutory guidance of the adult autism strategy in England is the keystone of the provision of services under the Autism Act 2009. The updating of that guidance is now imminent, and concern has been expressed to me about the draft wording produced by the Department. Can the Minister assure me that the Department does not intend to weaken the requirements for local authorities to provide services for people with autism and their families?
Norman Lamb
I am delighted that my right hon. Friend has become chair of the all-party parliamentary group on autism. She has fought for many years to secure a fair deal for people with autism. I am grateful to her for alerting me to the issue that she has raised, and I shall be sure to look at the guidance. It is absolutely not the intention to water down guidance for local authorities in any way.
Kerry McCarthy (Bristol East) (Lab)
2. What recent assessment he has made of the adequacy of provision of student health services.
The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)
All patients are eligible to register with local primary medical care services, and that includes students who are moving away from home and starting university.
Kerry McCarthy
I do not think that the Minister has entirely engaged with the question. Those who run the student health services at Bristol university are warning that young people’s health is very much overlooked and underfunded—particularly mental health, which accounts for a quarter of all consultations. They are being hit by the GP funding changes and by cuts in public health spending on sexual health advice, and they have had to introduce their own meningitis vaccination programme because the Government have not introduced one. What support can the Minister give specifically to student health services?
Dr Poulter
I certainly remember being actively encouraged to register with a local GP when I was a student at Bristol university, and I understand that that continues today. As for the important question of children’s and young people’s mental health, the children’s mental health and well-being taskforce is looking at the mental health and well-being of students. Student Minds is involved in the process, and that in particular will help to inform the work of the taskforce in improving access to students with mental ill health.
Duncan Hames (Chippenham) (LD)
Students do register with a practice in their university cities, but I was told recently by one of my constituents that she had experienced difficulty in gaining access to timely health care as a temporary resident when she was back at home. What options are available to ensure that students remain registered in the place where they are likely still to be spending half the year?
Dr Poulter
We recommend that all students register with university services, or with a GP in their university areas, but if patients are away from the GP with whom they are registered for more than 24 hours and less than three months—and that would include students—they can see a GP in the area where they are staying as temporary residents. GPs should be aware of that entitlement.
Keith Vaz (Leicester East) (Lab)
Students with long-term illnesses such as diabetes find it extremely difficult to manage their conditions, and there is evidence that a number of students are skipping their insulin injections. What further steps can be taken to make them aware of the necessity for them to take that important medication?
Dr Poulter
This is an incredibly important area of health care. How do we support young people through periods of transition? We know that people with long-term illnesses may struggle particularly, and diabetes and epilepsy are two of the conditions that have been identified. NHS England is currently examining transitional care tariffs to support people during the transition between children’s and adult health services, and educational support is part of that ongoing work.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
My right hon. Friend the Minister for Universities, Science and Cities recently announced that there would be no cap on the number of students wishing to study pharmacy. Does my hon. Friend agree that Plymouth university should now press ahead with the setting up of a pharmacy school given that it is the Peninsula medical school?
Dr Poulter
My hon. Friend makes an important point. I visited the Peninsula medical school and his local university to highlight some of their excellent work in training medical and dental students. I believe that there is ample scope to expand provision to train other health care professionals in what is becoming an outstanding medical and health care training facility.
Grahame M. Morris (Easington) (Lab)
3. What representations he has received on exemption of the NHS from the provisions of the transatlantic trade and investment partnership.
The Secretary of State for Health (Mr Jeremy Hunt)
The Government will not allow TTIP negotiations to harm the NHS. Any suggestion to the contrary is both irresponsible and false. I am grateful to the former Labour shadow Health Secretary for confirming that.
Grahame M. Morris
That is an interesting answer but, without specific exemption from TTIP, how can the Secretary of State give any reassurance that predatory organisations such as the Hospital Corporation of America, which was prosecuted for fraud in the US, will not use the TTIP provisions to seek contracts in our NHS?
Mr Hunt
The best assurance I can give the hon. Gentleman is not what I have said, but what the EU Trade Commissioner, Karel De Gucht—I challenge colleagues in Hansard to spell that correctly without looking at my notes—has said. In an interview in September, he said:
“Public services are always exempted—”
from TTIP—
“there is no problem about exemption. The argument is abused in your country for political reasons but it has no grounds.”
Mr Speaker
Colleagues in Hansard may not even rely on the Secretary of State’s notes; they may have their own source material. They are very special people those reporters.
David Morris (Morecambe and Lunesdale) (Con)
I thank my right hon. Friend for that concise answer. I reiterate the message to the unions, which are sticking up billboards in my constituency, that Cameron and Hunt are not selling off the NHS.
Mr Hunt
I thank my hon. Friend for his comments. I was quite amused to see that I have a future career as an estate agent, along with the Prime Minister, when our hopefully long careers in politics are over, but the point is that this is scaremongering and it is wrong to scaremonger about something as important as the NHS. To suggest that the NHS is being privatised is fiction. What is not fiction is Labour’s legacy of poor care.
Clive Efford (Eltham) (Lab)
The Secretary of State’s definition of “harm” is not the definition that Labour Members have. My Bill, which was passed overwhelmingly on Friday, would require the Secretary of State to bring the matter back to this House should TTIP apply to the NHS in any way whatsoever. Will he support my Bill going into Committee without delay, so that we can discuss the detail and answer the questions he has?
Ms Margaret Ritchie (South Down) (SDLP)
Given the uncertainty of the French and German Governments on the investor-state dispute settlement mechanism, as well as the indication by EU Commission President Juncker that he will not back it, why have this Government not done more to protect the health service from a practice that would leave it vulnerable to private sector intervention?
Mr Hunt
This is what the EU chief negotiator said to the former Labour shadow Health Secretary, who is chair of the all-party group on TTIP:
“the rights of EU Member States to manage their health systems according to their various needs can be fully safeguarded…There is no reason to fear either for the NHS as it stands today or for changes to the NHS in future as a result of TTIP.”
It could not be clearer than that.
Mr Philip Hollobone (Kettering) (Con)
4. How many patient episodes there were at Kettering General Hospital in (a) 2010 and (b) the last year for which figures are available; and what assessment he has made of the reasons for the change in the number of such episodes.
The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)
In 2012-13 there were 85,497 in-patient finished consultant episodes at Kettering General Hospital NHS Foundation Trust, compared to 84,602 in 2011-12. There has also been an increase in the number of accident and emergency attendances, from 76,099 in 2010-11 to 84,055 in 2012-13. That increase is largely attributable to a high demand for services from a growing, ageing population.
Mr Hollobone
Kettering general hospital serves one of the areas with the fastest population growth and greatest ageing in the whole country. Today’s report from the Care Quality Commission shows that, while the hospital has some of the most caring staff in the whole of the NHS, many areas of the hospital require considerable improvement. Will the Minister ensure that future NHS funding decisions are better targeted at areas such as Kettering which have such costly demographics?
Dr Poulter
My hon. Friend will be aware that the NHS funding formula is set independently, free from political interference. It is reviewed annually. I should like to reassure him that the Nene and Corby clinical commissioning groups have both received higher than real terms growth in their funding allocations and will do so again next year, to move them closer to their target allocations.
Andy Sawford (Corby) (Lab/Co-op)
I have been working closely with the hon. Member for Kettering (Mr Hollobone) in recent years on a campaign to support the hospital. We recognise the issues that the CQC has raised, and we support the journey that the hospital is taking towards improvement. When the hon. Gentleman and I come to see the Minister in a few months’ time, will he look favourably on our bid for £20 million of funding to improve our accident and emergency department, whose physical environment has been described by experts as being among the worst in the country?
Dr Poulter
I am looking forward to that meeting in the new year. I should like to reassure the hon. Gentleman and my hon. Friend that the Department has provided a total of £5 million of temporary public dividend capital funding and a further £1 million of emergency capital to the trust in the past three months, so support is going into the delivery of high-quality services.
Norman Baker (Lewes) (LD)
5. What recent assessment he has made of the potential medicinal benefits of cannabis.
The Parliamentary Under-Secretary of State for Health (George Freeman)
Cannabis is classified as a class B drug under the Misuse of Drugs Act 1971, as my right hon. Friend knows. To sell cannabis or preparations made from it as a medicinal product would necessitate obtaining a licence from the Medicines and Healthcare products Regulatory Agency. Cannabis in its raw form is not authorised as a medicinal product in the UK. However, certain cannabis extracts are contained in Sativex spray, which is the only medicine produced from the cannabis plant that is approved for use as a medicinal product in the UK. It is licensed for use in treating spasticity in multiple sclerosis and was approved in June 2010.
Norman Baker
Over the last year or so, I have met a number of credible people from all walks of life and with a range of medical conditions who have told me that the only substance that helps their medical condition is cannabis. However, they cannot secure it through the NHS and they risk getting a criminal record if they try to obtain it for themselves. Will the Minister look at the much wider availability of cannabis for medicinal purposes in other countries and try to find a way to help those in need in our country?
George Freeman
As a former Home Office Minister, the right hon. Gentleman will be aware of the difficulties of getting this policy right. I do not believe that anyone in the House thinks that we ought to allow the prescription of a controlled substance willy-nilly without good evidence. I should like to draw his attention to this evidence from Cancer Research UK, which states:
“At the moment, there simply isn’t enough evidence to prove that cannabinoids—whether natural or synthetic—work to treat cancer in patients, although research is ongoing. And there’s certainly no evidence that ‘street’ cannabis can treat cancer.”
We continue to keep this matter under close observation, and there is good evidence of science being done by companies and by the National Institute for Health Research.
Ian Austin (Dudley North) (Lab)
Has the Minister assessed whether the use of cannabis can result in paranoid and deluded behaviour, leading people to believe, for example, that it is possible in this country to mount a huge conspiracy to pervert the course of justice involving the police, the ambulance services, the security services, the Government of the day and the media, and to pretend that someone who had killed themselves had actually been murdered?
George Freeman
The hon. Gentleman makes an interesting parliamentary point, but my responsibilities cover only the licensing of cannabis for medicinal purposes.
Mark Pritchard (The Wrekin) (Con)
Cannabis no doubt has some limited medicinal benefits for some illnesses, but will the Minister put it on record that it is not the Government’s intention further to liberalise any licensing of cannabis, especially in the light of the Institute of Psychiatry’s empirical evidence that abuse of the substance can lead to severe mental illness?
George Freeman
My hon. Friend makes an important point, and I am happy to give him that undertaking. We have to be careful to maintain a distinction between recognising the damaging effects of the recreational use of cannabis and the specific medicinal benefits of some of its derivatives, when tested and proven, in medicinal products. We intend to make that distinction very clear.
David T. C. Davies (Monmouth) (Con)
6. How many patients have received treatment through the cancer drugs fund since the inception of that fund.
The Secretary of State for Health (Mr Jeremy Hunt)
More than 60,000 patients in England have received treatment through the cancer drugs fund since its inception in October 2010. They and their relatives will be very concerned at the suggestion made by the shadow Health Secretary last month that a Labour Government could abolish the fund.
David T. C. Davies
I congratulate the Secretary of State on that very high figure. Is he aware that some of those people who are being treated have had to sell up their homes and move here from Wales, where they are routinely denied life-prolonging cancer drugs by the Labour-run Welsh Assembly Administration. What does that teach us about the respective differences between the health services in England and Wales?
Mr Hunt
I thank my hon. Friend for raising that point. The last Labour Government did leave us with one of the lowest cancer survival rates in western Europe, which is one of the reasons why we introduced the CDF. Unfortunately, the current Labour Government in Wales are continuing with those policies, which is why 6,500 Welsh cancer patients were admitted for treatment in English hospitals last year. [Official Report, 12 January 2015, Vol. 590, c. 5-6MC.]
Valerie Vaz (Walsall South) (Lab)
So will the Secretary of State then publish the assessment of the CDF by the chemotherapy intelligence unit before 7 May 2015?
Mr Hunt
We are, on the NHS, the most transparent Government in history, and I can see no reason why we would not publish that. We are very proud of what the CDF has achieved. We are very proud that the level of cancer diagnoses has increased by more than 50% compared with what it was under the previous Labour Government, and so we are finally starting to win the battle against cancer.
Andrew Percy (Brigg and Goole) (Con)
We all remember the horror stories before the CDF existed locally, and all Government Members certainly support its continued use. Before any drugs are delisted from the CDF, will the Secretary of State make available the scoring of those drugs? Will he also outline what the provisions will be for consultation with patients and their families?
Mr Hunt
We will absolutely go through a transparent process on that. My hon. Friend is right to talk about the CDF’s success, which is why we have put its budget up by 40%. As part of the fund’s success, we want to make sure that it is allowing access to the latest drugs and to drugs that really work. Obviously, science has moved on since the fund was set up four years ago, which is why we want to make room for new drugs and take off existing drugs where there is evidence that they are not working as well as possible. However, the process must be transparent.
Liz Kendall (Leicester West) (Lab)
Last Wednesday, the Prime Minister denied that there is a problem with cancer care, yet the target for cancer patients to start their treatment 62 days after a general practitioner referral has been missed for nine months in a row. Cancer Research UK says that this target is vital for ensuring swift diagnosis and treatment so that we have the best survival rates in the world. Some 15,000 patients have already waited too long. This is a serious problem requiring serious action, so what is the Secretary of State going to do?
Mr Hunt
I think cancer patients in the hon. Lady’s constituency will welcome the fact that under this Government Leicester hospital has 194 more nurses and 120 more doctors, many of them involved in cancer care.
Let me answer the hon. Lady’s question directly. There is pressure on one of the cancer standards, and that is because every year we are now diagnosing 460,000 more people than happened under the last Labour Government, who left us with such a disappointing survival rate. When that many people are being diagnosed, it of course puts pressure on the diagnostic labs and the people doing those processes. But Cancer Research UK is also saying that we are seeing record increases in survival from cancer, and that is happening because of this Government’s policies.
John Robertson (Glasgow North West) (Lab)
7. Whether the Government have made a final decision on whether to introduce standardised packaging of tobacco products.
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
The Government have not yet made a final decision on whether to introduce standardised packaging. We are carefully considering a large number of responses from the summer consultation, together with detailed responses from EU member states.
John Robertson
I thank the Minister for her answer, albeit a disappointing one. Given the majority support for standardised packaging in this place and the fact that elected Members have backed it, perhaps she could explain why the Government have not come to a decision? Will she consider having a debate in the House on the subject, with a vote that people can take forward so that they believe that this Government actually care about people who are trying to stop smoking?
Jane Ellison
We are taking this forward. Not everyone in the House may be aware that we are obliged to go through a process with Europe, whereby we notify this policy to EU member states and there is a statutory three months during which member states can give a detailed response. If any member state does so, there is a six-month pause. Four states—Bulgaria, the Czech Republic, Portugal and Romania—have given that detailed opinion, and the window has not yet closed. The House might be interested to know that Ireland received eight detailed responses on this subject. That is part of the process.
Ian Paisley (North Antrim) (DUP)
I welcome the Minister’s statement that she will wait for the evidence before moving forward rather than relying on emotion. She knows that the policy, if implemented, would threaten 1,000 jobs in my constituency. Furthermore, will she agree to await the outcome not only of the evidence from Australia but of the tobacco tax directive that is being pushed through Europe?
Jane Ellison
I am encouraged by the evidence from Australia. We have seen some really impressive statistics regarding the cessation of smoking. The Government have not yet made a final decision on the matter, but Health Ministers are on the record as saying that we are minded to move forward on this, and we want to make progress. I regret the loss of jobs in the hon. Gentleman’s constituency, but I know that he will be working hard to assist his constituents in looking for other employment.
John Cryer (Leyton and Wanstead) (Lab)
If plain packaging were introduced, what assessment has there been on whether that will make life easier or more difficult for the counterfeiters?
Jane Ellison
That is one issue that we will weigh up before making a final decision. Obviously, we received a large amount of evidence from the consultation, and we are looking at it in detail. Some of it was around that matter, although it is also the case that Sir Cyril Chantler made some robust statements in his report, rebutting some of the claims, but that is all part of the final consideration that the Government will make.
Andrew Stephenson (Pendle) (Con)
8. What steps his Department is taking to accelerate access to innovative medicine and health care technology in the NHS.
The Parliamentary Under-Secretary of State for Health (George Freeman)
Accelerating access for patients to innovative medicines and health care technology is central to my mission as the UK’s first Minister for life sciences. Breakthroughs in genetics and the use of data are unlocking a new era of precision medicines, earlier diagnosis and remote monitoring, which can dramatically improve patient outcomes, and the efficiency of our health service. That is why I announced last week a major review of the role of the regulators, the Medicines and Healthcare Products Regulatory Agency and the National Institute for Health and Care Excellence, in accelerating innovation in the NHS.
Andrew Stephenson
I know that the Secretary of State has already visited Airedale general hospital to see its telemedicine service. Earlier this month, I visited Marsden Grange care home in Nelson to look at the service from a patient’s perspective. The service is reducing pressure on the ambulance service, local GPs, A and E departments, and, crucially, improving patients’ experiences. How can we ensure that telemedicine is much more widely used?
George Freeman
My hon. Friend makes an excellent point. As with Airedale, the Marsden Grange care home initiative shows that we can improve patients’ outcomes, deliver more health for the same amount of money and make our system much more efficient. That is why we so strongly support telemedicine, why NHS England has undertaken a rapid review of the 3 million lives programme and why, last week, we launched our review to accelerate the adoption of innovative med-tech and e-health technologies into the NHS.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
What is the good of innovation if we do not use it? For the 1 million people who suffer from atrial fibrillation, the three new NICE-approved drugs are a life saver; they make life worth living. But only about 6.5% to 7% of people have been prescribed the new drugs, as they are being blocked by clinical commissioning groups and GPs. What will the Minister do about that?
George Freeman
The hon. Gentleman is right to raise the matter. We have all seen it coming in recent years. Extraordinary advances in science are developing a huge range of new products, which our system is having to adjust to cope with, and that is precisely why I launched the review last week with NICE and the MHRA. We must look at these transformational technologies that bring new opportunities to our services and at how we can design a system that is better able to target innovations to the patients who need them.
Mark Menzies (Fylde) (Con)
18. Dementia is an abhorrent disease that affects thousands of people across the UK, and a significant number in my constituency of Fylde. With that in mind, what steps is the Minister taking to ensure that dementia sufferers have access not only to the most innovative medicine but to the most advanced early diagnosis?
George Freeman
My hon. Friend makes an important point. Dementia is one of those diseases where the loved ones and the carers of patients often suffer every bit as much as the patients. That is why, under the Prime Minister’s leadership, we have launched the G8 dementia summit to bring together the world to tackle the disease. We have launched a dementia strategy. Diagnosis rates in Britain have gone from 42% to 55% in two years. We have launched a new dementia service and doubled research spending. We will have 250,000 staff trained by next March, and, from April, we will be investing £3.8 billion into the Better Care fund. It is an important disease that deserves our priority.
Lilian Greenwood (Nottingham South) (Lab)
The Ear Foundation recently published a report that estimates that the real cost of adult hearing loss is at least £30 billion a year. I hope that the Minister has read it. What is he doing to ensure that adults who could benefit from improved hearing technologies, including cochlear implants, do so, and when does he plan to publish the action plan on hearing loss that has long been promised?
George Freeman
I am not aware of the veracity of the £30 billion figure, but I will happily look at it, and I happily undertake to look at the progress of the report and the work that the hon. Lady raised.
Mr Adrian Sanders (Torbay) (LD)
20. It is a well-established fact that type 1 diabetics who have insulin pumps are much more able to control their condition than those who do not, yet the take-up of insulin pumps in the UK compared with Europe and America is pitiful. What is the Department doing to increase the commissioning of insulin pumps? In the long run, the costs go down with better control.
George Freeman
My hon. Friend raises a important example of an innovation that, despite costing a little extra at the beginning, saves substantially downstream. One of the challenges in our national health service is tackling a series of ways in which the system is not well geared to incentivising such innovations. NHS England recently set out its five-year forward view, which has, for the first time, a strong commitment to tackling such issues, and we are working with it to see what we can do to remove barriers and promote incentives for earlier adoption.
Mr Russell Brown (Dumfries and Galloway) (Lab)
What steps are being taken to ensure that emerging treatments for Duchenne muscular dystrophy that receive conditional approval are available through the early access to medicines scheme as early as possible?
George Freeman
I was delighted, when we launched the early access to medicines scheme earlier this year, to see the very strong support that we got from the Duchenne dystrophy group. Dystrophy is one of those terrible diseases that desperately need the fast-tracking of new medicines. As I said, last week we launched a major review of our landscape for the earlier adoption of innovative medicines in the NHS, so that patients in the most severe clinical need can take part in cutting-edge research and we get drugs to patients more quickly.
Mark Durkan (Foyle) (SDLP)
9. What recent representations he has received on access to off-patent drugs; and if he will make a statement.
The Parliamentary Under-Secretary of State for Health (George Freeman)
The hon. Gentleman will be aware of the debate in the House two weeks ago in which I gave a very full statement of the Government’s position on off-patent and off-label drugs. We want to promote their wider use, but we do not believe that the Bill presented to the House is the right mechanism for achieving that.
Mark Durkan
Will the Minister borrow from the approach taken with the Medical Innovation Bill, and commit to consulting on whether the Government should support, or how they might pursue, the key purposes of the Off-patent Drugs Bill?
George Freeman
As I said in the debate, we absolutely support the Bill’s intention, which is to promote the greater use of off-label and off-patent drugs, but that must remain a decision for clinicians exercising their judgment about what is best for their patients. We do not think it right that the Government should be put in the position of effectively sponsoring new drug licence applications to the Medicines and Healthcare Products Regulatory Agency. I have convened a round table working group with all the stakeholders to try to look at how we can maximise information to clinicians to promote the use of off-label and off-patent drugs.
Mr David Crausby (Bolton North East) (Lab)
10. How many (a) NHS trusts and (b) foundation trusts are forecasting a deficit.
The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)
Thirty-three NHS trusts and 60 foundation trusts are forecasting an end-of-year financial deficit, with the remaining 65 NHS trusts and 87 foundation trusts forecasting an end-of-year surplus.
Mr Crausby
Earlier this year, Monitor announced that the number of trusts in financial breach had nearly doubled over the previous 12 months. How confident is the Minister that the number will not double again next year?
Dr Poulter
I am very confident that the measures already in place to drive efficiencies in the NHS are on course to save £20 billion during this Parliament. Many of those efficiencies are being delivered by improved procurement practice at a trust level. The Government have also invested £15 billion during this Parliament, which is a real-terms increase of £5 billion in NHS funding to support trusts.
Robert Halfon (Harlow) (Con)
The Government have invested hugely in the NHS in Harlow, including millions of pounds to our accident and emergency unit. However, for historical reasons the Princess Alexandra hospital has financial difficulties. Will my hon. Friend look at this and see what the Government can do to help?
Dr Poulter
Of course. As my hon. Friend is aware, every local health area—every clinical commissioning group—is receiving an increase in the funding available to it year on year. I would be happy to meet him to discuss the matter further, if that would be helpful.
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
As the Minister knows, North West London Hospitals is one of the NHS trusts that is in deficit. It has seen the accident and emergency departments at two nearby hospitals close, and its hospital board estimates that an additional 123 beds are necessary. Will the Minister meet me to discuss the problems of its historical deficit and the need for additional funding to make sure that those 123 medical beds are provided?
Dr Poulter
I can reassure the hon. Gentleman that, in the words of the medical directors of all the hospitals affected, there is a very high level of clinical support for the programme across north-west London, and the changes will save many lives each year and significantly improve the services that are available to local patients. I hope that is reassuring to the hon. Gentleman and to local patients.
John Stevenson (Carlisle) (Con)
Running a deficit can demonstrate short-term problems which, once resolved, will allow a trust to return to balance. Does my hon. Friend agree that there must be flexibility in the system, particularly for trusts such as North Cumbria, which have been in special measures?
Dr Poulter
It is absolutely right that trusts such as North Cumbria need to face up to challenges when those affect the quality of patient care, and that the focus of Care Quality Commission inspections and special measures is to drive up standards of care. It is also important that we continue to invest and support trusts where we can. That is why we are pleased to be increasing the NHS budget by £15 billion during this Parliament.
Sir Gerald Kaufman (Manchester, Gorton) (Lab)
Is the Minister aware that the Manchester primary care trust ought not to be incurring a deficit because it does not spend sufficient of its money and resources on investigating cases referred to it and on responding to hon. Members such as myself when they write to it over a period of months? Will he look into this incompetence and examine similar behaviour, or lack of it, by the Care Quality Commission?
Dr Poulter
It is very important that the NHS faces up to the situation when things have gone wrong so that it can put them right for the benefit of patients in future. If the right hon. Gentleman has concerns about his local NHS not investigating complaints that he has raised with it on behalf of his constituents who are patients of the local trust, I am very happy to investigate those issues for him if he would like to write to me about them, and see what I can do to ensure that he gets the answers that he and his local patients deserve.
Douglas Carswell (Clacton) (UKIP)
I understand that pretty much every hospital in Essex faces a yawning deficit, including Colchester hospital. Can the Minister guarantee that we can address the deficit without having to dramatically and radically reconfigure local services in Essex?
Dr Poulter
It is important to outline that for the first time this Government have put in place, via section 42 financial agreements with trusts where there is a requirement for interim financial support, measures that will ensure that trusts are held to account for delivering efficiencies—for example, reducing agency staffing costs, improving procurement practice, more efficient estate use and land disposal, and pay restraint of very senior managers. I am therefore confident that the local NHS can continue to deliver efficiencies to direct money to front-line care.
Eric Ollerenshaw (Lancaster and Fleetwood) (Con)
11. Whether it remains the policy of the cancer drugs fund to provide drugs which NICE has rejected for general use in the NHS.
The Parliamentary Under-Secretary of State for Health (George Freeman)
I pay tribute to my hon. Friend for his tireless campaigning on the issue of cancer drugs. I can assure him that the cancer drugs fund now administered by NHS England continues to fund effective cancer drugs which have been not been recommended by the National Institute for Health and Care Excellence. Over 60,000 patients in England have benefited from the fund since October 2010. That is why we announced a £160 million boost to the fund earlier this year.
Eric Ollerenshaw
Will my hon. Friend look again at the CDF’s proposal to delist 42 cancer drugs, including Abraxane, which was put on the list only nine months ago and is the first new drug in nearly 40 years to produce an extension of life for pancreatic cancer patients?
George Freeman
I am grateful to my hon. Friend for his notice. I have spoken to NICE. It is appraising the use of Abraxane for pancreatic cancer and has not yet published its final guidance. It would not be appropriate for me to intervene at this point. Obviously, we respect NICE’s clinical independence. Abraxane is available through the CDF for patients meeting specific clinical criteria. I understand that the NHS England’s CDF panel plans to reassess the inclusion of Abraxane in the national list, but no decisions have yet been made.
Mr Jamie Reed (Copeland) (Lab)
It is a pleasure to follow the hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw). Everyone in every part of the United Kingdom wants to improve access to cancer medicines. When the Prime Minister launched the cancer drugs fund in the home of Clive Stone, he promised to get
“more drugs to people more quickly”.
Mr Stone recently criticised proposals to remove a number of drugs from the fund, writing in his local newspaper that
“People are going to die, there is no doubt about it. Why don’t people keep their promises?”
Additionally, the Breakthrough Breast Cancer campaign has said that it is
“deeply concerned that several very effective breast cancer drugs appear on the list of drugs at risk of delisting”.
We all know someone affected by cancer in some way. What does the Secretary of State have to say to those patients relying on those drugs that are being removed from the fund?
George Freeman
The first thing I would say is that we have given an undertaking that any patients currently on drugs will not have the drug removed. Secondly, we are dealing with some very difficult issues. We have had extraordinary breakthroughs in the progress and rate of development of new cancer drugs, and we need to have a system for ensuring that the cost-benefits—the health economics—are done properly. NICE leads the world in making these difficult clinical judgments and we support its independence in doing so, but we need to ensure that we are not turning this issue into a political football. I notice that the shadow Health Secretary said that this was good politics but not good policy. It is really important that we ensure that when we set a benchmark on this debate we are guided by what is best for patients.
Lorraine Fullbrook (South Ribble) (Con)
12. What progress has been made in improving access to GPs.
The Secretary of State for Health (Mr Jeremy Hunt)
The Prime Minister’s £50 million challenge fund is improving GP access for more than 3 million patients across England, helping them to get evening and weekend appointments.
Lorraine Fullbrook
Many people in South Ribble will be able to see their GPs in the evening and at weekends, thanks to a locally led initiative by Chorley and South Ribble clinical commissioning group and Greater Preston CCG to extend GP surgery opening hours this winter. Does my right hon. Friend agree that such initiatives, which will give greater flexibility to patients and alleviate pressures on other areas of the NHS, particularly A and E, are exactly what is needed in the busy winter months?
Mr Hunt
I do agree with my hon. Friend. I took my own children to an A and E department at the weekend precisely because I did not want to wait until later on to take them to see a GP. We have to recognise that society is changing and people do not always know whether the care that they need is urgent or whether it is an emergency, and making GPs available at weekends will relieve a lot of pressure in A and E departments.
Andrew Gwynne (Denton and Reddish) (Lab)
I am afraid it is yet more spin from the Government. Everybody knows that it is getting harder not easier to see a GP under this Health Secretary. He has as much as admitted today that emergency departments across England have failed to hit the Government’s A and E target for 70 consecutive weeks, and that is in part because people are struggling to get a GP appointment in the first place. Will he now get a grip on this problem, and call on his Chancellor of the Exchequer in next week’s autumn statement to use £1 billion from banking fines to help ease pressure on the NHS this winter, as the Labour party has pledged?
Mr Hunt
We will not take any lessons from the Labour party about general practice. It is not just the disastrous 2004 GP contract. The president of the Royal College of General Practitioners says that the shadow Health Secretary’s plans
“could destroy everything that is great and that our patients value about general practice and could lead to the demise of family doctoring as we know it.”
David Tredinnick (Bosworth) (Con)
13. What steps he is taking to increase patient choice.
The Secretary of State for Health (Mr Jeremy Hunt)
This Government are committed to patients having greater choice and control over their health care, and decisions as to which treatments are available on the NHS are taken by GPs on the basis of available scientific evidence.
David Tredinnick
Does my right hon. Friend have any plans to increase personal health budgets, and will he ensure that there is greater awareness of the health professions that are regulated by the Complementary and Natural Healthcare Council, the Health and Care Professions Council and the Professional Standards Authority, which has recently accredited the Society of Homeopaths and the British Acupuncture Council?
Barbara Keeley (Worsley and Eccles South) (Lab)
With regard to reducing patient choice, can the Secretary of State explain the sudden move to remove dialysis from being regarded as a specialised commissioning service, which is of great concern to a constituent of mine who is a renal patient and to the renal community? Will the Secretary of State now agree to a proper consultation—not over the Christmas holidays—and will he think again about that risky move?
Mr Hunt
We hope to have a public consultation on the matter. We are not seeking to restrict access to dialysis—far from it. We want to make it easier for people to access those vital services, and we have been putting more money into the NHS budget because we recognise just how important they are.
Yasmin Qureshi (Bolton South East) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Health (Mr Jeremy Hunt)
As we look forward to world AIDS day next Monday, the whole House will want to pay tribute to the 30 NHS volunteers who left for Sierra Leone at the weekend to help in the fight against Ebola. They stand for the very best of the NHS and make us all proud. Last week I formally launched the MyNHS website. It contains 395,000 pieces of information and is the first website of its kind anywhere in the world. It will help people compare vital information about the performance of their local hospitals, GP surgeries, councils, mental health trusts and residential care homes. It will be a vital way to ensure that patients are not kept in the dark about the quality of their NHS services.
Yasmin Qureshi
Further to the Secretary of State’s answer to the hon. Member for Worsley and Eccles South (Barbara Keeley), he must know that treating renal failure requires complicated, integrated care and that no one part of it can be separated. He must also know that there are 23,000 dialysis patients in the UK, and transplant patients have overlapping clinical needs. Handing responsibility for commissioning dialysis to commissioning groups is unacceptable, especially as it has been done without any consultation. Can he explain the rationale for all this, and will he meet me and colleagues from the all-party kidney group to discuss the matter?
Mr Hunt
I am happy to arrange a meeting between either me or one of my Ministers and members of the APPG to discuss the matter. I stress that we recognise how important those specialised services are. We want to get the benefits of nationally co-ordinated commissioning with the local integrated care that CCGs are in the driving seat to deliver. That is why we are having this discussion.
Sarah Newton (Truro and Falmouth) (Con)
T2. Public Health in Cornwall has estimated that 300 people in Cornwall might die from the cold this winter because they are living in cold homes. Last week the Government introduced the first proper fuel poverty strategy to eradicate that totally unacceptable situation by 2030. Will my right hon. Friend join me in praising the work being done in Cornwall by a partnership of over 30 organisations in the Winter Wellness programme to ensure that people stay warm and well this winter?
Mr Speaker
Order. On both sides of the House the questions have been too long. It is not fair on other Members who are waiting to contribute. Please cut it out.
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
I commend my hon. Friend, who, as many of us know, has worked enormously hard on a whole range of health issues in her constituency. In particular, I know that she has helped deliver the Winter Wellness programme with a number of local organisations. It is important to highlight what help and advice is available for people who need it most in order to stay warm. The Government’s cold weather plan has a series of cost-effective and simple measures that people can take to reduce the harm caused by cold weather.
Andy Burnham (Leigh) (Lab)
Two weeks ago, news emerged of serious problems at Colchester hospital. People there still do not know the precise details, as Ministers have not made a statement and the Care Quality Commission has not published its report. But Colchester is not the only hospital in difficulty; we have learnt that hospitals in Scunthorpe, Middlesbrough and King’s Lynn have been turning patients away and others are already on black alert, and that is before winter has even begun. We do not have an accurate picture of what is happening in the NHS right now, because NHS England was due to begin publishing weekly reports on 14 November but has failed to do so. Why has that information not been published, and will the Secretary of State today instruct NHS England to do so without delay?
Mr Hunt
That information is published at the decision of NHS England—[Interruption.] It has said that it will publish it in a fortnight’s time. Let me just say to the right hon. Gentleman that it was this Government who decided to publish that information on a weekly basis, something he never did when he was Health Secretary.
Andy Burnham
I am afraid that is just not good enough. Who is in charge here? It is not just A and Es that are under pressure; there is a knock-on effect on ambulance services. Reports are now surfacing of serious failures in patient care. Last month, a six-year-old girl from Sunderland was left for three hours with a suspected broken back despite five 999 calls. At the weekend, it was reported that a 56-year-old stroke patient from Huyton was taken to A and E by police on a makeshift stretcher made from window blinds from the man’s home, and he later died. Yesterday, it emerged that a 57-year-old cancer patient from Bishop Auckland died after three ambulances were diverted to other calls. Is it not clear that the situation in the NHS right now is far more serious than the Government have acknowledged, and should not the Secretary of State now make an urgent statement to Parliament setting out what he is doing to reduce the risk of harm to patients this winter?
Mr Hunt
There are huge pressures in the NHS. That is why we have put a record £700 million into the NHS to help it to get through this winter. May I gently suggest to the right hon. Gentleman that he should not try to politicise every single operational problem? When the NHS is all about politics, patients get forgotten—as he should know, because that is what happened when he was Health Secretary. Whether in Medway, Colchester, Burton or George Eliot, patients were forgotten because for Labour it was politics before patients every time.
Eric Ollerenshaw (Lancaster and Fleetwood) (Con)
T6. Will the Secretary of State look again at the funding formula for hospital trusts so that some adjustment can be included to recognise the issues in trusts such as University Hospitals of Morecambe Bay NHS Foundation Trust which cover large and difficult geographical areas?
Mr Hunt
I recognise those issues, and I am very happy to take that suggestion away. I particularly want to put on the record that the scare stories put out by Labour in Lancaster about the potential closure of Royal Lancashire Infirmary are false. It is totally irresponsible to scare people in Lancaster in that way.
Alex Cunningham (Stockton North) (Lab)
T3. My constituent Corron Sparrow was left lying in the road for two hours with a compound fracture of his leg despite a call from a policeman to the North East Ambulance Service pleading for help. Eventually the service responded by sending an ill-equipped St John Ambulance team who then had to call for professional assistance. There are many more failures. It is now three weeks since I wrote to the chief executive, Yvonne Ormston, asking for an inquiry into this, but she has not even acknowledged my letter. Will the Minister intervene and tell the North East Ambulance Service that it cannot just ignore these matters?
The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)
I am very sorry to hear about the difficulties experienced by the hon. Gentleman’s constituents, and of course I am happy to look into those and do what I can to help him with that. However, I would also like to make it clear on the record that because this Government have put £15 billion more into the NHS during this Parliament, we are making sure that we are keeping services running efficiently through the winter for the benefit of patients.
David Rutley (Macclesfield) (Con)
T7. Eighteen NHS trusts have been placed in special measures, while so far six have come out. What progress is being made with the other 12?
Mr Hunt
I am happy to answer that, because for the first time we have a proper independent inspection regime. Labour tried to vote that down so that we could not have it, but we pressed on. A third of these trusts have been turned round. We are making good progress across most of the other 12 hospitals in special measures, including 1,500 more nurses, 200 more doctors, and 53 changes at board level. Where there were problems before, we are sorting them out.
Hugh Bayley (York Central) (Lab)
T4. Patients with mental health problems who are referred for psychological therapies wait, on average, less than 40 days for treatment, but in York the wait is 125 days. My constituent, Laura Goodacre, has now waited nearly 350 days. Will the Minister look at this worrying case and the need for our mental health trusts in York to reduce waiting times?
The Minister of State, Department of Health (Norman Lamb)
I will absolutely look at that case, and I am happy to talk to the hon. Gentleman about it. This is precisely why we are introducing, for the first time ever, an access standard—a maximum waiting time of six weeks for access to psychological therapies from next April.
Charlie Elphicke (Dover) (Con)
T8. After all the cover-ups of the past, what is being done to ensure that the culture of the NHS is always improving, particularly in that patients are treated with dignity and respect and always have the highest standards of safety?
Mr Hunt
I thank my hon. Friend for his question. After the Francis report, we now have 5,000 more nurses on our hospital wards. The scores that patients themselves are giving for whether they are treated with dignity and respect are up by 10%. We want to put poor care behind us and behind the NHS. It is time that Labour got on board with this agenda instead of constantly saying that we are running down the NHS by sorting out poor care.
Ann Coffey (Stockport) (Lab)
T5. Recent reports indicate that the extent of child sexual exploitation and abuse is more widespread than previously recognised. The trauma of sexual abuse can have massive, life-long consequences on the physical and mental health of victims. Will Ministers consider designating child abuse and child sexual exploitation as a public health priority in the same way as smoking, alcohol, drug use and obesity?
Jane Ellison
The hon. Lady is quite right to say that those are incredibly important issues, and we do see this as an important public health issue. We are committed to tackling child sexual abuse. In May the Department published its response to the recommendations of the independent health working group report on child sexual exploitation and we accepted the recommendations in full. We are taking this very seriously.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
T9. Do Ministers agree that the patient transport guidance should be interpreted with an understanding of rural needs, rather than telling my elderly constituents to report to a hospital 60 miles away and to get three buses there and three back that do not connect with each other in order to have treatment or consultation?
Dr Poulter
It is particularly important in rural areas that patients with complex medical needs who have difficulties mobilising or who perhaps do not have access to a car are supported by the local NHS to access the services they need. There is provision for local hospitals, as well as for CCGs, to give financial assistance to support patients in accessing services and to give them lifts to hospitals, as appropriate.
Mr Ben Bradshaw (Exeter) (Lab)
T10. When I asked the Prime Minister two weeks ago about the financial crisis facing Devon NHS, he seemed completely unaware of it, so could the Health Secretary please explain why Devon NHS faces an unprecedented £430 million deficit and what he is doing to stop the rationing, cuts and total withdrawal of some services that is now being proposed?
Mr Hunt
We are not rationing services. In fact, we are doing 1 million more operations every year than were done under the previous Government. I will tell the right hon. Gentleman why that financial pressure exists: we have an ageing population, with nearly 1 million more over-65s than four years ago, and huge pressure to deliver good care in the wake of the Francis report. The NHS will be supported if we have a strong economy that can fund real-terms increases in health spending—something that never happens if the deficit is forgotten.
Greg Mulholland (Leeds North West) (LD)
My constituent, six-year-old Sam Brown, is one of 100 people with the rare disease Morquio. His family live in a state of anxiety because they do not know whether the drug Vimizim will be approved for further use on 15 December. Will a Minister please meet me and Katy and Simon, Sam’s parents, to give Sam the Christmas present he needs and to keep Sam smiling?
The Parliamentary Under-Secretary of State for Health (George Freeman)
I would be delighted to meet my hon. Friend and his constituents to review that very important issue.
Mark Reckless (Rochester and Strood) (UKIP)
Last month one patient waited 35 hours in Medway’s A and E, and in the past year 10 patients have waited more than 24 hours. I was grateful to the Secretary of State for taking up my invitation to visit the hospital. What progress has been made specifically on turning around the A and E department?
Mr Hunt
There are more doctors and more nurses operating at Medway hospital and I know that when the hon. Gentleman was sitting on this side of the House he was very pleased with the progress that was being made in turning it around from special measures, but, like UKIP’s policy on the NHS, everything changes.
Alec Shelbrooke (Elmet and Rothwell) (Con)
May I welcome the recent launch of MyNHS? Does my right hon. Friend agree that transparency of NHS performance, whether it be that of hospitals, GPs or surgeons, will be a major driver in improving patient care, as international evidence suggests, and help us avoid a scandal such as Mid Staffs, which happened under that lot over there?
Caroline Lucas (Brighton, Pavilion) (Green)
Do Ministers agree that it is a scandal that cold homes are costing the NHS in England more than £1.3 billion every year, with kids growing up in cold homes twice as likely to contract diseases such as asthma? Do they also agree that it is hugely disappointing that not one penny of Treasury infrastructure funding is devoted to energy efficiency? Will they speak to their Government colleagues about that?
Jane Ellison
The hon. Lady will know from the answer I gave to my hon. Friend the Member for Truro and Falmouth (Sarah Newton) that the Government published the first fuel poverty strategy for England, which aims to address that very issue. It is also really important that all Members do everything they can locally to publicise the Government’s cold weather plan. Members can really assist local public health officials and their local NHS to get the word out to all communities about the simple measures we can take to keep our constituents warm and safe this winter.
Charlotte Leslie (Bristol North West) (Con)
One of the key challenges in improving access to GPs is improving recruitment of GPs. Will the Secretary of State work with the Royal College of General Practitioners and other medical groups to see whether there might be merit in introducing a mandatory stint of working in a GP surgery for junior doctors?
Dr Poulter
I am sure that my hon. Friend will welcome the fact that there are now just over 1,000 more GPs working in the NHS and training than when we came into government, but there is more we need to do. We have committed to delivering 5,000 more GPs for the NHS, and part of that work will be working with the Royal College of General Practitioners to ensure that we can support return-to-practice initiatives for GPs who have taken career breaks.
Mr Speaker
Order. The level of interest in Health questions today has broken box office records. I am sorry not to be able to accommodate remaining demand, but we must now move on.
Petition
(9 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text
Stephen Barclay (North East Cambridgeshire) (Con)
The petition states:
The petition of residents of the North East Cambridgeshire constituency declares that the Petitioners believe that healthcare should be more localised in North East Cambridgeshire; further that residents of North East Cambridgeshire face long travel times and costs when requiring procedures which should be delivered locally; further that the Petitioners believe that treating patients locally brings significant benefits; and further that there is a community campaign entitled “Treat Me Local” calling for healthcare to be more localised in North East Cambridgeshire which has been signed by 1,389 individuals.
The Petitioners therefore request that the House of Commons urges the Government to ensure that the ten pledges of the Treat Me Local campaign in North East Cambridgeshire are fulfilled within twelve months.
And the Petitioners remain, etc.
[P001401]
Murder of Lee Rigby
(9 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Prime Minister (Mr David Cameron)
Today, the House of Commons Intelligence and Security Committee has published its report into the murder of Fusilier Lee Rigby. He was a British soldier who stood for our country and for our way of life, and he was killed in broad daylight on the streets of our capital city. It was an appalling, sickening act, and a stark reminder of the threat we face from home-grown terrorists and extremists plotting to murder our people. At the same time, we should be clear that it was also a betrayal of Islam, and of the Muslim communities in Britain who give so much to our country.
I am sure the thoughts of the whole House are with Lee Rigby’s friends and family at this time. When I spoke in the House in the aftermath of the attack, I said we would bring those responsible to justice, and learn the lessons of what happened in Woolwich. The two murderers, Michael Adebowale and Michael Adebolajo, have since been convicted and sentenced to life in prison.
Today, this report answers the questions we had about what our security services knew about these murderers, and the lessons we can learn to help to stop similar attacks in the future. I am grateful to my right hon. and learned Friend the Member for Kensington (Sir Malcolm Rifkind) and his Committee for their comprehensive report. It contains an unprecedented degree of detail on the current workings of MI5, the Secret Intelligence Service and GCHQ. I wanted us to get to the truth as quickly as possible, without a prolonged judicial process, and that is exactly what has been done with this exceptional report. Few countries in the world would publish this degree of detail about the activities of their security services. It reflects the way we have strengthened the Committee with new powers to hold our security services to account. For this report, the agencies have carried out the same searches they would for proceedings in the law courts.
Before I turn to the key findings, let me be clear that this is a very serious report, and there are significant areas of concern within it. I do not want anyone to be in any doubt that there are lessons to be learned and things that need to change. On the key findings, I am sure the House will welcome the fact that the Committee does
“not consider that, given what the Agencies knew at the time, they were in a position to prevent the murder of Fusilier Lee Rigby.”
Furthermore, the Committee says:
“It is greatly to the Agencies’ credit that they have protected the UK from a number of terrorist plots in recent years”.
As the Commissioner of the Metropolitan Police says, at least four serious plots have been foiled this year alone. So much of what our agencies do necessarily goes unreported. They are Britain’s silent heroes, and the whole country owes them an enormous debt of gratitude.
There are four broad areas where things need to change: first, dealing with the delays in the process of investigating potential terrorists; secondly, dealing with low-priority cases and so-called self-starting terrorists; thirdly, the role and responsibilities of internet companies in helping to keep us safe; and, fourthly, tackling foreign fighters travelling abroad for terrorist purposes. I want to take each in turn.
First, the report identifies a number of serious delays and potential missed opportunities. The Committee expressed concern over the four-month delay in opening an investigation into Michael Adebolajo following his return from Kenya in 2010, and the eight-month delay before Michael Adebowale was first actively investigated in 2012. The report concludes that an application for intrusive surveillance on Michael Adebowale in 2013 took
“nearly twice as long as it should have”,
and that had the original target been met, these further intrusive
“techniques would have been in place during the week before, and on the day of, the attack”.
Crucially, the report goes on to say that
“there is no indication that this would have provided advance warning of the attack: retrospective analysis of all the information now available to the Agencies has not provided any such evidence.”
The report also finds that the two murderers were in contact 39 times between 11 April and 22 May, including seven attempted calls and 16 text messages on the day before the murder. Again, we should be clear that post-event analysis shows that
“none of these text messages revealed any indication of attack planning or indeed anything of significance”.
However, although the Committee accepts that those delays and missed opportunities did not affect the outcome in this case, it is clear that processes need to be substantially improved.
MI5 is improving guidance and training for investigators for its online teams, and looking at new automated processes to act on extremist material online. The MI5 initial lessons learned document has been published in today’s report, and I have asked the Security Service to provide a further detailed report to the Home Secretary and to me in the new year, setting out progress on implementing each and every one of the lessons learned. In all of this we must remember the extreme pressure that our agencies are under. As the director general of MI5 put it in evidence to the Committee:
“We are not an army that has battalions waiting in barracks for deployment.”
Everyone it has is always out there working.
Secondly, one of the most challenging tasks facing our agencies is how to prioritise the many and various potential threats to our security. That is incredibly difficult and it is not an exact science. During the weeks prior to the Woolwich attack, MI5 was running several hundred counter-terrorism investigations, and as the Committee notes, at any one time it is monitoring several thousand subjects of interest. It is obviously essential to focus on the highest priority cases, especially those where there is specific intelligence that terrorists are planning an attack in the UK.
The report details how Michael Adebolajo and Michael Adebowale were both known to the security services for some time. Michael Adebolajo had featured in five separate Security Service investigations since 2008, and MI5 had put significant effort into investigating him as part of several of those investigations. Michael Adebowale featured in two lower priority investigations. Although none of those investigations revealed any intelligence of an attack, the Committee recommends improvements to the processes for dealing with recurring subjects of interest, low priority cases, and so-called “self-starting” terrorists.
This Government have protected budgets for counter-terrorism, and the security services have been clear with me that they have always had the resources they need. However, the increasing threat we face—including from so-called “self-starting” terrorists—means that we should now go further in strengthening our capabilities. My right hon. Friend the Chancellor of the Exchequer will therefore make an additional £130 million available over the next two years, including new funding to enhance our ability to monitor and disrupt those self-starting terrorists.
The report also makes clear the important role of all public bodies in dealing with the threat of self-starting terrorists and extremists. Our counter-terrorism and security Bill, which will be introduced tomorrow, will include for the first time a clear legal obligation on our universities, prisons, councils and schools to play their part in tackling this poisonous extremism. New funding being made available today will include additional resources for programmes to prevent radicalisation.
Thirdly, let me turn to the role of internet companies. The Committee is clear that it found
“one issue that could have been decisive”.
In December 2012, five months before the attack, Michael Adebowale had a crucial online exchange in which he wrote about his desire to kill a soldier, but the automated systems in the internet company concerned did not identify that exchange. When it automatically shut down other accounts used by Michael Adebowale on the grounds of terrorism, there was no mechanism to notify the authorities. This information came to light only several weeks after the attack as a result of a retrospective review by the company. The Committee concluded that
“this is the single issue which—had it been known at the time—might have enabled MI5 to prevent the attack.”
This is a very serious finding.
The report does not name the company, and it would not be appropriate for me to give a running commentary on the level of co-operation from different internet companies. However, the Committee is clear—and I agree—that it has serious concerns about the approach of a number of communications service providers based overseas. This summer, the Government introduced emergency legislation to put beyond doubt in UK law that the Regulation of Investigatory Powers Act 2000 applies to companies based overseas that deliver services in this country. I appointed Sir Nigel Sheinwald as a special envoy on intelligence and law enforcement data sharing to address concerns that there could be a conflict between UK and US law in this area.
Since then, a number of companies have improved their co-operation, but, as I said in my speech to the Australian Parliament earlier this month, there is much further to go. We are already having detailed discussions with internet companies on the new steps they can take, and we expect the companies to report back on progress in the new year. The truth is this: terrorists are using the internet to communicate with each other. We must not accept that those communications are beyond the reach of the authorities or the internet companies themselves. We have taken action. We have passed emergency legislation and we will continue to do everything we can. Crucially, we expect the internet companies to do all they can, too. Their networks are being used to plot murder and mayhem. It is their social responsibility to act on this, and we expect them to live up to that responsibility.
Fourthly, the report raises a series of issues directly relevant to the increased threat in recent months from British citizens travelling to fight abroad—so-called foreign fighters. The Committee expresses concern about what they describe as a “deeply unsatisfactory” response to Michael Adebolajo’s arrest in Kenya. They highlight the importance of tackling British citizens travelling to fight with terrorist groups in Syria and Iraq. The report recommends further powers, including considering whether existing proscription powers should be amended to enable further prosecutions. Tackling foreign fighters is an absolute priority for our agencies. To be fair to the agencies and the police, in the case of Michael Adebolajo he was arrested on his return from Kenya to the UK. Their operational effort has been stepped up, with more than 120 arrests this year for Syria-related offences, compared to just 27 in the whole of 2013. The Committee is right, however, to ask whether we need to give our agencies stronger powers to tackle extremists. Our Counter-Terrorism and Security Bill, which will be introduced tomorrow, will include essential new powers to seize passports to prevent travel, to stop suspects returning unless they do so on our terms, and to relocate suspected terrorists to other parts of the country and away from their extremist networks. I very much hope we can take this Bill forward on a cross-party basis, so our agencies are able to start using these vital powers as soon as possible.
Finally, the Committee criticises the Secret Intelligence Service for the handling of allegations of Michael Adebolajo’s mistreatment in Kenya. This Government took the important step of publishing the consolidated guidance in 2010 on the obligations of our agencies and the Ministry of Defence in relation to detainees held overseas. But, of course, there are cases that fall outside the scope of this guidance, for instance when people are entirely dealt with by overseas agencies but where the Secret Intelligence Service still might have an operational interest. In those cases, the agencies are clear that they always seek assurances on the treatment of detainees and that, in future, they will record the outcome of their investigations and inform Ministers if mistreatment has in any way occurred.
It is of course right that there is vigorous oversight of this issue, so the Government will put the oversight role of the Intelligence Services Commissioner on a statutory footing. I will issue a direction under the Regulation of Investigatory Powers Act 2000 in the coming days to formalise Sir Mark Waller’s role in overseeing the guidance on detainees. Sir Mark will have full access to all the material referred to in the report and will be able to examine the concerns raised by the Committee on the Government’s responsibilities in relation to partner counter-terrorism units overseas.
Today’s report contains a number of very detailed recommendations. We will publish a full response in the new year to all the points raised. We will not shrink from doing what is necessary to keep our people safe. The terrorist threat we face cannot be ignored or contained. We have to confront it. We have to equip our security services with the powers and the information they need to track down these terrorists and stop them attacking our people. We have to confront the extremist ideology that drives this terrorism by defeating the ideas that warp so many young minds. Of course, none of this will be easy. We will need stamina, patience and endurance, but we will in the end defeat this extremism and protect our people and our way of life for generations to come. I commend this statement to the House.
Edward Miliband (Doncaster North) (Lab)
I welcome the Prime Minister’s statement. Fusilier Lee Rigby served our country with huge courage. He was a brave soldier and his murder was an appalling act. For his family and friends, reading the report will mean painfully reliving his brutal killing. They should know that today, across this House, our thoughts are with them. It is welcome that his cowardly killers have been brought to justice. I also thank the members of the Intelligence and Security Committee for their investigation. It is right that it took place, and it is the most detailed account of the agencies’ work ever published.
The security services and the police play a vital role in keeping us safe, often in incredibly challenging circumstances, and do a difficult job in seeking to identify those who pose a risk to our country. However, while perpetrators of terror need to succeed only once to further or achieve their vile aims, our agencies and others need to be successful every time to keep us secure. Insofar as there are criticisms of the agencies in the ISC report, they need to be understood in that light.
As the Prime Minister said, the ISC report details how the two men who killed Lee Rigby, Michael Adebolajo and Michael Adebowale, were under investigation at various times before the murder. I welcome his announcement today of additional resources, but what does he believe is required, beyond additional resources, to put in place a better strategy for dealing with those, such as Adebolajo, who are recurring subjects of interest on the periphery of several investigations, as the report chronicles in detail? In addition, the report points to a lack of co-ordination at times between the agencies and the police, so will he further outline the steps that will be put in place to strengthen the working relationship between the different agencies—MI5, the Secret Intelligence Service and GCHQ—and the police?
As the Prime Minister said, the report also highlights the issue of returning foreign fighters and the missed opportunities in relation to Michael Adebolajo. Of course, we will engage constructively with the Bill being published tomorrow, and we welcome the other decisions made, particularly on reinstating relocation powers. As he says, Michael Adebolajo was arrested, but the report states that his case was not then followed up, so this is not simply about the powers available; it is about how cases are then followed up. Will he assure us that there will be a more rigorous and systematic approach to dealing with returning foreign fighters in the future, as the report recommends, including on the issue, which we have raised before, of mandatory referrals to de-radicalisation programmes, which can play a role?
The report also highlights the fact that these two individuals, particularly Michael Adebowale, were radicalised over several years, including by accessing extremist material online. Precisely because of the risks posed once this has happened, the report compellingly makes the case for an expansion of the Prevent programme and states:
“The scale of the problem indicates that the Government’s counter-radicalisation programmes are not working.”
The amount of money being spent in communities on the Prevent programme has dropped alarmingly over the past few years, as we have mentioned before in the House. Will the Prime Minister explain how the welcome resources announced today will be allocated to the Prevent programme and on what scale? On another issue we have discussed before, will he also assure us that local community groups, organisations and others will be mobilised as part of the Prevent programme? They have an incredibly important role to play in countering the growth of extremism and stopping people being radicalised.
The Prime Minister rightly raises the issue of internet companies, as detailed in the report. There are two issues: first, about whether companies have a responsibility to draw authorities’ attention to potential terror threats; and, secondly, about whether major companies based outside the UK regard themselves as compelled to comply with UK warrants. On the first point, the report states that companies might sometimes
“decide to pass information to the authorities when they close accounts because of links to terrorism”,
but that in this case they did not. This suggests that part of the problem is the existence of different company practices and the absence of agreed procedures.
In cases of child abuse images, a procedure is in place for companies to take action and refer abuse to the authorities, and when it comes to terrorism, there should be much stronger procedures and obligations on companies as well. Does the Prime Minister agree? Is there scope to agree that with the companies? Will he update us on the work being done by Nigel Sheinwald to improve our ability to get information, with a warrant, from companies based overseas, particularly the US?
On detention, we welcome the Prime Minister’s announcement that oversight will be strengthened, but we think we will eventually have to go further. We have said for some time that the framework of commissioners is not strong enough. Will he confirm that David Anderson’s review, which we agreed in the summer, will also cover the strengthening of oversight and the role of the commissioners?
To conclude, this report is a reminder of the threats we face in keeping our country safe. The murder of Fusilier Lee Rigby was an appalling act. We must learn the right lessons, and this is what the ISC report seeks to do. It does so thoroughly and with diligence, and in seeking to put those lessons into practice, the Government will have our full support.
The Prime Minister
I thank the right hon. Gentleman for his remarks and for how he has approached this subject. He was right to praise the ISC—it has done a good job—and our agencies; and of course he was right that whereas the terrorist only has to get lucky once, our agencies need to succeed on every occasion.
I shall try to respond to the right hon. Gentleman’s questions. He said we were right to increase resources, and although these are modest additional resources, it is worth pointing out that funding for the security and intelligence services has increased by 5% in cash terms since 2010. Compared to other departments, therefore, it has had a very good settlement, as is right, and that has continued in the 2013 spending round.
The right hon. Gentleman said it was necessary to learn lessons on more rapid decision making and better triaging of cases, particularly when they appear on the fringes of more than one investigation. MI5 has said something about that already in its response today, but I think we will hear more next year. On co-ordination between the agencies and the police, MI5 is confident it now has better systems in place.
On the question about referrals to Prevent, which are considered on a case-by-case basis, the Committee rightly pointed out that referral should at least be considered in every case, but that it did not seem to have been in these two cases. On the issue of money, Lord Carlile’s review of Prevent in 2011 concluded that it should be split, with the money for integration going to the Department for Communities and Local Government, where it is now spent, and the remainder being spent on the Prevent programme, specifically to guide people away from extremism and terrorism; and the money for the latter has gone up from £35 million in 2012 to £40 million in 2014. Lord Carlile found cases of groups we would now consider to support an extremist ideology having received funding, and obviously we want to stop that happening again.
Crucially, on internet companies, the right hon. Gentleman made the sensible point that just as we are getting internet companies co-operate on the definition of unacceptable images of children and child abuse—the Government have done a lot of work on that—so exactly the same needs to happen on terrorist information. We are pushing them on that and will use today’s report to lead a debate about their social responsibility. All the action we have taken—passing legislation, employing Nigel Sheinwald to talk to the Americans and so on—is leading to better co-operation between internet companies and the agencies, but more needs to be done, although for obvious reasons I do not want to give a running commentary on each and every one.
Finally, the right hon. Gentleman asked about David Anderson. His role is very broad—he can look at the threat, the response, the capability and the important safeguards—and I think he has done excellent work on all those grounds.
Sir Malcolm Rifkind (Kensington) (Con)
I thank the Prime Minister and the Leader of the Opposition for their welcome for the Committee’s report. I also draw attention to the unprecedented support and co-operation we have had from the intelligence agencies, particularly MI5, which have provided us with all the classified material. In the 190 pages of our report, we have been able to publish for the public more such material than ever before in the history of these matters. There are redactions, but none of them, even if they could be read, would affect the substance of our conclusions and recommendations.
We make some severe criticisms of the agencies, as can be seen in the report, but we have seen no evidence that, even had these errors not been made, the tragic murder of Fusilier Rigby could have been avoided. As the Prime Minister said, there was one online exchange, which came to knowledge some months after the murder of Fusilier Rigby, revealing that Michael Adebowale, months before the murder, had discussed his desire to kill a soldier and that he made various other comments that we refer to in the report. If that intelligence—the one piece of hard evidence that we have seen—had been available to the intelligence agencies at the time, it is at least possible that the murder of Fusilier Rigby could have been avoided.
The Prime Minister has indicated the problem with regard to United States communications providers—the internet companies—and I want to put one question to him. If these United States internet companies feel able to cancel the accounts of some of their clients when their systems demonstrate that either terrorist activity or serious criminal activity are being conducted through these internet exchanges, is there any basis on which they could have an ethical or privacy objection to sharing with the authorities evidence of terrorist intent when that also appears in these same exchanges?
The Prime Minister
My right hon. and learned Friend puts the matter into clear perspective. Once it has been discovered on someone’s e-mail account that they are planning or plotting a terrorist outrage, it is hard to think of any justification for not passing that on to the authorities. That is exactly what my right hon. and learned Friend’s Committee finds:
“the companies should accept they have a responsibility to notify the relevant authorities when an automatic trigger indicating terrorism is activated, and allow the authorities, whether US or UK, to take the next step.”
That is absolutely right and I hope that this will trigger a debate among the internet companies themselves about the action that needs to be taken.
Mr Jack Straw (Blackburn) (Lab)
First, I commend the Intelligence and Security Committee report, as the Prime Minister and the Leader of the Opposition have done. I also echo what the Prime Minister and the Home Secretary have said about the extreme difficulties that the intelligence and police services face when there is an expectation of success in respect of every investigation. These agencies, and the police, have people who are very highly skilled and dedicated and who are working very long hours—but, with the best will in the world, they are human. There will be some cases where the terrorists escape detection and there will therefore be terrorist outrages, as there have been in previous terrorist campaigns.
Lastly, may I press the Prime Minister again on the issue of the United States-based internet companies and ask him to take it up with the US at the highest level? Is there not a cultural problem among the leadership of some of these companies, which have a distorted “libertarian” ideology and believe that somehow that allows them to be wholly detached from responsibility to Governments and to the peoples whom we democratically represent in this country and abroad?
The Prime Minister
I agree with everything that the right hon. Gentleman has said. First, on the work done by MI5 and our agencies, I will repeat the quote from the director general of MI5 that says it all:
“We are not an army that has battalions waiting in barracks for deployment. We are fully deployed all the time so the only way to go on high priority cases is to stop low ones.”
That gives a sense of the pressure that, inevitably, organisations such as this are under; they are trying all the time to think of how they best triage these cases and make sure that they have the maximum input into the most dangerous cases.
The second point that the right hon. Gentleman made was about taking up personally with the US the engagement on the importance of communications data. I can guarantee absolutely that that happens at every level, including with the President. It is a shared challenge for both of us to get this right. We are very clear: wherever these companies are headquartered, if they provide services in the UK they should be subject to UK law. The point he makes with respect to the companies is absolutely right. Of course they worry about their public image in terms of wanting to be in favour of data security, and one can understand that. But they also need to worry about their public image if they are being used by terrorists to plot attacks and they have information about those attacks that they do not pass on. We need to make that point tell in the conversations to come.
Dr Liam Fox (North Somerset) (Con)
The intelligence services do a magnificent job but we spend on all three services in a year what we spend on the national health services every six days. The funding settlement has indeed been generous as the Prime Minister said, but is he satisfied that the problems set out in the report are problems of procedure and practice and not of funding priorities? In other words, are the intelligence services big enough to do the job we are asking them to do in this increasingly dangerous era?
The Prime Minister
My right hon. Friend asks a very good question. The fact is that we spend over £2 billion a year on our intelligence and security services. We have protected that spending, as we did for counter-terrorism policing. But the truth is that there is no upper limit on what we could spend if we wanted to do more and more activity. We have to make a judgment about what is right.
As I say, I meet the heads of our intelligence agencies regularly and talk to them about the pressures they are under. The reason for providing some extra money today is that there is a specific and growing challenge from these self-starting—they are sometimes called “lone wolf”—jihadis, who have been radicalised on the internet because of what has been happening in Syria but are not necessarily linked up with other terrorist networks. That puts extra pressure on and we need to respond to that. But it is a permanent judgment about how much to spend. We try to give the agencies a long-term perspective so they can plan and bring all their resources to bear.
Liz McInnes (Heywood and Middleton) (Lab)
Lee Rigby was a Middleton lad and his family live in my constituency. Will the Prime Minister give assurances to the family, who are bound to have questions about the statement, that he will arrange a meeting with them if necessary and that he will endeavour to ensure that all their questions are given full answers?
The Prime Minister
The hon. Lady raises an important point. As the Leader of the Opposition said, the pain that the family will feel on reading this report and reliving everything should be uppermost in our minds. A police liaison team is still working with the family, and they should know that whatever meetings they want, they can ask for and they will get.
Sir Menzies Campbell (North East Fife) (LD)
I hope that my right hon. Friend will excuse me for returning to the issue of resources. My quick calculation is that a sum of £130 million over two years amounts to an increase of about 3%. We are facing an unprecedented set of challenges, a matter that is publicly acknowledged not only by the Home Secretary and the Foreign Secretary but by the Commissioner of the Metropolitan Police—and, indeed, the heads of the agencies themselves.
Can we really be satisfied that an increase of the kind that my right hon. Friend has mentioned—which is obviously welcome—will be adequate to deal with a problem that is not static and is almost certainly likely to increase in the years to come? Will he at least consider a review, at every possible stage, of the resources available to those who have the primary responsibility for guarding our security?
The Prime Minister
I say to my right hon. and learned Friend, for whom I have great respect, that this is under permanent review. This is a discussion that can be had at any time if there are particular pressures. In the spending review in 2013 we put up spending on the intelligence agencies by 3.4%, at a time when other Departments were, on average, being cut by 2.77% in real terms, on top of the 19% average departmental reduction over the previous four years. They have had a much more generous spending settlement and quite rightly so.
There is also the issue—we discussed this in the National Security Council—of how much to spend on counter-intelligence and how much to spend on counter-terrorism. The argument is often made that it is time to reduce the spend on counter-terrorism. My own view is that that is not the case and that the pressures on counter-terrorism are still very great. As the Home Secretary said yesterday, the threat is greater than for many years, so we need to keep the focus on that part of the work.
Keith Vaz (Leicester East) (Lab)
I join the Prime Minister and the Leader of the Opposition in commending the report by the Intelligence and Security Committee and in welcoming the proposals that both he and the Home Secretary have made over the last few days, which I hope will be subject to proper parliamentary scrutiny.
On the issue of returning British citizens, the Prime Minister will know that tomorrow marks the fourth anniversary of Adebolajo’s return from Kenya. The Kenyans were very clear that it was the British Government, or their associated agencies, who asked for the return of Adebolajo to the UK. That mirrored the return of Mohammed Ahmed Mohammed from Somalia. Is the Prime Minister now telling the House that from now on, when a British citizen commits an offence in another country, we will not seek their return until the criminal processes are completed?
The Prime Minister
Let me first guarantee to the right hon. Gentleman that there will be proper scrutiny of this legislation. It is fast-track legislation, we hope, rather than emergency legislation. It is not being rushed through in just a couple of days—in the other place, for instance. The time between the stages will be shortened, but the overall amount of time will not be.
Much of this legislation comes from ideas that I put forward back in September and some of it comes from the extremism taskforce, which I set up after the murder of Lee Rigby many months ago, so this is not emergency, knee-jerk legislation, but well thought through. It is not starting from scratch either, because we have very good counter-terrorism legislation in this country. This is about seeing where there are potential gaps and making sure they are filled in.
On the question about people returning from overseas, the power we are taking in the new legislation is to make sure that people can come back only if they do so on our terms. That is the key. We will make sure that if people are to be prosecuted, we are ready to prosecute them and that if they are going to be subject to a TPIM, they will be subject to a TPIM.
Dr Julian Lewis (New Forest East) (Con)
One thing not mentioned in the Prime Minister’s statement—and for good reason—was communications data. Whatever one thinks about the Communications Data Bill, our report did not focus on this matter at all significantly because it played no relevant part. Nevertheless, there was a serious leak at an early stage from the unredacted draft of the report, which was reported in a Sunday paper, saying that the report was going to concentrate on this area. Does the Prime Minister agree with me that if MI5 is going to continue to share so much secret material with the Intelligence and Security Committee, leaks of our drafts are absolutely to be deplored and might imperil our ability to do this sort of work in the future?
The Prime Minister
I completely agree with my hon. Friend. All leaks are to be deplored, but leaks of this particular sort of material, when we have trusted the Committee with such important and delicate work, are particularly reprehensible. Communications data are vital not just in respect of terrorism, but when we are trying to find abducted children or solve rapes and murders. They are used in almost all serious crimes. What we did in the Bill was simply to stop the situation from getting worse. What we need now is to go forward with more full-throated legislation. I think we need an honest and open debate about that across the House.
Hazel Blears (Salford and Eccles) (Lab)
This was a brutal murder of a young man who was serving his country, so all our thoughts today are with his family for the months to come. I welcome the Prime Minister’s statement. Neither of the individuals involved was referred to the Prevent programme. I believe the Prevent programme has been under-resourced and not given the priority it should have had within the Contest strategy. If we can stop the pipeline of people being drawn into extremist behaviour, the money will be extremely well spent. I believe that because such activity has been viewed as something of a soft end to the counter-terrorism strategy, it has been seen as a cultural issue and has not had priority.
I welcome the Home Secretary’s commitment to new legal powers and I welcome the Prime Minister’s commitment to further resources, but we have to change the perspective. The threat we now face, with 500 people out in Syria and Iraq and 250 of them coming back—some of them radicalised and well trained—amounts to a different scenario. I think the Prevent programme must no longer be viewed as a soft and fluffy end of community engagement, but as a hard, targeted counter-ideological strategy and a counter-narrative that stops people from creating a climate for extremism.
The Prime Minister
I wholly agree with the right hon. Lady. What we did by separating the integration work from the Prevent work was to make sure that this is not seen as some soft and fluffy programme, but a tough and robust one. It will become more robust because additional funding has been secured; it will become more robust because we are putting it on a statutory footing; and it will become stronger because Channel will be put on a statutory footing, too.
I do not think anyone should underestimate the importance of putting this legal duty on all these organisations. When the right hon. Lady came to our extremism taskforce, I think she could see how the aim was to make sure that whether it be schools, prisons, universities, community centres or whatever, all have a legal duty to prevent extremism and terrorism. That is what we are aiming to do.
Mr David Davis (Haltemprice and Howden) (Con)
Adebolajo and Adebowale are both in prison for life, which should provide permanent security to the British public—from them, at least. However, three weeks ago it was made clear in the Investigatory Powers Tribunal that the agencies have, at least since 2010, been breaking the absolute protection on privileged information between lawyers and suspects. If that happened during the course of a terrorism trial, we could find ourselves in a position where that has undermined or even fractured the conviction of proven terrorists, and we could end up having proven terrorists back on the streets. Have the Government considered that problem, and do they have any plans to deal with it?
The Prime Minister
I believe that our agencies have appropriate procedures for dealing with legal material. As my right hon. Friend says, it is very important that they do that because we want to make sure that justice is done and that these people remain behind bars.
Mr Nigel Dodds (Belfast North) (DUP)
I welcome the Prime Minister’s statement and this Committee’s important report. Our thoughts and prayers are with the family and friends of Lee Rigby today once again.
On the issue of new powers and the counter-terrorism and security Bill, the Prime Minister will be aware that as well as the threat from returning jihadists and Islamic terrorism, we still face a severe terrorist problem in Northern Ireland from dissident republicans, which could spread to the UK mainland. Can the Prime Minister assure the people of Northern Ireland that the increase in attacks from that quarter is still taken extremely seriously and that all the necessary resources will be put in? Can he outline the impact of the new powers in the Bill being brought forward tomorrow on countering that severe threat for UK citizens as well?
The Prime Minister
Let me first reassure the right hon. Gentleman and everyone in Northern Ireland that just because there is a growing terrorist threat from citizens of our own country and from people being radicalised in Iraq and Syria, that does not mean that we have taken our eye off the ball of Northern Ireland-related terrorism in any way. Yesterday we had a National Security Council meeting, which was attended by the head of the Police Service of Northern Ireland, and we discussed in some detail what more could be done to enhance the excellent work it is doing. For every one attack made, it is stopping three or four. It is doing an excellent job, and we continue to keep anything else we can do to help under review—respecting, of course, that under this Government, policing and justice in Northern Ireland has been devolved.
Bob Stewart (Beckenham) (Con)
Lee Rigby was killed wearing civilian clothes, and all soldiers are easily identifiable whether in civilian clothes or not. Seeing our armed forces in uniform on the streets gives me great pleasure and pride. People may think that wearing uniform incites or indeed attracts attention from these terrorists. It does not. These terrorists will identify our soldiers, sailors and airmen if they want to. I thus add my voice to those of people who say, “Keep our soldiers on the streets in uniform.”
The Prime Minister
My hon. Friend is absolutely right, and no one is proposing anything different. The point he makes about the tragic murder of Lee Rigby is right, and we have no plans to change that.
Mr George Howarth (Knowsley) (Lab)
The Prime Minister may recall that in May 2009, the Intelligence and Security Committee produced a report on the London bombings, in which we concluded that there were real problems with tracking those on the periphery of investigations or whose names popped up on a regular basis. The recommendation was that there needed to be a proper regular review process in place. The Prime Minister will be aware that a similar conclusion is drawn in this report. Does he not think it is about time that somebody took responsibility for ensuring that these cases are reviewed on a regular basis so that, where necessary, in cases such as those of Adebowale and Adebolajo, the level of surveillance can be increased?
The Prime Minister
The right hon. Gentleman, who is a member of the Intelligence and Security Committee, makes an important point. It comes out very clearly in the report, which makes a recommendation about how to deal with these low-level suspects. The agencies’ view is that they are putting in place new measures to ensure that low-level subjects are picked up by the joint programme that they now run with the police, and it is important to see that through. We want to see their actions taken set out in the new year and followed through.
There is also the issue of where subjects of interest appear on the periphery of various investigations. Again, MI5’s view is that it is putting in place a strategy to address that, which it sees as a core part of its investigative process. As I said in my response to the report, no one should be in any doubt that, although the finding was that no specific information was available to get MI5 to stop the dreadful thing that happened, there were many lessons to learn. There is no way that anyone is going to shy away from that. All these points need to be followed through, and then we need to check up that action really has been taken.
Richard Drax (South Dorset) (Con)
Does my right hon. Friend agree that our intelligence services operate best in the shadows, and that we must be vey careful indeed not to undermine them when we shine the democratic spotlight on them and follow up cases such as this?
The Prime Minister
I do agree with my hon. Friend. The important thing about secret intelligence services is that they are secret. There is, however, a wider consideration. We now have a very good system in place. We have a scrutiny Committee in Parliament, and an Intelligence Services Commissioner. Any warrant to listen to someone’s telephone or intercept their e-mails must be signed personally by the Home Secretary. We have a system of which we can be proud. It is that democratic accountability and that system that enable us to say, whether to internet companies or to others, “You should be co-operating with us properly, because we do this in a proper and decent way.” I think that the safeguards that we put in place not only mean that we scrutinise our intelligence services, but should help to make us safer.
Mr David Winnick (Walsall North) (Lab)
May I add a word of caution? The new measures to deal with this murderous threat to our people must not be counter-productive, as measures were from time to time when we were dealing with the IRA murder campaign. It was 40 years ago last week that 21 people were murdered in two Birmingham pubs. In the west midlands, certainly, we have not forgotten that. The IRA did not win, despite all the murders, and neither will these latest murderous fanatics.
The Prime Minister
I agree with the hon. Gentleman that we will never defeat terrorism if we undermine the freedoms that terrorists want to attack, but successive Governments have found that simply standing back and saying “We will just use the traditional criminal justice system of investigation, prosecution and imprisonment” is not enough. That is why there have been control orders, TPIMs and other such measures. Successive Governments have found that more is needed to face what is a really existential threat from a group of people who not only do not mind if they are killed in the act of carrying out their murderous intent, but positively welcome that. I do not think it would be responsible to stand here and say that there is never anything that we need to do. This is not a knee-jerk or emergency measure; it has been carefully thought through, and it adds to the weapons in our armoury.
Dr Julian Huppert (Cambridge) (LD)
This is an impressively detailed report on a brutal murder. It refers to a long list of mistakes: actions not carried out, failures to keep adequate records, delays, months of inaction, and insufficient co-ordination. One key failing is identified on page 108. Apparently, by 2 May there was such a serious risk of Adebowale being involved in terrorist actions that an application was made for further intrusive measures, but that submission was delayed until 21 May. The Prime Minister says that such intrusive surveillance measures would not have made any difference, but how can he be so sure that those detailed intrusive measures could not have prevented this?
The Prime Minister
The reason I can be sure is that the Committee subsequently went through, in great detail, the content of the communications that were not being monitored, and found that nothing in them would have given information about an attack. However, the hon. Gentleman is absolutely right to say that there should not have been a delay in putting the intrusive measures in place. They should have been put in place more quickly, because that might have made a difference in another case. Nevertheless, it is very important to read those pages carefully.
Fiona Mactaggart (Slough) (Lab)
As a new member of the Intelligence and Security Committee, I was not able to hear all the evidence that led to the conclusions in the report, but I have observed the extensive leaks about its conclusions. Those leaks concern me deeply, because I think that they undermine the impact of the report, and they seem to have been designed to lead people to a particular conclusion. How will the Prime Minister use his office to prevent such leaks from happening from within Government in future?
The Prime Minister
The hon. Lady has made an important point, and I shall be happy to discuss with the Chairman of the Committee whether he wants to take further action to try and find out how those leaks happened.
I really care about this, because I think that too often, when something terrible has happened, we in the House immediately reach for the judicial inquiry, or the inquiry that will take place outside the House. In this case, an institution of the House has proved what a good job it can do in garnering all the information, doing a huge amount of hard work, and coming up with very sensible but tough recommendations. I do not want that way of doing things to be undermined by leaks.
Mr John Baron (Basildon and Billericay) (Con)
My regimental colleagues, whether serving or not, will greatly welcome the words of the Prime Minister and, indeed, the Leader of the Opposition about Fusilier Lee Rigby, and the assurances given by the Prime Minister in regard to his family. Does the Prime Minister accept, however, that with potentially hundreds of jihadists returning to this country, one of the key lessons of the report is that we must minimise the delay between the gathering of intelligence and the taking of appropriate action?
The Prime Minister
My hon. Friend is absolutely right. There are some worrying instances in the report. Some delay is inevitable, because, as I have explained, when a huge range of cases is being covered, from the highest-priority cases to those that are given a less high priority, and more high-priority cases suddenly arise, people have to be removed from something, and that sometimes results in delays. However, I think the report shows that there are sometimes delays that are over and above what is normal in such cases, and that is clearly not acceptable.
Mike Gapes (Ilford South) (Lab/Co-op)
Does the Prime Minister agree that we are facing a struggle with an ideology—the ideology of violent Islamist jihadism, which, although it is only a small minority ideology in the Muslim community, is linked to the phenomenon of the self-starting terrorist? Does he agree that we need not just our state institutions but the whole of our society to challenge, confront and defeat that ideology?
The Prime Minister
I agree with every word that the hon. Gentleman has said. I think we sometimes make the mistake of looking at a particular area of the world and thinking that that is where the problem is coming from when the problem is actually extremism itself, which manifests itself in the parts of the world with the greatest amount of civil war and trouble and so forth. The problem is the extremist ideology, and, as the hon. Gentleman has said, we do not defeat that just by military means. We defeat it by ensuring that we drive it out of universities, colleges, prisons, schools, community centres where appropriate, and mosques, because some of them have been taken over by extremists on occasion. That is why this public duty, and the funds that we are providing, are so important.
Mr David Nuttall (Bury North) (Con)
I thank the Prime Minister for his statement. Does he agree that all the thousands of peace-loving members of the British Muslim community in my constituency will be as supportive of the measures announced this week to strengthen the fight against terrorism as everyone else in my constituency?
The Prime Minister
My hon. Friend is absolutely right. I think that that is what the “Not in my name” campaign is all about: it is about Muslims throughout our country saying that this very small minority fringe of people who have been radicalised and who buy this extremist ideology do not speak for Islam. It is very important for us to make that point. British Muslims want to see robust anti-terrorism and criminal justice powers as much as anyone else.
Mr Nick Raynsford (Greenwich and Woolwich) (Lab)
The Prime Minister will recall coming to Woolwich in the aftermath of the killing of Lee Rigby—to whose memory we all pay tribute—and he will recall the commitment of the local community to preventing this horrific incident from damaging community relations and opening the door to extremism. May I urge him to look again at the issue of Prevent, which has been highlighted by two of my colleagues? I remind him that the Intelligence and Security Committee’s report refers specifically to
“the relatively low priority (and funding) given to Prevent”,
and goes on to say:
“This misses the value that Prevent can offer: successfully diverting individuals from the radicalisation path”.
The Prime Minister
Let me reassure the right hon. Gentleman, who has spoken now, as he did then, for the people of Woolwich in standing up to this horrific murder. We definitely think that Prevent is important. That is why we are putting it on a statutory footing, why the funding is going up, why extra resources are being made available today, and why we are backing it with a duty that is being placed on all public bodies in the United Kingdom.
Jason McCartney (Colne Valley) (Con)
Does the Prime Minister agree that these vicious murderers who so barbarically took the life of an innocent young soldier have not only betrayed the Muslim community in my constituency, but betrayed Muslim communities throughout the United Kingdom—communities that contribute so, so much to our country?
The Prime Minister
My hon. Friend is absolutely right to say that this has no place in the religion of Islam, which is a religion of peace. That is why so many British Muslims have come out so strongly to condemn what happened. One senses their incredible frustration that a small minority of people who have bought into the extremist mindset and rhetoric are causing so much damage. The more people can stand up and say that, the better.
John Mann (Bassetlaw) (Lab)
Four years ago, I set up a working group with all the major internet companies and the Anti-Defamation League, and I have met most of the people who moderate content. Does the Prime Minister agree that a voluntary approach will not be sufficient because the internet companies do not have and will not have the expertise to make the decisions? What is needed is legislation or an intergovernmental agreement that ensures that we have the expertise in our police and our security services so that we can draw down the information we want, rather than relying on young, inexperienced moderators of content who will make the wrong call at some stage, to someone’s detriment.
The Prime Minister
The hon. Gentleman makes an important point. There is an element of this that is about having legal powers. That is about the ability to gather communications data or to intercept telephone calls, e-mails and other internet communications, which is vital—all done legally, on the basis of a signed warrant. There are also the practices that internet companies should themselves want to take up. Some people say, “You cannot change this and nothing can be done.” I do not accept that. In the case of child pornography, to start with, when we made suggestions about, for example, not returning search items on disgusting child pornography terms, we were told that that was impossible. Now the internet companies have put that in place. Therefore, there is a place for legislation but there is also a place for bringing people together and encouraging proper practice.
Michael Ellis (Northampton North) (Con)
Will my right hon. Friend confirm that our security services are this country’s unsung heroes? He knows—many others do not—that they are regularly responsible for tremendous successes, which we hear nothing about. Does he agree that the report shows that social media firms should take action immediately to ensure that their services do not become terrorist safe havens, from where terrorists can almost with impunity launch plots against this country? Internet companies must co-operate and not become some modern version of a mediaeval sanctuary.
The Prime Minister
My hon. Friend is right on both bases. We cannot always praise and point out what the security and intelligence services have done, but since I have been Prime Minister there has been at least one major plot every year and this year already at least four plots have been avoided by the work of the security services, so we should thank them for what they do.
On the issue of the internet, I would put it like this. Historically, Governments have always decided that, whether it is people sending each other letters, making fixed-line telephone calls, mobile telephone calls, or sending e-mails, in extremis, on the basis of a warrant signed by the Home Secretary, it is okay to intercept that call, letter or e-mail. The question we must ask is: are we prepared to have a means of communication—the internet and a number of modern methods—that we are not able to intercept? My answer is clear: we should not accept that. We should legislate to ensure that that is the case. I think that that is in the finest traditions of having law that is in favour of security but also in favour of liberty. However, the whole House at some stage will have to come to a view on that.
Clive Efford (Eltham) (Lab)
I associate myself with the comments of my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford). Greenwich borough has a long association with the garrison at Woolwich and the murder of Fusilier Lee Rigby was felt particularly powerfully by our local community. May I press the Prime Minister a little more on internet companies? It seems extraordinary that we do not have the co-operation of the companies that are overseas. It seems to me that we need to negotiate and take action at Government level. What is taking place at that level to ensure that, where such companies do not co-operate, regulations are put in place to compel them to do so?
The Prime Minister
The hon. Gentleman asks the key question. We are both updating—we did that over the summer—and applying our legislation on the basis that we believe that what matters is whether companies provide services in this country, not where they are based. On that basis, companies should comply with warrants and requests. Therefore, we are progressing that, but at the same time we are trying to deal with one of the sources of the problem, which is the interaction between UK law and American law, specifically the US Wiretap Act. Sir Nigel Sheinwald is holding conversations with America-based companies and the American Government to try to find a way through so we get higher levels of co-operation. However, the levels of co-operation have increased, not least because of the important legislation that this House passed in the summer.
Sir Tony Baldry (Banbury) (Con)
Further to the last question, does not the Intelligence and Security Committee report indicate that social media companies need to do more to put in place systems to spot terrorist groups that are using their services to plan attacks?
The Prime Minister
My right hon. Friend is right. The companies have to do two things. They have to have systems in place to spot key words, key phrases and other key things that could be part of terrorist plotting. They also need to have a system in place, in our view and as my right hon. and learned Friend the Member for Kensington (Sir Malcolm Rifkind) said, to report that to the authorities. This is linked to the point that I made in response to my hon. Friend the Member for South Dorset (Richard Drax). Because we have such a robust system of safeguards in this country, I do not think that it should be a problem for any of these companies to do just that.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
I associate myself with the comments of the Prime Minister and many other hon. Members about Fusilier Lee Rigby. The Prime Minister has repeatedly referred to the importance of schools and universities in tackling the threat from radicalisation, yet I have spoken to many young people who are concerned about the absence of, or lack of consistency in information provided to them about how to report and tackle extremism that they find online. I am concerned that it appears that there have been no inter-ministerial meetings about that issue between the devolved Administrations and UK Ministers with responsibility for education and universities. Will the Prime Minister commit to working with education and universities Ministers across the UK to ensure that consistent information is provided to our young people, teachers and youth workers?
The Prime Minister
The hon. Gentleman makes an important point. That is one of the reasons for having the public duty on public bodies, including universities, to combat extremism and terrorism. We will set out the guidance on that as the legislation goes through the House. It is important to ensure that this happens on a UK-wide basis. Combating terrorism is a reserved, UK-wide responsibility. We need to discuss with the devolved authorities exactly how they put that in place, but obviously whether it is done is a matter for the UK Government.
Nadhim Zahawi (Stratford-on-Avon) (Con)
It is the job of the House to pass laws to require internet companies to help to prevent terror attacks, but does the Prime Minister agree that companies such as Facebook, Twitter and other social networks have a moral responsibility—they owe it to the memory of Lee Rigby—to introduce systems, similar to the ones we have introduced to deal with child pornography, to identify terror threats? When they do identify them, they should have a Rigby rule and pass them to the authorities.
The Prime Minister
My hon. Friend is absolutely right. Obviously, we can put down legal obligations in terms of complying with warrants from the Home Secretary and legal requirements on providing communications data that are vital in solving crime, but there is a moral responsibility, too. If companies know that terrorist acts are being plotted, they have a moral responsibility to act. I cannot think of any reason why they would not tell the authorities. The debate that will happen following the publication of the report will help to keep us safe.
Jenny Chapman (Darlington) (Lab)
Will the Prime Minister urgently examine whether the Prison Service has the resources and, crucially, the skills to deal with radicalisation in our jails?
The Prime Minister
The hon. Lady makes an important point, which we discussed in the extremism taskforce. It is a tragic fact that a number of people have gone to prison and become radicalised in prison because there have not been the appropriate services in prison or there has not been the right sort of religious instruction. Therefore, we have a programme going through all our prisons to ensure that that is in place. That is important.
Mr Peter Bone (Wellingborough) (Con)
I think the whole House will thank the Prime Minister for the speed with which he has come to the House and for fact that he does so regularly. In his statement he said, “But the automated systems in the internet company concerned did not identify this exchange.” Therefore, it does not appear that there was a deliberate attempt by the internet provider not to provide the information. It seems that its systems were wrong. Has he found out why those systems did not work? I also think that he could say which company it was.
The Prime Minister
I do not think that saying which company it was would be right, because I do not want to give a running commentary on which companies are better than others at analysing this problem and reporting it to the Government, for what I would have thought were quite obvious reasons about the signal that that would send to people who want to do us harm. My understanding of what happened in this case is that the company discovered the exchange after the murder took place, when it was searching its systems, and it found out that one automatic shutdown of an account had not been, as it were, referred upwards. We think it is very important to discuss with that company what it is going to put in place to ensure that that does not happen again.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
Further to the comments from my right hon. Friends the Members for Salford and Eccles (Hazel Blears) and for Greenwich and Woolwich (Mr Raynsford), I very much welcome the development of the Prevent programme. Will the Prime Minister expound on the expectations that will be placed on schools, universities and community groups to deliver on the legal duty?
The Prime Minister
The concept is a simple one. This is linked to what the hon. Member for Ilford South (Mike Gapes) said, which is that the effort of combating extremism is a matter not just for the police and the security services but for everybody. So if schools, universities and colleges know that someone is promoting terrorism in their organisation, they have a duty to act. Some colleges and universities might have taken a very laissez-faire attitude towards this, but that is wrong. We will clearly need to set out in guidance more details of what we expect and how we define this problem.
Steve Baker (Wycombe) (Con)
High-quality Islamic scholarship is surely crucial as a tool to confront the extremist ideology that leads to terrorism. Do the Government recognise that it is extremely difficult to find the individuals who have the necessary breadth and depth of knowledge of Islamic theology to make that possible?
The Prime Minister
My hon. Friend raises an important point, which we have spent some time discussing. I do not think that we have yet found the right answer. Some other European countries insist on particular training programmes and language abilities for imams, so that they are able to connect with the young people in their mosques. This is an area in which we still need to do more to ensure that people who are in danger of going astray have more people in their community to help to keep them grounded.
Henry Smith (Crawley) (Con)
The first British-born suicide bomber in the Syrian civil war was from my constituency. The incident occurred in February this year, and I am grateful to my right hon. Friend the Home Secretary for putting in place a number of Prevent programmes in my constituency over the summer as a result of that. Given the concern about how internet companies and social media might be aiding terrorist activity, will the Prime Minister tell us how we can use those platforms to counter this poisonous ideology?
The Prime Minister
First, let me share with my hon. Friend the sense that it is absolutely dreadful that there are people from our own country—many of whom were born, brought up and schooled here—who have had their minds poisoned by this extremist ideology and gone to fight or, in some cases, tried to commit atrocities on our own soil against their fellow countrymen. That is deeply shocking, and it shows how much effort we need to make to combat those activities.
Social media can of course be a great force for good as well as a force for aiding terrorists to talk to each other, and we should be using social media to point out all the positive things that we are doing. For instance, when young people in Muslim communities or other communities are concerned about what is happening in Syria, it is important that they can see instantly that this country is one of the most generous in the world for getting aid to people and giving them shelter, food and a chance of life. We must use social media to communicate that message rather than just leaving it open to the radicals and the extremists.
Julian Smith (Skipton and Ripon) (Con)
There has been a pretty concerted campaign by The Guardian, which has been supported by some Members of this House, relating to the transparency and oversight of our security services. Does the Prime Minister agree that this incredibly detailed report will finally put paid to the myths that have been developing over the past few years?
The Prime Minister
My hon. Friend makes a good point. There is a balance here. What we have tried to do is improve the institutions that oversee our intelligence agencies. For instance, the Intelligence and Security Committee now has more power, resources and independence, and I have just said that we are going to make the Intelligence Services Commissioner put the role of the agencies on to a statutory basis. So we have updated and upgraded what we do, and I think we have now got to a pretty good place. We should always ask ourselves whether the next step we are going to take will really add to the democratic accountability and legitimacy of what we are doing, or whether it could hold us back.
Philip Davies (Shipley) (Con)
The Prime Minister has often said that one of the purposes of overseas aid spending is that it contributes to our security. Given that finances are tight, to say the least, and given the extreme pressure that the Prime Minister admits the intelligence and security services are under, is it not time to divert some of that overseas aid spending to our security services at home? This is the elephant in the room, and to increase spending on the security services by £130 million at a time when overseas aid spending has gone up by about £5 billion is completely unacceptable. Will he put his dogma on overseas aid spending to one side and give the security services the funding that they need to keep us safe? That is what the public expect from him.
The Prime Minister
First, we have not only protected but recently increased spending on the security and intelligence services. I do not think that it is an either/or. We should be doing that as well as keeping our promises to the poorest people in the world, not only because we made that promise but because when it comes to dealing with problems in other countries so that they do not come and visit us here, overseas aid has a role.
Mr Philip Hollobone (Kettering) (Con)
My constituents were horrified by the murder of Lee Rigby. It is clear from the report that the security services were perhaps not as adept as they might have been at intercepting his killers before the murder took place, but my constituents will be reassured that those two individuals were known to the security services. They would have been more worried had they not been known to them. We have heard many questions to the Prime Minister today about electronic and digital surveillance, but no one has mentioned the “mark 1 eyeball” or the importance of human intelligence. My right hon. Friend sees more of these things than the rest of us. Is he satisfied that proper emphasis is being placed on the infiltration of these radical organisations at a human level, rather than an over-emphasis on electronic and digital surveillance?
The Prime Minister
My hon. Friend makes an important point. He is absolutely right to say that, without human intelligence and all of that kind of interaction, a lot of the digital surveillance to which he refers would come to nothing. One thing that has changed since 9/11 is that an enormous amount of effort and work has gone into building up our intelligence and security services in those ways as much as in others.
Iran (Nuclear Talks)
(9 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Foreign and Commonwealth Affairs (Mr Philip Hammond)
With permission, Mr Speaker, I will make a statement on the negotiations between the E3 plus 3 and Iran regarding the future of Iran’s nuclear programme. In November 2013, the E3 plus 3 signed an interim agreement with Iran which came into force on 20 January 2014 for an initial period of six months. Under that agreement, Iran committed to freezing the areas of its nuclear programme of greatest concern to the international community. In return, Iran received limited sanctions relief and the repatriation of $4.2 billion in oil revenues. Crucially, that interim agreement gave us the time and space to build confidence and begin negotiations on a comprehensive deal to ensure the peaceful nature of Iran’s nuclear programme.
Since February, we have engaged in extensive negotiations with Iran at both official and ministerial level. We always knew these negotiations would be difficult and complex, and they have been—even more so than negotiating the Geneva interim agreement. At the heart of the negotiations is the need to reconcile Iran’s aspirations for a peaceful civil nuclear programme with our insistence on ensuring Iran cannot develop a nuclear weapons capability.
By July 2014, after several rounds of talks with Iran, we had deepened our understanding of the positions of both sides and made progress on areas of the negotiations, but we were still far short of reaching agreement on core issues. The E3 plus 3 and Iran therefore decided to extend the negotiations until 24 November—yesterday.
Since July, negotiations between the E3 plus 3 and Iran have intensified, and we have closed the gap between the parties on a number of important issues, but significant differences remain. I and other Foreign Ministers from the E3 plus 3 met the Iranians in Vienna last Friday and again yesterday to evaluate the prospects of reaching agreement on a political framework for a comprehensive deal within the deadline. The discussions in Vienna highlighted the need for further movement on some big issues by the Iranians and the need for flexibility on both sides. Despite the efforts of all parties, it was clear yesterday morning that we need more time to close the gaps between the E3 plus 3 and Iran, particularly regarding the issue of Iran’s enrichment capacity, which remains at the heart of this negotiation. But, based on the significant progress we have made to date, I remain of the view—one shared by my fellow E3 plus 3 Ministers and Iranian Foreign Minister Zarif— that a comprehensive deal remains possible. We must capitalise on the momentum we have gathered and push forward to achieve that prize.
Iran and the E3 plus 3 have therefore agreed to extend the interim agreement again until the end of June to allow more time to bridge remaining gaps and tie down technical details. We will continue negotiations in December with the shared aim of securing an outline agreement within four months. We would, of course, have preferred to reach a comprehensive deal by yesterday’s deadline, but only if it was the right deal. As we continue to work towards such a deal, we have an interim agreement in place that maintains important constraints on Iran’s nuclear programme and the vast majority of nuclear-related sanctions. Under that arrangement, Iran will continue to be able to repatriate some oil revenues on a similar basis to the current arrangements.
Successive Governments have enjoyed cross-party support in the House for the twin-track approach of sanctions and negotiations. I remain convinced that that approach is the right one, and that it is yielding progress, albeit slow progress. The negotiations with Iran are tough and complex, but a comprehensive agreement would bring enormous benefits to all parties. For Iran, it would herald the beginning of reintegration into the international community, and open the door to an easing of sanctions and access to significant frozen assets. For the international community, it would mark a considerable advance for regional and global security. We cannot and will not succumb to the temptation of sealing a deal at any price, but we will remain steadfast in pursuit of a comprehensive agreement that respects the clear principle that Iran must not be able to develop a nuclear weapons capability. I commend this statement to the House.
Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)
I thank the Foreign Secretary for his statement and for advance sight of it. First, on behalf of the Opposition, I wish to acknowledge the work of the EU’s outgoing High Representative for foreign affairs, Baroness Cathy Ashton. Over the past five years, she has played a decisive and constructive role on the world stage, particularly in relation to the Iranian nuclear dossier. Her contribution will be missed, but her legacy—I hope—will prove in time to have been significant.
On yesterday’s events in Vienna, the fact that it was not possible to reach agreement by the already extended deadline of 24 November is, of course, a setback, but it is better than either a bad deal or a rupture in the negotiations that would have freed Iran from its commitment not to accelerate its efforts to develop nuclear energy while negotiations proceed. For many years, Iran has chosen to exploit regional sectarian tensions through supporting terrorist groups in other parts of the region. Today, Iran has the capability to play a much more constructive role. So there should be no doubt that in an already volatile region, at a particularly perilous period, a nuclear-armed Iran would pose a threat not only to Israel and its neighbours, but to wider global security. Therefore, the interim agreement in November 2013 was a significant step forward. The June 2015 extension could allow for a further opportunity for progress to be made towards a vital comprehensive deal. This afternoon, I seek a number of assurances from the Foreign Secretary about the content, extension and negotiation of this proposed deal.
First, on the content of the final agreement, reports suggest that one of the main obstacles to securing a deal remained the crucial issue of the number of centrifuges Iran could operate. The Foreign Secretary did not mention that issue in his statement, so in his response will he set out the Government’s assessment of the appropriate number of centrifuges that Iran can retain while still offering sufficient protections on the so-called “break-out” time?
Secondly, the extension of negotiations must be agreed only alongside sufficient guarantees that it will not allow Iran to gain by running down the clock. The terms of the now-extended agreement explicitly forbid Iran from adding new enrichment capacity and accumulating more enriched uranium, and ban 20% enrichment altogether. Can the Foreign Secretary confirm that those restrictions will remain in place and will continue to be monitored, and that any sign of a breach will warrant an effective response? In particular, is he satisfied by the level of International Atomic Energy Agency access going forward?
Thirdly, could the Foreign Secretary also confirm that Iran will not enjoy any net financial gain through this extension? As he said in his statement, there has been cross-party support for a twin-track approach for a number of years. Yesterday, he confirmed the following:
“The expectation is that there will be a rollover of the current arrangements for Iran to access around $700 million per month of frozen assets”.
In his statement, he said that Iran will continue to repatriate oil revenues on “a similar basis” to before, so can he confirm explicitly that that does not allow for any further extension of sanctions relief without anything in return from Iran?
Of course the focus of today’s statement is on the nuclear negotiations but, with your permission, Mr Speaker, I wish to ask a question about reopening the British embassy in Tehran. I welcomed the announcement in June by the former Foreign Secretary—he is now Leader of the House—that the embassy will be reopened. The Foreign Secretary’s recent written answer to me stated that issues associated with getting the embassy back to a functional level and re-establishing a visa service are still under discussion. Can he offer further details about when he envisages those issues will be resolved? Three years since the attack on the embassy, ensuring its swift but safe reopening must surely remain a priority for those from all parts of this House.
Secretary of State Kerry was right to say that these talks will not get easier just because they go on longer. Unless there is a real breakthrough soon on the key heads of agreement, including on centrifuges and stockpiles, 2015 could see a progressive unravelling of political momentum for a deal on both sides. The onus therefore remains on Iran to be able to give the international community confidence that its nuclear programme is a purely civilian one, and the responsibility of the international community is to negotiate a deal that achieves that goal. As the Foreign Secretary recognised, there has been a bipartisan approach in this House, and he continues to have our support in seeking such an outcome.
Mr Hammond
I am grateful to the right hon. Gentleman for his expression of support at the end of his remarks. May I join him in thanking Baroness Ashton and congratulating her on the significant role she has played in these negotiations over the last period? I should also welcome her successor, Federica Mogherini, as new EU High Representative. The E3 parties are discussing—we began a discussion yesterday and will continue it—how we carry forward this process, because, clearly, Baroness Ashton had a large store of accumulated knowledge and had built important relationships. We will discuss with the new High Representative how best we can carry forward these negotiations in a way that gives them the maximum chance of being successful.
I strongly agree with the right hon. Gentleman’s expressed view that no deal is better than a bad deal; a nuclear-armed Iran would be a major destabilising force in the region and, conceivably, in a short period of time, far beyond it. That is not an outcome we can allow to happen, and we are all clearly focused on that. He has asked me for some specific assurances, and I will answer his questions in so far as I can. We agreed yesterday in Vienna that it would not be helpful to have on public display all the various heads of discussion and the various specific ideas that are in play and being discussed. We are clear among us that nothing is agreed until everything is agreed. If we want the discussions to proceed in a spirit of openness, with people testing new ideas, we have to respect the confidentiality around that process. I did say in my opening remarks that Iran’s enrichment capacity—a proxy for centrifuge numbers or centrifuge capability—remained a key issue to be resolved. We are exploring a number of ways of approaching that issue, and will continue to do so with the Iranians.
The right hon. Gentleman asked me to confirm whether the restrictions under the recently expired joint plan of action and the monitoring arrangements would remain in force and also whether access under those monitoring arrangements is considered to be adequate. I can confirm all of those things. He also asked about financial gain. As I said in my opening remarks, Iran will continue to be allowed, for as long as this arrangement is in place and the restrictions on Iran’s activity continue, to access approximately $700 million a month of its oil revenues, as has been the case since the beginning of this year.
Finally, the right hon. Gentleman asked me about the Tehran embassy. Yes, we are committed to reopening embassies between our two countries as soon as possible, but as he knows and has acknowledged there have been some technical issues that we have not found easy to resolve. We need to import into Iran a significant amount of equipment for the embassy to replace what was destroyed during the events of November 2011. If we are to operate effectively, we need to be able to take in that equipment in a way that is secure and that maintains necessary confidentiality. We have not yet been able to agree a way of doing that with the Iranians or to establish how we can deliver an effective visa service in Tehran that will meet the level of demand that is expected. At the same time, we also have to comply with various restrictions that the Iranians have in place, which limit our scope to deliver that service. We are continuing to engage with the Iranians on that issue. We are clear that this is a separate discussion; it is not dependent on, or in any way connected to, the nuclear discussion.
Finally, let me pick up on the right hon. Gentleman’s last comment. He said that to make progress, there needs to be a real breakthrough soon. I know that, in these sorts of discussions, it is always tempting to think that there has to be a sudden breakthrough. I say to him that progress thus far would be better characterised as slow but incremental, a painstaking inching towards each other, a testing of new ideas, and an exploring of new possibilities and of new ways of looking at old problems. We have made significant progress, albeit in very small steps, over the past few months. Rather than having a sudden breakthrough over the next couple of months, I expect us to edge towards each other in this incremental way.
Mr Kenneth Clarke (Rushcliffe) (Con)
I am sure that everybody who wants one day to see a return to stability in the middle east will be hoping for eventual success in these negotiations. No one wants to see sanctions maintained on Iran and the Iranian people for any longer than is necessary. Will my right hon. Friend assure me, within the sensible constraints of what he can say during negotiations, that any eventual solution must include a system of inspection and monitoring that will continue for the indefinite future so that every interested party can be reassured that any deal will not be slid back on either by the present Iranian Government or any future regime in that country?
Mr Hammond
I can reassure my right hon. Friend that transparency and an inspection and verification regime are at the heart of these negotiations. The Iranians understand that the regrettable but none the less undeniable lack of mutual trust between the two sides means that there will have to be robust inspection and verification procedures in place throughout the duration of any agreement. Indeed, there will have to be proper transparency and inspection arrangements in place beyond the duration of any agreement under the usual terms of the nuclear non-proliferation treaty in respect of a non-nuclear power.
Mr Jack Straw (Blackburn) (Lab)
I draw the attention of the House to the fact that I am co-chairman of the all-party group on Iran. The Secretary of State’s characterisation of negotiations with the Iranians as tough, complex and painstaking sounds all too familiar. I have every sympathy with him and commend him on his work. All of us want to see a satisfactory deal, but does he accept that there is a danger, if this drifts on, of a hardening of sanctions by the United States Congress and, at the same time, a degradation of sanctions by some of the other parties in the E3 plus 3? Has he any comment to make on the report in Fars News, an Iranian news agency, yesterday that President Vladimir Putin had a telephone conversation with President Rouhani of Iran in which he proposed
“to lift the anti-Iran sanctions in a unilateral and gradual process.”
Mr Hammond
I can tell the right hon. Gentleman that Foreign Minister Zarif refers often to the negotiations that took place in the middle of the last decade. I suppose he does that to emphasise that he was involved in the discussion long before any of us at the table were. It is, as the right hon. Gentleman suggests, absolutely essential that the sanctions regime remains robust. Last November, we said that the easing of certain specific sanctions under this deal did not imply, and would not be allowed to imply, a general weakening of the sanctions regime. We have seen nothing to suggest that the sanctions regime has weakened. We monitor it carefully and it remains effective and robust and it must continue to do so. I too saw, while I was still in Vienna yesterday, those remarks attributed to President Putin. I was with Foreign Minister Lavrov, who gave me no reason to believe that they were likely to be true, and I note that they were reported by an Iranian source. We are seeking clarification from the Russians, but I do not expect to see them break ranks. The Russians have been entirely constructive and very much engaged in this process, as have the Chinese.
Mr Speaker
Having called one co-chair, a most illustrious co-chair, of an all-party group, I am inclined to call another. Mr Richard Bacon.
Mr Richard Bacon (South Norfolk) (Con)
I congratulate the Government and the Foreign Secretary on the wisdom and patience of their approach, which is plainly required in the nuclear talks. It is plain that the Vienna convention requirements must be adhered to before we can consider reopening embassies, but does he agree that, on a broader range of matters such as the return of citizens and nationals, the opening of embassies should be seen not as some sort of reward but as a useful tool that could help in the resolution of a number of the normal kinds of disputes that occur between nations and that on many of those there is in fact some room for negotiation?
Mr Hammond
I agree that the opening of an embassy is certainly not a reward; it is a practical step to give effect to what we hope will be an increasing level and intensity of bilateral relations. In particular, we know that there are significant numbers of Iranian citizens who would like to visit the UK, but who find the current visa application regime onerous—I am talking about requiring them to travel outside the country to obtain a visa. We are moving towards reopening the embassy as soon as we practically can. For that to happen, we must have support from the Iranians to facilitate the work that we need to do to rehabilitate the embassy and all its operating equipment.
Sir Gerald Kaufman (Manchester, Gorton) (Lab)
Is the right hon. Gentleman aware that despite Iran’s vile internal policies—I hope that he has been making protests to the Government of Iran about the imprisonment of a British woman for seeking to watch a volleyball match—there is no evidence that it has been seeking to acquire nuclear weapons capability? A Daily Telegraph journalist has written a very carefully researched book about that. Furthermore, Iran has never committed an act of aggression against another country. That being so, does the right hon. Gentleman accept that it is absolutely right to continue the negotiations, and will he make that clear to the Israeli Government? Will he continue to adopt the Churchillian rule that jaw-jaw is better than war-war?
Mr Hammond
We regularly raise consular issues with the Iranians, and we were of course pleased to see the news that Ghoncheh Ghavami has been released on bail pending her appeal. The right hon. Gentleman referred to her as a British citizen. Part of the problem is that she is a dual British-Iranian citizen, and the Iranian constitution does not recognise duality of citizenship, so the Iranians regard her as simply an Iranian citizen. The Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for Bournemouth East (Mr Ellwood), met her fiancé this morning; the Prime Minister raised the case with President Rouhani when he met him at the UN General Assembly; I have raised the case with Foreign Minister Zarif, and we will continue to do so.
The right hon. Gentleman talked about the absence of Iranian aggression, and I am happy to agree with that as a matter of historical fact. He will know, however, that there are many in the middle east who see the hand of Iranian asymmetric engagement in their internal affairs and would very much urge the Iranians not to intervene in a way that destabilises the situation in various countries around the Gulf. I can tell him that the Israeli Government are well aware of our position, and equally we are well aware of their position.
Sir Richard Ottaway (Croydon South) (Con)
I congratulate the Foreign Secretary on his statement and on the fact that the talks are still live. He says that there are significant differences, but from where I am standing it looks more like an unbridgeable gap, and I would be grateful if he could tell us how he intends to bridge that gap. Can he tell us a bit more about what is going on in Tehran? On the one hand, we have President Rouhani, who clearly wants to move towards a negotiated settlement; on the other, the vibes from the supreme leader’s office are that Iran’s priority is the removal of sanctions but with no retreat from the nuclear programme. Will not those divisions make progress impossible?
Mr Hammond
One of the characteristics of the negotiations is that the two key protagonists—on one side the Iranians, and on the other the United States—have complex and non-homogeneous internal political audiences, in which different parts of the system may have very different views. We are quite familiar with dealing with that situation in our own environment, and we have to recognise that it sometimes exists in other countries as well.
I do not agree with my right hon. Friend that there is an unbridgeable gap. If we thought that, we would have called a spade a spade and, if I can mix my metaphors, pulled stumps and gone home on Monday—I am not sure whether the Iranians play cricket. We do not believe that there is an unbridgeable gap; we believe that there is a substantial gap. It is a lot smaller now than it was a month ago, and there was a genuine sense of momentum in the room in Vienna over the weekend. The fact is that the Iranians clearly want to do a deal, and we want to do a deal, but we have to make sure that it is a deal that addresses our absolute and unshakeable conviction that Iran must not obtain the capability to build a nuclear weapon.
Angus Robertson (Moray) (SNP)
I commend the Foreign Secretary for making the effort to travel to Vienna and be part of the discussions, and I wish him success with the new time scale. The next nuclear talks in Vienna take place in a fortnight in the international conference on the humanitarian consequences of nuclear weapons. The United States, more than 100 other countries, the United Nations and the Red Cross have all committed to attending; the UK has in the past boycotted the event. Will the Foreign Secretary confirm today whether the UK will attend that conference in Vienna? The question has been asked a number of times, but no answer has yet been forthcoming.
Mr Hammond
The hon. Gentleman has asked the question a number of times, and his question has been noted. I have been discussing the conference with other P5 colleagues, and I can assure him that a definitive position on the UK’s attendance will be announced in the next few days.
Martin Horwood (Cheltenham) (LD)
The Foreign Secretary is exactly right to highlight the relevance of this issue to regional security, a major factor in which has been the continuing hostility between Iran and Sunni Arab states. How confident is he that the process is accepted and supported by countries in the region such as Saudi Arabia?
Mr Hammond
As the hon. Gentleman knows and as I think we would expect, some of Iran’s neighbours are deeply nervous about the process. They want to be absolutely reassured that if a deal is done which relieves the sanctions pressure on Iran, it is done in exchange for a cast-iron, copper-bottomed guarantee, if one can have such a thing. Perhaps it is cast-iron round the sides and copper at the bottom.
Mr Hammond
Indeed. Iran’s neighbours seek an absolute guarantee that it will not be able to use its civil nuclear programme to develop the capability to build a bomb.
Mr Frank Roy (Motherwell and Wishaw) (Lab)
There are many other middle east countries with legitimate security concerns who are not at the negotiations. Can the Secretary of State tell the House whether their concerns were addressed in Vienna?
Mr Hammond
If the hon. Gentleman is referring to the Gulf countries, I can say that all of the E3 participants have regular discussions with Gulf colleagues, and indeed with Israeli Government representatives. We are very much aware of the views of other countries in the region who are not represented around the table.
Dr Julian Lewis (New Forest East) (Con)
It is often said that, because of the mutual hatred between Iran and Saudi Arabia, if Iran got nuclear weapons, Saudi Arabia would follow suit. How realistic is that danger?
Mr Hammond
I am not in a position to comment on how Saudi Arabia might react to any hypothetical situation. Our focus is on ensuring that Iran does not acquire nuclear weapons and does not acquire the capability to build them in future.
Mr Nigel Dodds (Belfast North) (DUP)
I welcome the Foreign Secretary’s statement and the decision to extend the negotiations because that is clearly a better position than agreeing a bad deal, both for the region and for the world. Can he reassure the House that there will be no question of dismantling sanctions before it has become very clear that Iran’s nuclear capacity has also been dismantled?
Mr Hammond
Yes, there will be no question of removing the sanctions until we have seen compliance by Iran with the terms of an agreement. I am clear that that agreement will include a restriction of Iran’s capabilities in terms of enrichment to a level appropriate to the legitimate purposes that it has.
Mr David Jones (Clwyd West) (Con)
Last week the Foreign Secretary expressed the view, which he has just repeated at the Dispatch Box, that no deal is better than a bad deal. Can he confirm that that view is shared by the other P5 plus 1 negotiators, and further that it will inform their negotiating position over the months ahead?
Mr Hammond
That is the stated view of all the P5 participants—that no deal is better than a bad deal—and I hope that it will inform their negotiating stance over the months ahead.
Mr Nick Raynsford (Greenwich and Woolwich) (Lab)
Although I endorse the approach that the Foreign Secretary has taken towards the negotiations and the obvious long-term benefit of reaching an agreement, may I express a little bit of surprise at the reasons he has given for not progressing faster with the re-establishment of our embassy in Tehran?
The Foreign Secretary will know that this is not the first time we have had to re-establish an embassy; he may not know, but I do, that I visited as a Minister in 2000 when the Khatami regime was opening up the prospect of re-establishing relationships. Although there are undoubtedly difficulties that have to be overcome to guarantee the freedom of our ambassador and staff to work effectively, I would have thought that if there was a will, there would be a way—and I hope that he will pursue that.
Mr Hammond
I assure the right hon. Gentleman that we are pursuing the issue actively with the Iranians, but we are clear that we do not want to reopen an embassy on a half-baked basis. If we are to go back in and reopen our embassy, we have to be able to set up the communications and IT systems that we need, and we must be able to import into Iran the equipment that we need to do that. We continue to discuss with the Iranians the arrangements that we might be able to agree with them to enable us to do that, but we have not succeeded in reaching an agreement.
James Morris (Halesowen and Rowley Regis) (Con)
One of the reasons why the Iranians came to the negotiating table in the first place was the tough international sanctions regime. In some sense they have already received a concession through the interim agreement. Does the Foreign Secretary agree that we need to be cautious as these negotiations proceed, to make sure that we do not create a perverse incentive for the Iranians to continue to extend these negotiations as they begin to chip away at the sanctions regime?
Mr Hammond
It is important that I reiterate that the Iranians are not chipping away at the sanctions regime. Some specific reliefs from sanctions have been provided, but the sanctions that deal with proliferation issues remain in place, so the Iranians cannot get access to equipment that would help them in a nuclear programme, the vast majority of their financial assets remain blocked, and in exchange for the limited relaxation that has been given they have had to enter into a series of detailed obligations that involve reducing the usable stockpile of enriched uranium and diverting new enriched uranium as it is produced into uses that could not be converted to military use at a later date. I consider that to be a sustainable situation for both sides while we continue to negotiate.
Mr Andy Slaughter (Hammersmith) (Lab)
The Foreign Secretary, in response to my right hon. Friend the Member for Manchester, Gorton (Sir Gerald Kaufman), mentioned my constituent, Ghoncheh Ghavami. I am grateful to the Minister with responsibility for the middle east, the hon. Member for Bournemouth East (Mr Ellwood), for meeting Ghoncheh’s family and me earlier today and I am obviously very pleased that she is out of jail. However, she is only on bail; if she loses her appeal she could be returned to prison for at least another seven months and she has a two-year travel ban. Will the Foreign Secretary use the improved atmosphere between the two Governments to encourage the Iranian authorities to allow Ghoncheh now to return to her home in Shepherd’s Bush?
Mr Hammond
As I have already told the House, we have raised and will continue to raise this case with the Iranians, but they simply do not recognise our locus. The Iranian constitution does not recognise the concept of dual nationality and therefore our protestations are received politely, but without any obvious effect.
Mr John Baron (Basildon and Billericay) (Con)
The extension of the deadline is the second-best option, but one that is welcome all the same—going the extra mile to try to resolve the impasse could unlock so many thorny problems in the region. May I press the Foreign Secretary for absolute clarity as to the west’s position? He said that he does not want Iran to acquire nuclear weapons or to develop nuclear weapons itself. Is it the west’s position that Iran would be allowed to harness technology and capability to the point of break-out?
Mr Hammond
The clear position of the E3 plus 3 is that Iran should be allowed to pursue a peaceful civil nuclear programme, but that safeguards should be in place that prevent Iran from acquiring the capability to develop a nuclear weapon.
Jim Shannon (Strangford) (DUP)
Three weeks ago, I had in my office a deputation of Iranian Christians who had fled Iran due to persecution and business men who still carry out business in Iran. Both groups informed me that Iran’s verbal statements on its nuclear strategy are untrue and that behind backs Iran is fully focused on developing a nuclear bomb. What discussions has the Foreign Secretary had outside Government with those in Iran who clearly know what is happening on the ground in relation to the nuclear strategy?
Mr Hammond
Let us be clear about this: Iranian society, like pretty much every other society, is not homogenous. I would be astonished if there were not people in Iran saying that Iran needs to develop a nuclear bomb. That is not the issue. The issue is the position of the Iranian Government and the Iranian senior leadership.
What we are seeking to do is establish a robust framework within which Iran can develop a civil nuclear programme, while assuring us that it has no intention of developing, and will have no capability to develop, a nuclear weapons capability. It would be unreasonable of me to expect the Iranian Government to vouch for there being not a single individual in Iran who thought that the Government’s stance in engaging with the west in these negotiations was wrong. I am sure there are hard-liners who would prefer these negotiations to break down. Fortunately, that is not the position of the Government of Iran.
Mr Jonathan Djanogly (Huntingdon) (Con)
I do not think this has been mentioned yet this afternoon, but there are many people who believe that Iran has no intention whatever of getting rid of its nuclear weapons programme and is using negotiations as a delaying tactic. That being the case, if in four or seven months no progress has been made, where do we move to then? Would military action be considered?
Mr Hammond
I hear my hon. Friend’s point, but if negotiations under the terms of the joint plan of action are a delaying tactic, they are a very poor one, because what Iran has to do during this period is systematically and steadily to convert its stock of enriched uranium into materials that cannot be used and could not be used for further enrichment and therefore for military purposes. It is a rather poor tactic, if that is what it is.
We are focused on trying to pursue this negotiation and get to a comprehensive agreement. I do not think it would be helpful to speculate on what might happen if we fail, but we are very clear: we are not going to enter into a bad deal. If we cannot get a deal that gives us clear reassurance that Iran is not going to acquire the capability to build a nuclear weapon, we will not do the deal. We will then have to deal with the consequences of such a situation, but it is not helpful to speculate on those now.
Rehman Chishti (Gillingham and Rainham) (Con)
I welcome the statement from the Foreign Secretary and the work done by his predecessor on this matter. Along with what is going on in relation to its nuclear capacity, has a lot of pressure been put on Iran for it to stop supporting and harbouring terrorism—whether from Hamas in Israel, from Hezbollah in Lebanon, from interference in Iraq or from support for the brutal regime in Syria? If we want Iran to be a key player in the international community, it must abide by international norms.
Mr Hammond
We have a separate bilateral dialogue with the Iranians in which we urge them, as I said earlier, not to meddle in the internal affairs of other countries and not to take actions that would destabilise the region, but these nuclear discussions are taking place at P5 plus 1 or E3 plus 3, whichever people choose to call it. On many of the issues that my hon. Friend listed we would not get agreement among the P5 plus 1 about what is happening on the ground, so we have chosen—I think it is the right decision—to keep these nuclear talks ring-fenced and separate from all other bilateral and multilateral strands of discussion with Iran.
John Howell (Henley) (Con)
Does the Foreign Secretary agree that Iran must be asked to provide details of its previous nuclear activity? Otherwise a mechanism for monitoring Iran’s future actions will be fundamentally flawed.
Mr Hammond
Yes. An essential part of the agreement will be a proper investigation into, and understanding of, past breaches of Iran’s international obligations in respect of nuclear weapons.
Geoffrey Clifton-Brown (The Cotswolds) (Con)
Does my right hon. Friend agree that a successful conclusion of these E3 plus 3 negotiations could lead to greater normalisation of relations with Iran, which would make a number of the problems that my hon. Friend the Member for Gillingham and Rainham (Rehman Chishti) mentioned earlier much easier to resolve?
Mr Hammond
I agree entirely with my hon. Friend’s point. Iran feels isolated and behaves in a way that sometimes reflects that. The big prize here is that we get Iran to become an active part of the international economy. Iran is a big country, with some sophisticated capabilities, and having it back as a partner in the international economy will be significant. Once Iran feels that it is playing a full role as a normal state in the international community, I hope that we will start to see Iranian behaviour reflecting that, and Iran wanting to resolve issues through bilateral and multilateral discussion rather than through the kind of unilateral action that, unfortunately, we have seen in the past.
Nadhim Zahawi (Stratford-on-Avon) (Con)
May I echo the Foreign Secretary’s thanks and congratulations to Baroness Cathy Ashton for the tremendous work that she has done during the many years she has been involved in the process? He rightly wants the P5 plus 1 to focus solely on the nuclear negotiations, but Iran exercises enormous political and security influence over Iraq and is shoring up the murderous Assad regime. Have the Iranian authorities attempted to link these nuclear negotiations with help in defeating ISIL?
John Glen (Salisbury) (Con)
I welcome the Foreign Secretary’s determination to make progress on the nuclear issues, but will he reassure the House that he will continue to stand up for persecuted religious minorities in Iran—in particular Pastor Saeed Abedini, who has been locked up for two years without access to legal representation or medical treatment under this brutal regime?
Mr Hammond
Yes. Iran’s human rights record is poor, to put it mildly, and while there have been some limited steps in the right direction, it is clear that a huge amount remains to be done. We do raise human rights issues with the Iranians on a regular basis. My hon. Friend is right to draw attention to the particular problem of religious persecution and the unwarranted imprisonment of those practising minority religions in Iran.
Crispin Blunt (Reigate) (Con)
It is fairly clear that the negotiations will get much more complex when both Houses of Congress are hostile to the Administration’s negotiating policy. Looking back to Iran, what can the Foreign Secretary tell us about the confidence that the Iranian negotiating team enjoys from the Iranian Parliament? Is there anything that can be done to address the flattering but rather hilarious view in Iran that Britain is at the centre of all evil that befalls Iran and is the directing evil genius of policy towards it?
Mr Hammond
Yes, my hon. Friend is right—and not only about Iran. I often discover that we wield a great deal more power and influence in the world than appears to be evident from my seat in the Foreign Office. He is right to say that American congressional politics is a significant complicating factor in moving forward, and, as I said a few moments ago, it very much reflects the diversity of view in Iran also about how this negotiation should be conducted. But the reality, and the thing that is driving things forward, is that there is a huge prize for both sides in getting to an acceptable deal. So long as there is a win-win and something substantial in it for both sides, there will be continued momentum.
Mr Philip Hollobone (Kettering) (Con)
In his statement, the Foreign Secretary confirmed that the November 2013 interim agreement commits Iran to freezing certain areas of its nuclear programme in return for limited sanctions relief and the repatriation of $4 billion-worth of oil revenues. Although the sanctions relief and the oil revenues are transparent and measurable, freezing areas of its nuclear programme is not. Given that there is either limited or no inspections access to nuclear and weapons facilities at Fordow, Natanz, Arak and Parchin, how confident can he be that Iran is freezing these areas of nuclear development, and is not secretly using this extended deadline to produce enough fissile material to develop nuclear weapons?
Mr Hammond
We are highly confident of that. The technical representatives of the E3 plus 3 review these issues regularly. We do have access to and visibility of what is going on. The arrangements under the interim agreement for monitoring are effective, and we are confident that Iran is complying with its obligations—in some cases, complying with our interpretation of an obligation even where there may be some uncertainty in the wording of the document itself.
Mr Peter Bone (Wellingborough) (Con)
I thank the Foreign Secretary for coming to the House and keeping us informed. There are some reports in the media saying that effectively the west is being played for a fool by Iran and that it is developing a nuclear programme, as my hon. Friend the Member for Kettering (Mr Hollobone) suggested. Will the Foreign Secretary tell the House frankly whether he thinks Iran will have nuclear weapons in the future?
Mr Hammond
That will depend, crucially, on whether we are successful in reaching an agreement. If we reach an agreement, Iran will have a civil nuclear programme with the support and assistance of the international community, but will not be able to develop the capability to build a nuclear weapon. If we do not reach agreement—indeed, if we had got to the deadline yesterday and not rolled over the interim agreement—Iran would have been able, albeit under the current sanctions regime, to continue to enrich uranium and build a stockpile of fissile material, which is absolutely not in the interests of the international community. There is no alternative to pressing forward, giving it our very best shot, to get an acceptable deal with Iran. If we cannot do that, we cannot do it, but we will give it our very best shot.
Universal Credit
(9 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
I rise to make a statement about the new announcements on the roll-out of the next part of universal credit. Universal credit is a major reform, transforming the welfare state in Britain for the better and bringing £35 billion in economic benefits to the UK. Rightly, for a programme of this scale, the Government’s priority continues to be its safe and secure delivery. That is why, after the successful launch of the pathfinder in April 2013, a controlled expansion of universal credit has been taking place since last year, and in the north-west since June—first to singles, then couples, extending to families from today, across Birkenhead, Warrington, Bromborough, Upton, Wallasey and Hoylake.
In addition, universal credit is live in 81 jobcentres. National roll-out will follow from next year, bringing universal credit to one in three jobcentres by spring 2015. This careful, controlled expansion is the right approach, testing and learning as we go, avoiding some of the big bang failures that have dogged programmes in the past.
Already, universal credit is delivering major benefits. The early results show that the majority of recipients agree that it is easier to understand, easier to claim and provides a better financial incentive to work. I know that many colleagues have visited those centres and will testify to that. People are spending almost twice as much time looking for work as they were before and, above all, universal credit is on track to help them move out of unemployment more quickly, with those in the new system reporting that they are working more over a six-month period than those on jobseeker’s allowance.
Ensuring that work always pays, universal credit will generate up to an additional 300,000 people in work once fully rolled out. Some 3 million households are set to gain by £177 on average and 500,000 working families will receive more help with child care, with 100,000 of those in part-time work or mini jobs benefiting for the first time from entry into work. With the rate of child care support increased from 70% to 85% of costs, parents can receive up to £646 for one child, and £1,108 for two or more children. It is important to point out that that is the element of the roll-out in this particular area and that it covers all the hours that they will be in work—unlike the present system, which puts them only in certain batches of hours.
The number of people reaping those benefits is set to grow exponentially as the universal credit roll-out ramps up. The latest published statistics—up to November—show that nearly 40,000 have made a claim for universal credit, over 20,000 have completed that process and gone on to receive universal credit, and 17,850 are on universal credit currently. Illustrating the scale of the increase, nearly 6,000 claims were made in the month between October and November—over five times as many as there were in June, before we started the north-west expansion.
At the same time, we are bringing forward changes to legacy benefits. That is a ripple effect of the massive cultural shift that universal credit delivers. Around 1 million jobseeker’s allowance claimants have now signed a claimant commitment, which is part of universal credit, making unequivocal once and for all the deal between those looking for work and the taxpayers who support them. That is the massive cultural change that universal credit entails.
Our plans to deliver universal credit are on track, taking the same approach that has delivered success so far, rolling out once we are confident in our capacity and capability. The plans have been assured by the Major Projects Authority, the independent body advising the Government, just as the universal credit business case has now been signed off by the Treasury. The current business case assumes that the last claims to legacy benefits will be accepted during 2017. Following that, the stock of remaining cases will progressively decline, with the rest migrated to universal credit. Should there be no change in the labour market outlook or the pace at which claims are migrated, the current business case assumes that the bulk of this will be complete by 2019.
Our careful approach is set to deliver universal credit under budget, with implementation costs down from £2.4 billion to £1.8 billion, according to the latest figures. The value of the programme to date is unmistakably clear, I hope. Specifically, the investment in IT has a value that hugely outweighs the cost. There are over £130 million-worth of universal credit assets on the balance sheet, as agreed by the National Audit Office. That IT is being used day in, day out, and it will continue to be used even as we start to test an enhanced digital solution from this week. Our decisions will continue to be informed by that digital development.
The important point is that this is about de-risking the roll-out, which the MPA agrees is happening now as a result of this programme. I believe that that represents value for money. It is delivering the maximum benefit from this vital process of welfare reform, renewing work incentives, restoring fairness and rebuilding a welfare system fit for the 21st century.
Rachel Reeves (Leeds West) (Lab)
I thank the Secretary of State for his statement. However, the announcement in this morning’s press release confirms that universal credit is rolling out at a glacial pace. It is just another example of Tory welfare waste. We all know that simplifying and integrating our benefits system has the potential to help people into work and to progress in work. That is why the Opposition have always supported the principle of universal credit and want it to succeed, despite the Secretary of State’s best attempts to make a complete and utter shambles of it.
The Secretary of State has already informed the House that universal credit would be rolled out to families with children this year, but today’s statement tells us nothing more about how many families will be claiming it, in which areas of the country, and whether that will include families with someone in work or families with a disabled member. We were told that at the beginning of next year universal credit would be rolled out to all jobcentres across the country. That has now turned into one in three jobcentres by next spring, but we still do not know which jobcentres, in which parts of the country, whether those jobcentres themselves have been informed and, more importantly, whether local partners, including councils and voluntary sector organisations, which have such a critical role to play in making the roll-out work, have been informed.
However, there was one new revelation buried at the bottom of this morning’s press release: an admission from the Secretary of State that the delivery of this policy will now not be completed until the end of the decade, if then, with only “the bulk” of claimants on legacy benefits transferred by 2019. Let us remind ourselves what the Secretary of State said he would deliver four years ago so that we can see how far plans have gone astray. The White Paper presented to the House in 2010 set out a timetable for
“completing the transfer to Universal Credit by October 2017”.
Since then, the Secretary of State’s timetable has repeatedly slipped, despite repeated assertions that the project was
“on time and on budget”.
In November 2011 the Secretary of State said that he would have 1 million people on universal credit by April 2014. The truth turned out to be just 1% of that figure. The Government told us that they would have 1.7 million people on universal credit by May 2015, but his latest target is for just 100,000 to be on the system by then. As recently as this month, he was insisting that the transfer of all claimants to universal credit would be completed in 2018.
On 5 November, less than three weeks ago, he said in evidence to the Work and Pensions Committee, in response to a question from my hon. Friend the Member for Erith and Thamesmead (Teresa Pearce), that
“we do envisage Universal Credit being complete by the end of 2018.”
Yet buried at the bottom of today’s press release we find the admission that only
“the bulk of this exercise will be complete by 2019”.
I hope that the Secretary of State can answer the following questions and give us some clarification and assurance. First, what on earth does he mean by “the bulk”? Is it a new statistical term that we can appeal to the UK Statistics Authority for clarity on? More importantly, given the concerns and the amount of public money at stake, can he not be more precise about how many people he expects to be left on legacy benefits after 2019? Which claimants will those be, and when can we expect them to be transferred on to universal credit?
Secondly, what are the implications of this further delay in the completion of the roll-out and transfer for the project’s administrative costs and the expected savings and benefits being claimed? Can the Secretary of State confirm that the estimate of £35 billion for the project’s benefits remains correct, and has the full business case now been signed off by HM Treasury?
Thirdly, why did the Secretary of State claim on the BBC’s “Today” programme this morning that “almost 40,000” people are “actually claiming” universal credit when the latest figures show that the current caseload is 17,850? Fourthly, can the Secretary of State tell us how many families he expects to be receiving universal credit by the end of 2014 and by May next year? Will only families with both parents out of work be able to claim? Will families including a disabled member be able to claim by May 2015?
Fifthly, will the Secretary of State place in the House of Commons Library a full list of the “one in three” jobcentres that he expects to be handling universal credit claims by the spring? Sixthly, will the extension of universal credit to families with children, and to jobcentres, be on the new digital platform being developed by the Department, or will it still be running on the old system that we know is inadequate for handling large-scale caseloads? Finally, would the Secretary of State care to repeat his claim that this programme is
“on time and on budget”?
I hope that the Secretary of State will be able to answer those simple and fundamental questions about a programme that was held up as the Government’s flagship welfare reform and has already eaten through more than half a billion pounds of public money. If he cannot give straight answers to straight questions, Members of this House and voters will be forced to conclude that, as with the delays we have seen with disability benefits, the failure of the Work programme and the Youth Contract to help key groups into work, and the failure to tackle the low pay, insecurity and housing shortages that are driving up benefit bills, this is just adding to the legacy of Tory welfare waste—wasted money, wasted time, wasted talents and a wasted opportunity to get our economy and our social security system working for all the people of our country.
Mr Duncan Smith
I must say that I think that the hon. Lady thought that up about a week ago, before she even got near what I have just said in the statement, but never mind—she likes to rehash the old ones, and we will deal with them. She made the point at the end of her statement that somehow the Work programme is not working. The Work programme is outperforming all of the figures that it was meant to. It is also outperforming what we were left by the previous Labour Government: record unemployment and more people who had lost work as a result of their crashed economy. We have more people in work than ever before and more young people now returning to work. Those are the standing plans.
Let me deal with some of the other issues the hon. Lady raised. She talked about what we are doing on universal services. We have already undertaken a huge amount of consultative processes with local authorities and all other partners in the areas. We have a programme called universal services, to be delivered locally, and we are working closely with the Local Government Association in trialling all sorts of elements of that, including the exchange of information on housing, which is an area that previously was not working. The LGA is represented on the programme of governance, the partnership forum and the universal credit transition working group. As universal credit is expanded nationally, delivery partnership agreements will be established locally so that local authorities, jobcentres, landlords and employers can adjust their requirements to prepare for the UC roll-out. That is taking place at the moment and it is helping to inform hugely the process of helping to improve the nature of the roll-out.
As I said in my statement—I repeat this because the hon. Lady seemed not to have picked it up—40,000 people had claimed, over 20,000 had completed the claim process, and 17,500 were currently on universal credit. [Interruption.] No, that is exactly what they have done. Forty thousand had claimed, 20,000 had made the claim and received—[Interruption.] I do not want to go through this nonsense with her. Let me remind her that many of those who started a claim went to work and therefore never completed the process. In case she thinks it is not worth people claiming the benefit because they are not staying on it, our position is that the purpose is to get them off the benefit and into work.
I will be happy to give the hon. Lady a list of the one in three jobcentres that will be covered by the spring. As I said, by the end of this year one in eight jobcentres will be covered. Families will be included. Depending on the type of claimants and their particular issues, they will be dealt with in jobcentres as the benefit is rolled out to them. The timing and delivery remain exactly as they were.
As we have announced today, we will also be rolling out the first part of the digital trial process, and that will inform us hugely on how we will be able to roll out and expand the system. The hon. Lady said that I had only just announced the timing of the roll-out, but in fact I had said it previously. She might want to ask the right hon. Member for East Ham (Stephen Timms), who is sitting next to her, about that. All the dates were in the answer to a parliamentary question from him about a week and a half ago; I cannot remember the exact date. Nothing has been hidden at all—we have been very clear about it.
The long-term strategic outline business case covers the lifetime of the programme from 2023 to 2024 and provides even more granular detail on costs and benefits and delivery planning until, it is expected, 2025. The MPA has approved our roll-out plans and given them a very strong sign-off.
The hon. Lady asked about the information that will be shared automatically. Claimants are asked to give consent to our universal credit teams sharing information about their claims with local authorities to help to highlight extra support that may be needed.
The hon. Lady says that she is in favour of universal credit in principle, but she has voted against it and attacked every single thing to do with it, just as Labour Members say they are in favour of welfare reform in principle but attack and vote against every single part of what we are doing. I have to say that the way she is going, she will get a lot of practice at being in opposition.
Mr Mark Hoban (Fareham) (Con)
I commend my right hon. Friend for the methodical way in which he is going about the implementation of universal credit. My constituents suffered from over-payments, under-payments and mis-payments under tax credits because Labour in government botched the implementation of the system by doing it as one big bang. We cannot afford the same thing to happen in this case. That is why he is absolutely right to introduce in the way that he is to make sure that it works before it is rolled out further. We should be commending him for that and for not repeating Labour’s mistakes.
Mr Duncan Smith
I thank my hon. Friend; he is exactly right. We have worked on this together. As he knows very well, taking the early decisions to ensure that the programme rolls out safely and securely is far more important than, as the hon. Member for Leeds West (Rachel Reeves) seems to suggest, rattling ahead regardless of the consequences. That is exactly what happened with tax credits, where, on day one, 400,000-plus people did not receive any benefits. The disaster of tax credits has stayed with us ever since.
Dame Anne Begg (Aberdeen South) (Lab)
Will the Secretary of State confirm that the reason the volumes are so low is that only the simplest cases in the simplest groups are covered? Although it has been rolled out to families, they will still be only the simplest and easiest-to-deal-with families. Given that 250,000 jobseeker’s allowance claims are usually made every month, I wonder how he thinks we are going to get from today’s position of having had 20,000 claims in over a year to having 250,000 in a month. It seems quite a task to get the volumes up to that level and to be able to roll it out across the whole country.
Mr Duncan Smith
As the hon. Lady knows, we started with single people, but whenever somebody’s circumstances changed—they may have become a couple or had a family—they stayed in the system and have been dealt with. It is not correct, in any way, to say that these are the simplest cases. The roll-out to families introduces further complications, but we are doing this in way that makes sure that we get it right. By the end of this year, the north-west will have universal credit, so if someone falls unemployed and then goes into work, they will do so on universal credit. That is the key point. All the complications will be dealt with within the existing system.
Nigel Mills (Amber Valley) (Con)
I welcome the progress announced in the Secretary of State’s statement. Will he confirm that the Treasury has now signed off the whole business case and laid to rest the fear that it was not going to do so?
Mr Duncan Smith
That is exactly what was being asked before the summer break, and the answer is that the Treasury has done that. The MPA has also signed off the roll-out process in saying that it de-risks the nature of the roll-out and approves it exactly as it stands at the moment.
Glenda Jackson (Hampstead and Kilburn) (Lab)
Somewhat unusually, but fortunately, the House was not subjected this afternoon to a self-serving sermon in the guise of a statement. Does the Secretary of State have as a principle the idea that promises, like pie crusts, are made to be broken? Every promise he has made at that Dispatch Box about the cost of implementing and rolling out universal credit has been broken, so is today’s semi-statement merely more porky pies in the sky?
Mr Duncan Smith
I will not follow the mixed metaphors about pies and pie crusts in the sky; I usually like them on a plate myself. The hon. Lady has a choice to make. I would much rather make it clear that we want to deliver this thing safely and securely. After all, we have listened to the MPA and we had the National Audit Office in to look at it last year. We took all the advice, and we are rolling it out in the way that it should be rolled out. I have to say—this is not arrogance—that I believe that future Government programmes will be best rolled out using the test-and-learn process that is securing these roll-outs. That is the right way. Let us get this safely and securely rolled out, not smashed to pieces like tax credits on day one.
Maria Miller (Basingstoke) (Con)
I thank the Secretary of State for coming to the House to update us and explain exactly what the situation is with universal credit. Four million people spent most of the last decade trapped on out-of-work benefits. Universal credit is already giving people the opportunity to get back into work more effectively. Why on earth would a Labour Government want to halt these vital reforms for three months when a full roll-out has been approved by the Major Projects Authority? Surely we should be hearing from Labour Members how they would help us to support this being brought forward even more rapidly.
Mr Duncan Smith
Of course it is legitimate, as it always is, for the Opposition to question this. All I am saying is that we have taken the decisions to ensure the security and safety of the roll-out. We will not take any decision unless it is clear that it is the right thing to do, and we want to deliver this safely and securely. The experience of those who are on universal credit is getting better. We now find that word of mouth from those groups is so good that people are going into jobcentres wanting to claim universal credit rather than be on jobseeker’s allowance.
Margaret Hodge (Barking) (Lab)
Having listened very carefully to the Secretary of State’s statement, I wonder whether he is playing a rather worrying political trick by making a statement on the day before the NAO brings out its publication on progress on universal credit. He well knows that there are huge risks with the value for money of the project and substantial potential for waste of taxpayers’ money. For example, if there are further delays in the implementation of the digital programme, taxpayers will have to continue to pay for the expensive, mainly manually operated live service. Why does he not, just for once, give us an open and straightforward account of the state of play?
Mr Duncan Smith
I am sorry that the right hon. Lady takes that view. She may not know the genesis of the statement, so perhaps I can explain it to her. Labour Front Benchers asked for an urgent question today, and I gather that it was negotiated between the various authorities that there would be a statement, not a UQ, because there were to be some very important statements today. The Speaker made that decision, which is quite correct. The reason I am here today is that I was originally asked to be here by the Opposition.
In answer to the right hon. Lady’s question, I fully respect the NAO and we listen carefully to what it has to say. She knows that she will have its team before her when she undertakes the inquiry process. I cannot second-guess what is in tomorrow’s report, but my general belief and hope is that it will welcome this as being the right direction, the right process and the right prioritisation of safe delivery that makes sure that we do not waste money. In cost terms, as I said, we will be spending less, at £1.8 billion, than we were originally set to spend.
Dr Julian Lewis (New Forest East) (Con)
Many people are concerned about both welfare tourism and benefit fraud. Will my right hon. Friend explain how they might be diminished as a result of the new system?
Mr Duncan Smith
On migrants, we have already made it clear that universal credit is a different type of benefit, so people who come here and are out of work will not be able to claim it as a benefit. The issue of how migrant workers can claim in-work support will be negotiated. We are clear that, under universal credit, family benefits will not be paid to people who are not accompanied by their family, so we will secure such claims, thus cutting costs. On fraud, the automatic processes that check what people are earning and whether they are in work mean that we will cut down on all the fraud related to tax credits.
Sheila Gilmore (Edinburgh East) (Lab)
Given that the Department is such a fan of safe and secure roll-out, it is a pity that it did not take a similar view to the personal independence payment. A lot of people were treated like guinea pigs while it was being rolled out—that topic is being debated in Westminster Hall as we speak. The Secretary of State must be aware that 61% of the current claimants of universal credit are under 24 years old. They are the simplest of cases and, after such a long period, 17,000 is a very small number indeed. We have been hearing the “safe and secure” mantra for at least two years. When will the Secretary of State admit that his Department has very serious problems with implementation?
Mr Duncan Smith
I would have thought that the hon. Lady, who sits on the Work and Pensions Committee, would be attracted to the idea of trying to land the programme safely and securely. On the one hand she says that she agrees with it, but on the other hand she attacks it for not being fast enough. My view is that it should be expanded and delivered on a safe scale. Of course, the majority of cases will have been simpler ones because we have started with singles, but over the next few months we will see more complicated cases as we roll out to families. The north-west will be fully family when we start rolling out nationally. I am waiting for the hon. Lady to say one day, perhaps in a few years’ time, “You know, they did a jolly good job, because this has benefitted everybody, particularly those on low income.”
George Hollingbery (Meon Valley) (Con)
Given the huge importance of universal credit and the scale of the programme, has my right hon. Friend had any confirmation from the Labour party as to whether it actually supports universal credit, as opposed to vaguely supporting it in principle?
Mr Duncan Smith
The answer is that I have not, but my hon. Friend probably reached that conclusion after the earlier statement made by the hon. Member for Leeds West, which was really miserable. That is Labour’s position: its Members hate the idea that we are doing this securely and safely. They say that they support it in principle, but attack everything to do with it and never miss a chance to tell everybody how terrible it is when, in actual fact, if they visited and talked to claimants rather than just dash out of the office, they would find that those who are on universal credit think it is the best thing that has happened and it is helping them enormously.
Yvonne Fovargue (Makerfield) (Lab)
The Secretary of State has said that 40,000 people have made a claim and 17,850 are in payment, which is less than 1% of the total number affected. In my area, which is a pilot area, local charities that operate food banks say that delays in processing are a significant reason for single people applying for their help. How will the Secretary of State ensure an improvement in processing time if he cannot even deal with 1% at the moment?
Mr Duncan Smith
Actually, the number of delays in processing has fallen since this Government came to office. There are now fewer cases of delayed payments. The universal credit process will ensure that even that is improved on, as the automatic payments work quite quickly. All of the centres already provide advice on debt management and any particular personal problems people may have. There are debt advisers available and we are also ready to provide advanced payments if people have such problems. That is all part of the services delivered locally through universal credit. If the hon. Lady wants to raise a particular problem, I would be very happy to deal with it, as would the jobcentre. Jobcentres are able to pay money early to people, and if the hon. Lady has a problem case they will certainly be able to help her.
Chloe Smith (Norwich North) (Con)
It was only on Saturday that a constituent of mine—a mother of four, including a disabled child—described to me her current restriction on taking a little paid work. She told me that universal credit would solve that. May I urge my right hon. Friend to proceed as quickly and as safely as possible; to let me and the House know how many households in the country and my constituency will benefit; and to do a good job for my constituents?
Mr Duncan Smith
I accept those blandishments from my hon. Friend. There are two very important issues to remember. Universal credit is not just about the IT system; more importantly, it is about the relationship between the claimant and the adviser. When someone claims a benefit under jobseeker’s allowance, after they take a job—a part-time job or whatever—they have to sign off, which means that they do not have any contact with the jobcentre until they fall out of that job and go back again. Under universal credit, they will not sign off. They will be able to afford to take a job with fewer hours, build up their hours, go back to see their adviser and take another job. In other words, the adviser will stay with them until they come off the benefits system. It is that dynamic that is changing the lives of so many claimants and I intend to extend that to all of them,
Nia Griffith (Llanelli) (Lab)
We all want to see work paying properly. The Secretary of State will be aware that the Joseph Rowntree Foundation has said that the taper is far too steep and that some families will lose significantly by going into work. In other words, they will get only a couple of pounds more working a full week than they would get if they were entirely on benefits. What is the Secretary of State doing to address that problem with universal credit so that that does not happen and that work will always pay?
Mr Duncan Smith
That is a really important question and I thank the hon. Lady for being positive. Two things should be understood about universal credit. First, in-work allowances, which are rather like tax allowances, allow different groups of people—such as those with disabilities and single parents—to earn a certain amount of money before the taper comes in. That gives them a real step up, which is why the bottom 40% with regard to income will benefit to a greater degree than anybody else.
Secondly, I am fully prepared to accept that there is a debate about the taper, but when any future Government budgets they will be able to say, “We want to lower the taper because we want people to be able to up their hours quicker.” Alternatively, if there is full employment, they may say that the taper is not so relevant. That is a debate for Governments. We have instituted a very simple process whereby Back Benchers and others can say whether they want a higher or a lower taper. We have set it at what we think we can afford, and that still makes it better for those claimants going into work. There will always be a debate, so the hon. Lady will be able to argue whether the taper should be raised or lowered.
David Mowat (Warrington South) (Con)
The Secretary of State must have been relieved to hear the Opposition reiterate their support for universal credit, even though they are concerned that it is being rolled out too slowly. Has he had a chance to review their four-point plan, which I presume is designed to address the issue? The first point is to stop the roll-out and lay-off about 1,000 people while Labour reviews the programme, and the second and third points are uncosted, significant scope increases, introduced at a late stage in the programme, which will almost certainly mean much higher costs.
Mr Duncan Smith
I think my hon. Friend has a point. The Opposition think that the programme is rolling out too slowly, so they want to roll it out even slower or stop it and not roll it out at all. They are caught in a classic Opposition trap—we have all been there; I spent some time in opposition—which is that they know that what the Government are doing is right, but they do not want to say so because that would make it look like they had nothing to say. Therefore, they are talking about little bits and pieces and nit picking, instead of saying that it is a good programme. When I was in opposition, if something was really good I used to say, “Let’s get behind it and support it, and we can deal with the detail later.”
Mr Andrew Love (Edmonton) (Lab/Co-op)
Is the Secretary of State’s failure on universal credit the reason that fraud and error are likely to increase by £700 million in his Department?
Mr Duncan Smith
Actually, we are working very hard to bring down fraud and error. Of course, universal credit will bring down fraud and error. That is one of the driving reasons that it is important to implement universal credit, which is why we are delivering it safely and securely. We all want fraud and error to come down. Of course, we always hear about the mix-up between error and fraud. There is a tendency to think that everyone is defrauding the system, but that is not the case; sometimes, official errors get into the system. Universal credit gets rid of that by simplifying the process, which should make it better. The hon. Gentleman is right to say that we have more to do on fraud and error. We need to keep bearing down on it, which is what any Government would want to do, and universal credit will help enormously.
John Glen (Salisbury) (Con)
The working-age welfare budget increased by 40% in real terms between 1996 and 2009, while long-term unemployment doubled. In 2009, a quarter of the unemployed had been on in-work benefits for nine of the previous 10 years. That was the legacy of the previous Government. What does the Secretary of State think the legacy of his Government’s careful roll-out of the very well organised and researched universal credit will be once his period in office ends a long time in the future?
Mr Duncan Smith
That is exactly the point. On the first part of my hon. Friend’s question, the Opposition are in a kind of amnesia: they seem to forget that they crashed the economy in the biggest disaster it has ever had, with a fall of some 7% in GDP, and that many people lost their jobs. We have managed to get more people back to work and now have more people in work than ever before, with unemployment falling dramatically, youth unemployment falling and even more people with disabilities now going back to work. As it is rolled out, universal credit will deliver even more to those people—a better income, better support and a much simpler process that they can understand, rather than the chaotic system of tax credits that we have at the moment.
Mr Marcus Jones (Nuneaton) (Con)
Universal credit is a life-changing and positive policy. May I urge my right hon. Friend to take his time and make sure that we get this right? The impact of getting it wrong, as with tax credits, would be a complete disaster for many of the families whom I represent, and I hope he will not want to go down the path trodden by the Labour party.
Mr Duncan Smith
My hon. Friend is right. I set out to change the roll-out plan because I felt that we would just replicate all the problems of previous roll-outs, in which people tried to rush against an artificial deadline and ended up with a big crisis because they had not thought things through properly. The process of testing, learning and implementing is the way that I believe future programmes should be rolled out. It may not be delivered in the fastest way, which is what people want, but it is about securing people’s lives and, to my mind, that is more important than meeting artificial deadlines.
Andrew Jones (Harrogate and Knaresborough) (Con)
I congratulate my right hon. Friend on his statement. My constituency has been included in the roll-out of universal credit so far, and I visited the jobcentre to see the progress that has been made. I met a team there, as well as employers and, most importantly, jobseekers, and the feedback was universally positive. They said, “Universal credit is simply making work pay.” That is why I welcome the roll-out, but may I specifically ask how universal credit will support child care?
Mr Duncan Smith
I have been to many such jobcentres. I was in Hammersmith last week, when I talked to a number of people who have claimed the benefit. They were very clear about the difference that being able to stay with an adviser in the jobcentre has made to their lives. All of them said that it had allowed them to develop, get on and get a better job as a result.
On the second part of my hon. Friend’s question, we have announced the child care package today. Basically, people will get child care support at 85% of the costs. The reality is that that will be for every hour that they are in work. Unlike with tax credits at the moment, whether they are doing five or 10 hours or 20 or 25 hours, they will get help with child care. That will be a huge help for those with caring responsibilities, particularly lone parents who have to get back to work as well as look after their household.
Mr Peter Bone (Wellingborough) (Con)
It is rare to have a Secretary of State who is so passionate about a subject, has so much ability and has so much determination to see something through; in fact, he stood up to the Prime Minister to keep himself in his Department. He has two very able Ministers to support him, the Minister for Employment and the Minister for Pensions—I hope that that does not embarrass the Liberal Democrat on the Front Bench—and there are two worthwhile Opposition shadows, the hon. Member for Leeds West (Rachel Reeves) and the right hon. Member for East Ham (Stephen Timms).
It must be a matter of congratulation for the Secretary of State that universal credit is working. The Opposition want it in as quickly as possible so that they can congratulate him, but I think that he is right to keep rolling it out. Is that not the way to handle future Government programmes?
Mr Duncan Smith
My hon. Friend will forgive me if I do not repeat to the Prime Minister the first part of his question. Certainly, the Prime Minister and I are in complete agreement on all these measures, and I am of course implementing only what he wishes to see. I want that point on the record, if possible. Yes, the key thing is that we are trying to deliver universal credit safely and securely. I am pleased that my hon. Friend, from his position, is so supportive.
Mr Philip Hollobone (Kettering) (Con)
Her Majesty’s Treasury and the Major Projects Authority must have been attracted by the potential for universal credit to cut administrative costs and reduce benefit fraud or they would not have signed off the programme. Surely one major feature of universal credit is that it makes work pay by giving people extra incentives to keep more of their income as they move into the world of work. What evidence can the Secretary of State point to of jobseekers who are already recipients of universal credit changing their job-search behaviour?
Mr Duncan Smith
Interestingly, my hon. Friend is right. The whole point is that there is a static effect, which we know will save money even without any dynamic effect. In other words, offsetting the savings we make from changing tax credits and so on against expenditure puts us in a net positive position.
We are already beginning to run trials on the dynamic effect. So far, people are going into work quicker, and they tend to stay in work longer. They are doing many more job searches than before, because it is easier to do them. That proves my point that most unemployed people want work desperately. They want to be helped to get work, and if we make the system easier, simpler and more accessible, they will do a lot themselves. What is essentially happening is that they have cottoned on to the usability of universal credit, and it is gratifying to see the way in which they are getting back to work quicker.
Parliamentary and Constitutional Reform
(9 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text
Andrew Rosindell (Romford) (Con)
I beg to move,
That leave be given to bring in a Bill to reform the powers and structures of the United Kingdom Parliament and the devolved administrations so as to establish a new constitutional settlement for the United Kingdom of Great Britain and Northern Ireland to uphold equal democratic rights, historic identities, liberties and freedoms for the people of England, Scotland, Northern Ireland, Wales and for all British citizens; and for connected purposes.
The result of the Scottish referendum has opened the door to a much-needed debate on England’s constitutional status, but I believe that any new settlement must be in the interests not just of England, but of all the component parts of the United Kingdom and the wider British family. Today, we have a unique and exciting opportunity to be bold and imaginative in the evolution of our British constitution, putting our entire nation on a stronger footing.
The House of Commons is the British Parliament, elected by the British people, and has always included English, Scottish, Northern Irish and Welsh MPs, all of whom sit here as equals. Indeed, our constituents elect us to the House as equal Members of Parliament, with the right to speak, vote and participate on all issues, whichever corner of the Kingdom we may represent.
To change that principle by preventing MPs from one part of the Kingdom from speaking or voting on certain issues would, I fear, be a dangerous road to travel. I believe it would change the nature of this House for ever. With MPs no longer sitting here on an equal basis, I fear that the House of Commons might eventually be seen by those representing parts of the Kingdom that are excluded from certain business as no longer being a Parliament that truly represents the interests of the whole British nation and its peoples. My Bill seeks to ensure that for as long as England, Scotland, Northern Ireland and Wales remain part of the United Kingdom, their elected representatives will always be considered as equal in this Chamber. The House of Commons is not an English Parliament and must never become one.
I believe that the decision taken by the people of Scotland to remain within the United Kingdom was the right one, but many would of course have preferred Scotland to become an independent country, and they still do. The former First Minister of Scotland accepted the democratic verdict of the people, and he was right to do so, but it would be wrong to believe this issue has now been settled for good. On the contrary, there remains a constitutional imbalance in how the United Kingdom is governed, and it must now be our duty to devise a new constitutional settlement for all Britons.
My Bill would seek to create a new framework, evolving and enhancing the role of our UK Parliament, the Scottish Parliament, and the Northern Ireland and Welsh Assemblies, by creating a British-style federal model of Parliaments and Governments, similar to that which has worked successfully in Australia and Canada—nations with which we already have much in common, not least our constitutional monarchy. The Parliament of the Kingdom would retain overall British responsibilities, for example for defence, the armed forces, foreign affairs, international relations, national security, border control and immigration, management of our British currency, the pound sterling, and other clearly defined areas. A Parliament for England, alongside strengthened Parliaments for Scotland, Wales and Northern Ireland, would provide democratic self-government for all four countries, with autonomy and freedom over their own affairs, and the ability to uphold their own identities, traditions and laws, made by their own MPs in their own Parliaments.
For England I would not propose a separately elected set of English MPs. We do not need additional layers of politicians and vast costs, so English MPs would have a dual role as both British MPs sitting in the House of Commons, and English MPs sitting in the Chamber of an English Parliament. An English Chamber cannot be the one in which we sit today—these green Benches are British and must always remain so. An English Parliament would need its own home. The City of London would be my preference, but whatever the location, it must be one in which the people of England can take pride with their own symbols, English culture and traditions and the St George flag, just as the Scottish take pride in their Parliament, with Scottish symbols, culture, traditions and, of course, the flag of St Andrew—the saltire.
If further devolution in England is sought, it would be a matter for the English Parliament to decide on. It could perhaps be established or based on our traditional counties and great cities, which bring with them historical, social and geographic identities that are cherished by local people and have stood the test of time, rather than large artificial regions.
My Bill would establish a new settlement for the governance of the whole United Kingdom, with four equal countries and a consistent framework for our parliamentary democracy throughout the nation. We must also consider extending those democratic rights equally to the wider British family. Within a new federal structure, there would no longer be any reason not to invite equal representation from all British territories and dependencies. Why not also allow representation from British citizens overseas and armed forces stationed abroad, thus making it fully representative of all Britons?
My Bill is about strengthening the entire scope of our nation and its peoples in every corner of Her Majesty’s Britannic realm. If we are going to do this, let us do it properly and in the overall interests of the entire British family. As an English MP who represents an English constituency, I care deeply about England. Together with many Members from across the House, I believe that the time has come for England to find its voice, but to do so without full consideration of what the consequences might be for the rest of the Kingdom would be divisive and mistaken. My Bill allows for a genuine debate about how we as Britons can work to find a lasting constitutional settlement for our entire nation and all its component parts. With the support of Members from seven different political parties represented in the House of Commons, and from all four countries of which the United Kingdom is comprised, I hope that my Bill will provide a foundation for the next chapter in the evolution of our great British democracy, and I commend it to the House.
Question put and agreed to.
Ordered,
That Andrew Rosindell, Mr Frank Field, Kate Hoey, Mr Douglas Carswell, Greg Mulholland, Mr Elfyn Llwyd, Mr Angus Brendan MacNeil, Sir William Cash, Mr John Redwood, Jim Shannon, Martin Vickers, and Mr Graham Brady present the Bill.
Andrew Rosindell accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 23 January, and to be printed (Bill 125).
Pension Schemes Bill
(9 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister for Pensions (Steve Webb)
I beg to move, That the clause be read a Second time.
Madam Deputy Speaker (Mrs Eleanor Laing)
With this it will be convenient to discuss the following:
Government new clause 2—Power to impose requirements about factors used to determine each benefit.
Government new clause 3—Power to impose requirements about dealing with a deficit or surplus.
Government new clause 4—Requirement to wind up scheme in specified circumstances.
Government new clause 5—Policies about winding up.
Government new clause 6—Working out which assets are available for the provision of which benefits.
Government amendments 2, 3, 5 to 23, 25, 31, 32, 38, 43, 47, 51 to 55.
Steve Webb
It is good to see a packed House for this vital pensions Bill. The amendments are in two groups that correspond broadly with the Bill’s two main themes—the new definitions of pension schemes and pension scheme benefits, and budget pensions flexibilities.
Mr Andrew Love (Edmonton) (Lab/Co-op)
May I invite the Minister to apologise to the Chamber? I estimate that on Report there are 33 new clauses, 62 amendments, and one new schedule. Does he think that is rather a lot for us to cope with?
Steve Webb
I am encouraged by the fact that the hon. Gentleman and his friends in opposition have not tabled a single amendment to the Bill. I am pleased that the Opposition thought the Bill was flawless, but the Government did not. In Committee I tried to flag up that additional amendments would be tabled on Report, and I wrote to all members of the Committee setting out what those would be. I will not speculate, but if we use all the time available this afternoon I will be surprised. I hope we have time to properly consider the amendments.
Let us consider the first group of amendments. There are quite a few—the hon. Gentleman makes a fair point—and I hope the House will bear with me while I put on the record what the purpose of them is. I am happy to provide any clarification that may be sought. The majority of the amendments and new clauses change parts 1 and 2 of the Bill in respect of the new pension categories and collective benefits. New clause 1 is minor and technical and relates to provisions on judicial pensions—I will return later to that point.
Changes to parts 1 and 2 of the Bill have been made following debates in the House and in response to points raised by one of the hon. Gentleman’s colleagues on Second Reading. We have continued to talk to what are known in the trade as “stakeholders”—people who care about this stuff—and they have provided us with further feedback. It therefore makes sense to try to amend the Bill while it is going through the House, rather than at a later stage. The changes are in two broad categories: the addition of two regulation-making powers relating to the new pension scheme category definitions in part 1, which will offer more clarity; and to provide more detail and additional regulation-making powers on certain aspects of collective benefits in part 2. They are designed to bolster member safeguards in relation to key activities in the scheme.
Part 1 of the Bill contains provisions for a new framework for categories of pension scheme. The categories are based on the experience of the member about what certainty they have, while they are saving, about their retirement benefit. The intention is to create recognition and to encourage innovation in the shared risk, or defined ambition, category. The three mutually exclusive categories are: defined benefits; shared risk, sometimes known as defined ambition; and defined contribution. The definitions describe certain features of schemes that determine which category they fall into. This framework operates at a scheme level, and as such does not affect the requirements on pension schemes in relation to matters such as scheme funding, which operate at a benefit level. It should be clear from the definitions where existing schemes fit within this framework. The definitions also allow for new scheme designs.
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
I am beginning to see why my hon. Friend the Member for Edmonton (Mr Love) raised the question of the number of amendments and what they entail. I worry about how that will be interpreted by whoever happens to be a trustee of a pension fund. It will cost an inordinate amount of money, will it not?
Steve Webb
I am not sure that I follow the hon. Gentleman’s reasoning. The thing that would cost money would be poorly drafted, ambiguous legislation. What we are doing at the moment is listening and talking to people as the Bill goes through the House. We talk a lot to trustees, pensioners’ lawyers and pensions professionals, as well as to representative bodies of scheme members and so on, to ensure that we pick these things up in real time. I think the hon. Gentleman can take heart from the fact that, rather than stubbornly insisting that the first version of the Bill we published was immaculate, we are saying that we are creating new categories of pension scheme. There have to be rules on wind-ups, divorce and so on. Let us get them right now by further amendment, rather than by stubbornly insisting on our Bill and later discovering that we have a problem. I hope he will be reassured that that is what we are doing this afternoon.
Amendment 22 ensures that trustees or managers of schemes providing collective benefits can be required to seek actuarial advice before making any specified decisions or taking any other specified steps.
Government new clauses 4, 5 and 6, and amendments 14 to 21, all relate to the issue of winding-up schemes with collective benefits. This group of amendments is the result of continuing development of policy on creating the right legal framework for collective benefits. Winding up a pension scheme can be a difficult and complex process, and we need to ensure we have the necessary legislative framework in place. Collective benefits are different, so we need broad regulation-making powers to allow us to work with the pensions industry and others to get the detail right and to respond to developments.
This group of amendments covers: new clause 4, which provides for regulations to set out circumstances where a scheme, or part of a scheme, providing collective benefits must be wound up; and new clause 5, which requires trustees or managers to have and follow a policy about winding up a scheme that provides collective benefits. New clause 6, which is also part of this group, provides a power to make regulations setting out how to work out which assets are available for which benefits. This is not specific to winding up, as it may be used for other purposes as well. There are also a number of amendments that will ensure we can make regulations to ensure schemes providing collective benefits wind up effectively.
Amendments 14 to 17 provide for additional powers to enable regulations to make provision about the winding up of a pension scheme containing collective benefits and to make it clear how collective benefits will be treated when a scheme winds up. Amendments 18 and 19 ensure we can amend existing legislation that might need to change to cater for winding-up schemes providing collective benefits. Amendments 20 and 21 remove the limitation that changes to existing legislation relating to wind-up are only in relation to collective benefits.
Amendment 2 provides for regulations to specify additional requirements which must be met in order for a scheme to fall within the defined benefits scheme definition. Part 1 of the Bill contains provisions for three mutually exclusive categories of pension scheme, as I have mentioned. Government amendment 2 provides for regulations to specify additional requirements which must be met in order for a scheme to fall within the defined benefits scheme definition. It is appropriate for this to be dealt with by regulations and in consultation with the industry rather than on the face of the Bill, because this is about being able to respond to future scheme design and a theoretical risk. The regulations enable additional clarification to ensure policy intent is delivered in respect of future scheme design.
Amendment 2 has been made in response to discussions with industry and testing of the definitions, specifically in relation to theoretical and potential avoidance risks in new scheme designs, which would undermine the delivery of the policy intent for part 1. For example, we would not want a scheme that shared investment risk with the member to be categorised as a defined benefits scheme. Therefore, this regulation-making power provides that regulations can ensure that, as we intended, only schemes that provide members with certainty throughout the accumulation phase about the level of retirement income to be provided will fall within the defined benefits scheme definition.
We are confident that all existing scheme shapes we know about are covered by the definition of a defined benefits scheme in the Bill as it stands, but this does not preclude the possibility that a scheme might be designed in the future satisfying the requirements but also including an element of risk that could be passed on to members. We would not want such a scheme to be included in the defined benefits category. The power is therefore intended as a belt and braces measure to ensure that the policy intent behind the categorisation is not undermined. This is only about which category schemes will fall into; it is not to disallow or prevent forms of scheme design and has no effect on scheme funding commitments or member rights within a given scheme design.
Continuing my canter through this group, amendment 3 addresses the meaning of
“at a time before the benefit comes into payment”,
where a defined contributions scheme might find itself mis-categorised as a shared risk scheme. Clause 5 explains what is meant by the term “pensions promise”, including that it must be made at a time before the benefit comes into payment. Amendment 3, which amends clause 5, is in response to a point raised by the Chair of the Work and Pensions Committee, the hon. Member for Aberdeen South (Dame Anne Begg), when referring on Second Reading to a document from the Law Society of Scotland. The query was about the precise meaning of references to “at a time” and the intended application and effect. Amendment 3 addresses that point by excluding certain promises from the definition of pensions promise—if they are made at a particular point in time and conditional on coming into payment by a particular date—and enables the Secretary of State to make regulations on this matter.
We want to capture promises made in relation to income or saving while the member is saving—that is broadly what clause 5 already does—but the amendment caters for defined contributions schemes that also provide an income stream in retirement. Technically, such schemes will need to discuss and make a commitment to the member about that retirement income before the first payment is made. The schemes will usually only make the promise in relation to income that may be derived from the final pot and only in the immediate run-up to the retirement date. This means, in effect, that it provides no more certainty to the member than other defined contributions schemes and so should fall within the defined contributions scheme definition. However, the phrase
“at a time before the benefit comes into payment”,
in the meaning of “pensions promise”, might mean that it would be defined as a shared risk scheme. The amendment and the regulation-making power therefore make an exception in relation to this type of promise and ensure that this type of scheme falls within the defined contributions scheme definition.
We are on the home straight, Madam Deputy Speaker. Clause 49 makes amendments to bring the Bill within the scope of existing references to “pensions legislation” in the Pensions Act 2004 for specific purposes. The purpose behind amendments 32 and 51 to 55 is to move the text of clause 49 into schedule 3. This is sensible because of structural changes made to the Bill as amended in Committee. Having made several structural changes to the Bill in Committee, it makes sense to move what are essentially consequential amendments out of part 6 and into schedule 3. We believe that these changes sit better in schedule 3, which deals with amendments to existing legislation related to parts 1 and 2.
Finally, on judicial pensions, we have a minor amendment required to ensure that fee-paid judges who are subsequently appointed to the salaried judiciary are extended the same transitional protection rights as members moving between existing public service pension schemes. The clause provides that service as a fee-paid judge prior to 1 April 2012 has the transitional protections derived from the Public Service Pensions Act 2013 and the Public Service Pensions Act (Northern Ireland) 2014 applied to it, if that judge subsequently moves to salaried office. Following the O’Brien and Miller judgments in respect of fee-paid pension entitlement, the Lord Chancellor is required to establish a fee-paid judicial pension scheme. In order to ensure no less favourable treatment in the provision of pensions for fee-paid judges, the intention is to provide for transitional protection to apply to members of the fee-paid scheme. Transitional protections are a feature of both the 2013 Act and the 2014 Act. Regulations establishing new public service pension schemes may provide for transitional protection, extending the availability of pension benefits for certain members under existing schemes beyond 31 March 2015.
Sir Greg Knight (East Yorkshire) (Con)
Before the Minister sits down, will he tell the House whether steps are being taken within his Department to reduce the number of Government amendments introduced during the passage of future Bills?
Steve Webb
I am grateful to my right hon. Friend. The Bill was originally much shorter and obtaining the approval of, originally, the Government to bring it forward took place before the Budget. Therefore, the Budget measures, which both sides of the House welcomed, required substantial additional legislation. The entire second group of amendments relates to measures that were not envisaged when the Bill was published but which implement Budget measures. In other circumstances, there would have been a separate Bill but as we are in the final Session of a Parliament, everything has been on an accelerated timetable.
I can reassure my right hon. Friend that although these amendments have been tabled at a relatively late stage, they reflect extensive consultation over a period of years. The world that will have to deliver these things, as it were, has been extensively involved. In most cases, they are not new policies but are simply technical changes to implement a policy intent that has been well known for some time. But I entirely accept my right hon. Friend’s point; it would be better if these things were brought forward earlier. That is absolutely my view.
I commend to the House the new clauses and amendments. Throughout the Bill we have sought to try to alert members of the Public Bill Committee ahead of time when we knew that we had to table amendments on Report. I hope that the House will agree that the Bill is made much better by these new clauses and amendments, which I commend to the House.
Stephen Timms (East Ham) (Lab)
Given the current cost of living crisis, it is certainly the case that people struggling to set aside money for the future need access to pension schemes that they can trust to give good value for money and to provide them with a decent income in retirement. We welcome the improved opportunities that we hope the Bill will provide, as we have throughout the debates on the Bill.
A lot of important detail is still to come; this is an enabling Bill. However, as interventions from my hon. Friends the Members for Edmonton (Mr. Love) and for Central Ayrshire (Mr Donohoe) and from the right hon. Member for East Yorkshire (Sir Greg Knight) have pointed out, it is pretty extraordinary and very unsatisfactory that in an important Bill, which has in total 55 clauses, we should at this very late stage be debating 33 Government new clauses and 72 new Government amendments.
The Minister knows very well that this is not a field in which haste is fruitful. He attempted in his response to one intervention to make a virtue of the fact that he was “picking these things up in real time.” What he actually means is “making it up on the hoof.” I do not think that is a good way to legislate on pensions. The scope for mistakes in drafting very technical measures such as these is too great.
The point of having proper parliamentary scrutiny is to spot problems early and to allow for them to be corrected. As it is, there will, of course, be many mistakes in the 70 pages, or whatever, of new material in front of the House for our brief debate this afternoon. We can only hope that Members in the other place will spot them and be able to put them right, but things are bound to go wrong. Having said that, I think that the risks are significantly less in this group of amendments than they are in the next, on which I will have more to say. However, it is troubling that there is so much new and technical material here.
I wanted to ask about one particular point. As the Minister has said, the new clauses are imposing new obligations on scheme trustees. As I understand it—I may be mistaken; if I am, I know that the Minister will correct me—the Government have not provided an estimate of the cost of meeting those obligations for scheme trustees. I wonder why not; normally, I would have expected there to be an impact assessment with an estimate. Will the Minister comment, first, on whether I am right—that there is no estimate or at least none has been published so far—and, if so, the reason for that?
Will the Minister set out his intentions over the numerous sets of regulations that are envisaged? Is he able to tell us at this stage which of those sets of regulations are going to be subject to the affirmative as opposed to the negative procedure, so that we can be assured of future debate about those more detailed provisions when they become available?
Crispin Blunt (Reigate) (Con)
I have listened to the right hon. Gentleman’s critique of all the new clauses coming forward at this time, but he will have had them at least for some time and the resources of the Opposition have been available to him. I have tabled the only non-Government amendment this afternoon. The right hon. Gentleman is a replacement—a senior one—for the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont). Is he able to say whether the Opposition are going to table further amendments in the other place?
Stephen Timms
As the hon. Gentleman is well aware, we have not tabled amendments on Report. Of course, we debated in Committee three Opposition amendments, but we were sadly unsuccessful. I am delighted that the hon. Gentleman has tabled an amendment, which will provide us with a little relief when we get to the second group; at least it will not be entirely Government material on the amendment paper. I commend the hon. Gentleman for his amendment, and he is right that the Opposition have not tabled amendments today.
Steve Webb
I shall not detain the House for long, but the right hon. Member for East Ham (Stephen Timms) asked a couple of specific questions. The impact of regulations brought in under the primary Bill in front of us would depend on what they can contain. We cannot do an impact assessment because we have not yet written the regulations. Generally when we produce regulations and they have a cost on business, there is an impact assessment to go with them. I hope that explains why we have not published an assessment at this stage.
On the timing, our broad goal is to have all this in place by April 2016. The right hon. Gentleman will know that a very significant change in April 2016 will be the end of contracting out, so defined benefit pension schemes will be considering what they do in response to that. In particular, if a shared risk scheme or something of that sort is envisaged, there clearly needs to be a legislative framework by around that time—not right on the day, but about that time. That is our goal and the rough timetable that applies.
The right hon. Gentleman asked about the negative and affirmative resolutions. The collective and shared risk regulations are generally subject to the negative procedure. He will see that clause 41 deals more generally with regulation-making powers and considers when they should be negative and when affirmative. In general, as I say, most of these are relatively technical regulations, so the negative procedure applies. I hope that is helpful. I commend the new clause to the House.
Question put and agreed to.
New clause 1 accordingly read a Second time, and added to the Bill.
New Clause 2
Power to impose requirements about factors used to determine each benefit
Regulations may make provision as to the factors to be used to determine what proportion of the amount available for the provision of any collective benefits by a pension scheme is to be available for the provision of a particular collective benefit.—(Steve Webb.)
This amendment allows regulations to set out the factors that must be used to calculate members’ benefits.
Brought up, read the First and Second time, and added to the Bill.
New Clause 3
Power to impose requirements about dealing with a deficit or surplus
(1) Regulations may specify circumstances in which a deficit or surplus in respect of any collective benefits that may be provided by a pension scheme must be dealt with in a particular way.
(2) The regulations may, in particular, specify steps that must be taken by the trustees or managers and the period or periods within which any steps must be taken.—(Steve Webb.)
The amendment allows regulations to set out how a deficit or surplus must be dealt with in specific circumstances, the steps trustees or managers may be required to take and the time period within which those steps must be taken.
Brought up, read the First and Second time, and added to the Bill.
New Clause 4
Requirement to wind up scheme in specified circumstances
(1) Regulations may require the trustees or managers of a pension scheme under which collective benefits may be provided to wind up the whole or part of the scheme in specified circumstances.
(2) The regulations may, in particular—
(a) provide for the winding up of the scheme or part to be as effective in law as if it had been made under powers conferred by or under the scheme;
(b) require the scheme or part to be wound up in spite of any legislative provision or rule of law, or any scheme rule, which would otherwise operate to prevent the winding up;
(c) require the scheme or part to be wound up without regard to any legislative provision, rule of law or scheme rule that would otherwise require, or might otherwise be taken to require, the implementation of any procedure or the obtaining of any consent with a view to the winding up.”—(Steve Webb.)
This allows regulations to require the trustees or managers of a pension scheme under which collective benefits may be provided to wind up the scheme or part of it in circumstances specified in the regulations.
Brought up, read the First and Second time, and added to the Bill.
New Clause 5
Policies about winding up
(1) Regulations may require the trustees or managers of a pension scheme under which collective benefits may be provided—
(a) to have a policy about the winding up of the scheme or part of it;
(b) to follow that policy.
(2) The regulations may, in particular—
(a) require the trustees or managers to consult about the policy;
(b) make provision about the content of the policy;
(c) set out matters that the trustees or managers must take into account, or principles they must follow, in formulating the policy;
(d) make provision about reviewing and revising the policy.
(3) The regulations may, in particular, require the policy—
(a) to contain an explanation of the circumstances in which the trustees or managers are permitted or required to wind up the scheme or part and any requirements about the distribution of assets (including any order of priority);
(b) to contain an explanation of how the trustees or managers intend to use any powers to wind up the scheme or part and how they intend to use any powers in relation to the distribution of assets (including any order of priority);
(c) to contain an explanation of how the costs of winding up are required to be met or how the trustees or managers will use any powers to decide how those costs are to be met.—(Steve Webb.)
This allows regulations to be made requiring the trustees or managers of a pension scheme under which collective benefits may be provided to have a policy about winding up.
Brought up, read the First and Second time, and added to the Bill.
New Clause 6
Working out which assets are available for the provision of which benefits
Regulations may make provision, in relation to a scheme under which any of the benefits that may be provided are collective benefits, about how to work out—
(a) which assets held by the scheme are held for the purposes of providing collective benefits;
(b) which assets held by the scheme are held for the purposes of providing which collective benefits;
(c) which assets held by the scheme are held for the purposes of providing any benefits other than collective benefits.—(Steve Webb.)
This regulation making power will allow provision to be made about how to work out which assets are held for the purposes of providing which benefits.
Brought up, read the First and Second time, and added to the Bill.
New Clause 7
Independent advice in respect of conversions and transfers: Great Britain
(1) Where a member of a pension scheme has subsisting rights in respect of any safeguarded benefits, or a survivor of a member has subsisting rights in respect of any safeguarded benefits, the trustees or managers must check that the member or survivor has received appropriate independent advice before—
(a) converting any of the benefits into different benefits that are flexible benefits under the scheme;
(b) making a transfer payment in respect of any of the benefits with a view to acquiring
flexible benefits for the member or survivor under another pension scheme.
(2) The Secretary of State may by regulations make provision about—
(a) what the trustees or managers must do to check that a member or survivor has received
appropriate independent advice for the purposes of subsection (1), and
(b) when the check must be carried out for the purposes of that subsection.
(3) The Secretary of State may by regulations create exceptions to subsection (1).
(4) In subsection (1)(b) the reference to another pension scheme includes a scheme established in a country or territory outside Great Britain.
(5) Where the trustees or managers fail to carry out a check required by this section, section 10 of the Pensions Act 1995 (civil penalties) applies to any trustee or manager who failed to take reasonable steps to ensure that the check was carried out.
(6) Failure to carry out a check required by this section does not affect the validity of any transaction.
(7) In this section—
“appropriate independent advice” has the meaning given by regulations made by the Secretary of State;
“safeguarded benefits” means any benefits other than—
(a) money purchase benefits, and
(b) cash balance benefits.”—(Steve Webb.)
This provides that before trustees or managers of a pension scheme (in Great Britain) in which a person has safeguarded benefits convert them into flexible benefits, or make a transfer to another scheme to acquire flexible benefits, they must check that the person has received appropriate independent advice.
Brought up, and read the First time.
Madam Deputy Speaker (Mrs Eleanor Laing)
With this it will be convenient to discuss the following:
Government new clause 8—Power to require employer to arrange advice for purposes of section (Independent advice in respect of conversions and transfers: Great Britain).
Government new clause 9—Independent advice: consequential amendments—Great Britain.
Government new clause 10—Independent advice in respect of conversions and transfers: Northern Ireland.
Government new clause 11—Power to require employer to arrange advice for purposes of section (Independent advice in respect of conversions and transfers: Northern Ireland).
Government new clause 12—Independent advice: consequential amendments—Northern Ireland.
Government new clause 13—Independent advice: income tax exemption.
Government new clause 14—Sums or assets that may be designated as available for drawdown: Great Britain.
Government new clause 15—Provision about conversion of certain benefits for drawdown: Great Britain.
Government new clause 16—Provision about calculation of lump sums: Great Britain.
Government new clause 17—Restrictions on conversion of benefits during winding up etc: Great Britain.
Government new clause 18—Restriction on payment of lump sums during PPF assessment period: Great Britain.
Government new clause 19—Sums or assets that may be designated as available for drawdown: Northern Ireland.
Government new clause 20—Provision about conversion of certain benefits for drawdown: Northern Ireland.
Government new clause 21—Provision about calculation of lump sums: Northern Ireland.
Government new clause 22—Restrictions on conversion of benefits during winding up etc: Northern Ireland.
Government new clause 23—Restriction on payment of lump sums during PPF assessment period: Northern Ireland.
Government new clause 24—Rights to transfer benefits.
Government new clause 25—Restriction on transfers out of public service defined benefits schemes: Great Britain.
Government new clause 26—Reduction of cash equivalents: funded public service defined benefits schemes: Great Britain.
Government new clause 27—Public service defined benefits schemes: consequential amendments: Great Britain.
Government new clause 28—Restriction on transfers out of public service defined benefits schemes: Northern Ireland.
Government new clause 29—Reduction of cash equivalents: funded public service defined benefits schemes: Northern Ireland.
Government new clause 30—Public service defined benefits schemes: consequential amendments: Northern Ireland.
Government new clause 31—Meaning of “flexible benefit”.
Government new clause 32—Meaning of “cash balance benefit”.
Government new clause 33—Interpretation of Part 4.
Government amendments 4, 24, 26 to 30, 33, 34 to 37, 39 to 42, 44 to 46, 48.
Government new schedule 1—Rights to transfer benefits.
Government amendments 49, 50, 56 to 72.
Amendment 73, page 46, line 25, in schedule 4, at end insert—
‘(1A) Individuals delivering the pensions guidance must ask those receiving the guidance about other potential sources of retirement income in addition to defined contribution pension schemes; this must include an assessment of assets such as housing wealth, savings and investments.”
Government amendment 1.
Steve Webb
I am not sure whether the House will be thrilled to know that I have a slightly fuller note on this second group of new clauses and amendments. They are clearly very important, because they relate to the 2014 Budget freedoms that have been so widely welcomed in the House—and, particularly, outside it.
In the 2014 Budget statement, the Government announced that individuals with defined contribution pensions would be able to access their entire pensions flexibly from April 2015 if they wished to do so. This is the most radical reform of how people access their pensions for almost a century, and it returns choice to individuals by trusting them with their own finances. The Government believe that people should be free to make their own choices about how to use their savings, and our reform will give the 320,000 individuals who retire with defined contribution pension wealth every year choice as to how to access those savings.
We have committed ourselves to supporting the pension flexibilities through free, impartial guidance to help people to make informed and confident decisions about how to use their defined contribution pension savings in retirement. The new clauses and amendments cover a number of topics relating to the new flexibilities, and we notified members of the Public Bill Committee that they would be forthcoming. They include new clauses that provide safeguards for individuals who want to transfer to pension schemes to which the flexibilities apply; restrictions on transfers from public service pension schemes; a number of changes to pensions legislation to ensure that the flexibilities work as they are intended to; and further amendments relating to guidance to ensure that the arrangements run smoothly.
Richard Graham (Gloucester) (Con)
Will “appropriate independent advice” include consideration of financial assets other than defined contribution pensions? Does the Minister expect the Financial Conduct Authority to clarify in due course what constitutes “appropriate independent advice”?
Steve Webb
The issue that my hon. Friend has raised is covered by amendment 73, tabled by our hon. Friend the Member for Reigate (Crispin Blunt). If the House will allow me, I intend to allow our hon. Friend and others to make their points and then to respond to them, rather than trying to pre-empt that debate now. However, the FCA will indeed have more to say on these matters in due course.
New clauses 7 to 12 and new clause 13 create a safeguard to ensure that those who transfer from defined benefit to defined contribution schemes have received appropriate independent advice before doing so. That is important, because continuing membership of a DB scheme is likely to remain most people’s best option. However, the Government recognise that the attractiveness of transferring from DB to DC may increase for a limited number of people as a result of the reforms to DC savings.
New clause 7 creates a requirement for trustees and managers of a scheme to check that a member has received appropriate independent advice before converting a “safeguarded benefit” to a “flexible benefit”, or making a transfer payment in respect of safeguarded benefits to a scheme in which the member will acquire flexible benefits. In this context, the term “member” extends to any current or former employee, and any survivor of a member with subsisting rights to “safeguarded benefits”.
Subsection (2) enables the Secretary of State to set out in regulations the exact details of the regime that trustees or managers must abide by in checking that advice has been taken. Subsection (3) allows the Secretary of State to make regulations to allow exceptions to be made to the advice requirement, which will allow us, for example, to exempt those with a small amount of defined benefit wealth from the requirement to take advice. That approach was set out in the Government’s response to the consultation on freedom and choice in pensions, which was published in July this year.
Subsection (6) establishes that should a trustee or scheme manager fail to carry out a check, the scheme member will not be disadvantaged if the conversion or transfer of his or her benefits is ruled invalid. To ensure that trustees and scheme members carry out the required check, subsection (5) provides for certain civil penalties already used in the regulation of pensions to apply.
New clause 8 enables the Secretary of State to make regulations that set out the circumstances in which employers must pay for advice that is required by the advice safeguard. As we say in our response, we intend these circumstances to be, first, when a transfer is as a result of an employer-led transfer exercise, and secondly when a transfer is between DB and DC sections within the same scheme.
Subsection (2) allows the Secretary of State to ensure that the arrangement is fair for the employer by making regulations that can cap the amount that the employer must pay for advice on behalf of the member. It also allows the Secretary of State to take fairness to the member into account by making regulations preventing employers from attempting to pass the costs of advice back to members. Subsection (3) enables the Secretary of State to make regulations ensuring that employers will have to pay for the advice of former employees who continue to hold accrued DB rights in the employer’s scheme, as well as current employees.
New clause 9 is consequential to new clause 7. It ensures that trustees or scheme managers are not penalised for failing to comply with the provisions in new clause 7 for reasons outside their control—for example, when a check has been carried out, but it has not been possible to establish whether the member received appropriate independent advice. New clauses 10, 11 and 12 and amendments 82, 83 and 84 make provision parallel to that in clauses 7, 8 and 9 for Northern Ireland.
Mr Love
The Minister rightly talks about the safeguards introduced for people who want to transfer from DB to DC schemes, yet he does not think there is a need for a safeguard for people who do not access the guidance guarantee. Should not there be some safeguard for them, because they could lose substantially as people transferring schemes?
Steve Webb
The hon. Gentleman raises an important point. Our first strategy is to ensure that the guidance guarantee is accessed by as many people as possible. We are placing a legal duty on schemes and providers to flag up the guidance guarantee to people, both in wake-up packs and when people approach schemes to access their money.
The hon. Gentleman raises the issue of people who do not access the guidance—and indeed those who do, come to think of it, although particularly those who do not. The FCA will have more to say on the requirements on schemes and providers when people approach them having not accessed the guidance. There is already a general duty on providers to “treat customers fairly”, but the FCA will have more to say on whether that safeguard goes far enough, or whether further safeguards are necessary. I am grateful to the hon. Gentleman for raising that point.
As well as the changes in relation to transfers from unfunded public sector schemes and transfers of defined benefit rights, which I will deal with in a moment, new clause 24 and its accompanying schedule amend the existing transfer rights in the Pensions Schemes Act 1993 to ensure that the new flexibilities operate as intended. We will do that by extending the current transfer rights for those with “flexible benefits” up to and beyond their schemes’ normal retirement age, and applying statutory transfer rights at benefit categories, rather than at scheme level. Amending the transfer rules will ensure that individuals with uncrystallised flexible benefits will have the option to transfer their rights to another pension scheme.
Those amendments will also give individuals greater flexibility by giving members a statutory right to transfer at benefit category level, rather than at scheme level. Where an individual has more than one category of benefits under a scheme, they will now have an option to transfer out of a particular category of benefit, or their entire pot if they wish to, provided they have ceased to accrue rights in that particular category of benefit. Amendments 28, 49 and 50 make minor consequential change in respect of new clause 24 and new schedule 1.
New clauses 25 to 30 and Government amendment 29 address the implications of the new flexibilities for public service pension schemes. Regarding new clause 25 and, for Northern Ireland, new clause 28, following further policy development, that clarifies that the ban on transfers is limited to transfers from unfunded defined benefit public service pension schemes to schemes from which flexible benefits can be obtained. Further, the amendment ensures that the changes are delivered in the Pension Schemes Act 1993, rather than in regulations made by HM Treasury.
Additionally, new clause 26—new clause 29 for Northern Ireland—implements a safeguard for transfers out of funded public service pension schemes that is similar to that available in the private sector for reducing transfer values in specific circumstances.
New clause 25 restricts the right under the Pension Schemes Act 1993 to transfer from one pension scheme to another, so as to prevent a member of an unfunded public service defined benefit scheme from using that right to transfer to another pension scheme in which they can obtain flexible benefits. New clause 28 does the same for Northern Ireland. The new clauses also allow the Treasury—and in Northern Ireland, the Department of Finance and Personnel—to make regulations providing for exceptions to the transfer ban.
New clause 26 introduces a new safeguard that gives Ministers a power to designate a funded defined benefit public service pension scheme and in that way require the reduction of cash equivalent transfer values in respect of transfers from that scheme to pension schemes from which flexible benefits can be obtained. New clause 29 does the same for Northern Ireland. The use of the power will be restricted to cases in which the relevant Minister considers that transfers, either singly or in combination with other factors, increase the risk or amount of taxpayer intervention in the scheme.
The new clauses provide a power which, when used, will require the reduction of transfer values in respect of transfers requested after a scheme is designated, and completed before the scheme is no longer designated. The new clauses time-limit the use of the power and place an obligation on the scheme trustees or managers to alert the relevant Minister should they believe either that the power needs to be used or that, having been used, it is no longer needed.
We intend that the level of the reduction to be applied should be set out in regulations made by the Treasury, and new clause 26 also provides regulation-making powers for the Treasury to determine the amount of the reduction that should be made when a pension scheme is designated. Additionally, in the case of certain Scottish schemes, the power to designate a scheme is to be conferred on Scottish Ministers. New clause 29 makes parallel provision for Northern Ireland. In respect of parliamentary and ministerial schemes in England, Scotland and Northern Ireland, the new clauses give that power to the relevant trustees or scheme managers. Finally—that is an interim “finally”, not a final “finally”, by the way—new clauses 27 and 30 make amendments to pensions legislation that are consequential to new clauses 25, 26, 28 and 29.
I should like to explain the thinking behind these measures, Currently, only a small number of transfers take place out of the public service pension schemes to defined contribution schemes, but the introduction of the flexibilities might make transfers out to defined contribution schemes more attractive for some. In unfunded public service pension schemes, there is no fund of assets with which to finance transfer payments. Instead, they are funded from contributions and through general Government expenditure. So for every extra pound paid out in transfers, the Government will have a pound less to spend that year on public services. We have estimated that if 1% of all public service workers reaching retirement took their benefits flexibly, it would cost the taxpayer £200 million a year, and we do not think it fair to ask the taxpayer to meet those up-front costs.
Unlike with unfunded schemes, there is a pool of assets to support the payment of pensions in funded public service pension schemes, which can be used to meet the immediate cost of transfers out. Our expectation therefore is that, in the vast majority of cases, allowing greater flexibility in the funded public service pension schemes will not impact on public finances. However, it would be inappropriate for the Government to provide these freedoms to members of public service pension schemes and provide no back-stop protection to taxpayers, should transfers—either singly or in combination with other factors—contribute to a scheme needing support from local or national taxpayers to meet the cost of its liabilities. This is aligned with the position the Government have taken on the unfunded pension schemes, in which we have taken the decision to ban such transfers in the light of the cost risk to the Exchequer, and ultimately the taxpayer. Should a situation arise in which there is a risk to the taxpayer, this new safeguard will give Ministers and scheme managers the appropriate tools to address it.
The Government intend to legislate for some limited exceptions to this ban, and these provisions give the Treasury powers to make regulations providing exceptions to the transfer ban. It is intended that the Treasury will prescribe certain limited circumstances in which a transfer will be permitted. We will announce further details in due course, but we are considering options such as some specific circumstances under Fair Deal. Amendment 29 removes clause 36 and, as discussed earlier, new clause 25 is the replacement provision.
Moving on to the treatment of draw-down and to the Pension Protection Fund assessment, which are covered by new clauses 14 to 23, we are introducing changes to allow occupational pension schemes to offer the new forms of access to pension saving being created by the Taxation of Pensions Bill. In future, schemes will be able to offer more options for decumulation, including draw-down pensions and lump sums. Schemes will be able to offer options to allow all or part of money purchase funds, as defined under tax legislation, to be designated for draw-down after the minimum age—generally 55—is reached. They will also be able of offer members the option to take one or more lump sums from their money purchase funds after the minimum age has been reached.
We are making changes to pensions legislation to allow occupational pension schemes to offer flexibilities to members, and to ensure that the flexibilities operate as intended in relation to cash balance benefits when schemes wind up or enter the Pension Protection Fund assessment period. Cash balance benefits involve guarantees about the amount of a member’s accrued fund and cannot easily be designated for the payment of draw-down. For draw-down funds to operate as intended, cash balance benefits need to be turned into money purchase benefits before designated as “draw-down”. New clause 14 limits draw-down to money purchase benefits.
In addition, the Government will bring forward regulations to allow modification of scheme rules to convert cash balance benefits into money purchase benefits, where the member wants to exercise draw-down. Schemes will need to convert cash balance benefits into money purchase benefits, and new clauses 15 and 16 contain regulation- making powers for this conversion process. They are fall-back powers, as no scheme is currently offering the extended forms of access and we have no evidence of how such conversions might be undertaken. If there is evidence that schemes are not offering fair value for cash balance benefits in conversion or as a lump sum, we will bring forward regulations to impose requirements.
If an occupational pension scheme is underfunded at wind-up, assets relating to non-money purchase benefits shall be distributed according to a specified priority order. Members therefore see a reduction in their benefits in accordance with that priority order. New clause 17 contains provisions about the conversion of benefits during wind up. We want to prevent some members from avoiding any reduction to Pension Protection Fund levels of compensation. Therefore, we want to prevent members from converting non-money purchase benefits to money purchase after a scheme begins to wind up. If we did not do that, there would be a risk that benefits converted to money purchase would be discharged in full, to the potential detriment of other members.
If schemes offer the new decumulation options, we need to set out how rights under the scheme are treated if the scheme enters the PPF. Our provisions restrict what can be done with non-money purchase benefits when a scheme is in a PPF assessment period. New clause 17 prevents the conversion or replacement of non-money purchase benefits with money purchase benefits. New clause 18 restricts the payment of lump sums to those that would be payable if the scheme transferred into the PPF. Crucially, a scheme needs to be in as steady a state as possible while it is assessed for transfer into the PPF, so that its overall financial position can be determined. In addition, if members were able to transfer or discharge their benefits, this would delay the process and deplete the assets available to be transferred with which to pay compensation to other members. There are no restrictions on the payment, transfer or discharge of money purchase benefits. New clauses 19 and 23 replicate these provisions for Northern Ireland.
In new clauses 31 and 33, we introduce several definitional terms that will apply to a number of areas we are amending under part 4 of the Bill. New clause 31 introduces the definition of a “flexible benefit”, which will determine whether the requirements relating to independent advice, draw-down, treatment of lump sums and transfers will apply to that form of benefit or not. New clause 32 contains definitions of “cash balance benefits”. which are a form of benefit that will fall within the scope of flexible benefits. Those definitions seek to ensure that where a member’s pension saving results in a cash amount, as opposed to an income amount, they are able to access those benefits flexibly. The definition of “flexible benefit” is intended to include all those benefit categories that fall within the scope of the flexibilities introduced by the Taxation of Pensions Bill. The definition includes money purchase benefits, cash balance benefits and a residual category of benefits which are neither money purchase nor cash balance benefits for the purposes of pensions legislation, other than the provisions relating to pensions in the Finance Act 2004. This residual category may include a benefit structure which provides a sum of money at the member’s retirement date but is also subject to an additional guarantee, such as the option of a guaranteed annuity rate offered before the member becomes entitled to receive their pension. New clause 33 also defines a range of terms to ensure that the flexibilities apply to the right individuals, both members and those who may be entitled to survivor rights, as well as at the right points in time.
Government amendments 56 to 72 relate to the smooth running of the pensions guidance service and ensure that the legislative framework works as it should. They fall into three groups, the first of which comprises those aligning definitions with the ones used in the rest of the Bill. The second group comprises those ensuring that those delivering guidance work together effectively and share information. The third group comprises the consequential amendments. I outlined earlier the new definition of “flexible benefits”, which is used in this Bill to refer to money purchase or defined contribution schemes. Amendments 56 and 57 introduce the language of flexible benefits into the high-level definition of pensions guidance. Amendments 30, 58, 67, 68, 69 and 72 are necessary as a consequence of these definitional changes.
On information sharing, amendment 60 inserts new section 333EA in new part 20A of the Financial Services and Markets Act 2000. Subsection (1) provides for a duty on designated guidance providers and the Treasury to co-operate in the giving of pensions guidance. Subsection (2) provides for a gateway to share information. Ensuring that delivery partners and the Treasury are under an obligation to work together and, importantly, that they may share information with each other, subject to the usual data protection requirements, is important. It ensures a well-integrated and well-functioning guidance service; allows delivery partners to learn from each other and for evaluation of the overall service; and, finally and most importantly, facilitates a smooth journey for consumers through the service. The remaining provisions in this group make minor or consequential changes, principally to ensure that the guidance framework slots into the Financial Services and Markets Act 2000. They include amendments 61 and 63.
Mr Love
I apologise to the Minister for asking this now. He was going at such a pace that I did not catch up with him until he had moved on to a separate set of amendments. I want to press him on the guidance amendments. Will guidance be rationed to a once-only offer, or will the Financial Conduct Authority introduce some flexibility in that regard?
Steve Webb
Obviously, that issue is not spelled out in the Bill, but it is important none the less. What we envisage is that people will contact the guidance service, which by then will have a brand, an identity, a phone number and all the rest of it, and will make an appointment if they want face-to-face or telephone-based guidance. Obviously, they can access the website as many times as they like, but if they wish to have face-to-face or telephone-based guidance, it will be at a set time on a set date. There will be a period between the initial contact and the guidance appointment for the gathering of information to make the session more useful. Coming out of that session will be documentation and signposting for further sources of information, guidance and, if they wish, regulated financial advice.
Clearly, we want everybody to be able to access the guidance, so the core model is that a person does that once. But the Pensions Advisory Service has a business as usual role anyway and it is inconceivable that, even if a person has had their formal guidance session with the service and then rang it up the next day with a question, it would put the phone down on them; of course it would not, so there would be flexibility. Clearly, we need to think further on that. We need to reflect on the fact that if someone has a guidance session and then has additional needs, is a formal second guidance session appropriate or necessary or are there other ways of dealing with those needs? The core model is one session, but other resources, such as signposting, are available on tap. We are considering whether further flexibility could be introduced.
I hope that I am near to conclusion. I ran through the relatively minor and consequential amendments that come towards the back of the Bill and that are relatively uncontentious. On the title of the Bill, amendment 1 amends the title of the Bill to include
“provision designed to give people greater flexibility in accessing benefits and to help them make informed decisions about what to do with benefits.”
That change is to reflect more accurately the content of the Bill in the light of the new amendments on the pension flexibilities.
In sum, these new provisions are designed to ensure that the guidance guarantee works as effectively as possible; that the various rules on transfers do not act to the detriment of people who are left behind in the schemes; and that the process is properly overseen with the provision of independent financial advice. They also spell out who pays for the help, and whether or not it is taxed. The provisions help to flesh out some of the detail of this important policy, and I commend new clause 7 to the House.
Stephen Timms
We are now embarking on a debate on 27 Government new clauses, 40 new Government amendments and—providing welcome relief—an amendment from the hon. Member for Reigate (Crispin Blunt) and the right hon. Member for Sutton and Cheam (Paul Burstow).
The changes the Government have announced will introduce much-increased flexibility for savers, which is welcome. They will also make the pensions market more diverse and complicated and lead to a whole new range of products about which consumers have not had to make decisions in the past. Of course it is right that safeguards need to be in place to protect savers adequately from the danger of being taken advantage of, as we have seen happen in this market in the past.
We are dealing with an area full of technicalities, some of which we have just been hearing about, and fraught with difficulty. I appreciate that the Minister had no choice but to introduce these measures at the same time as the implementation of the Budget changes, but he will recognise, as the House certainly will, that there is a danger, in providing so little opportunity for the House to conduct proper scrutiny, of creating serious problems and a future mis-selling scandal.
We have set out three tests for the new flexibility. First, is there reliable advice for people saving for their retirement? Secondly, is the system fair to those on middle and lower incomes who want to secure retirement income? Thirdly, are the Government confident that the changes will not result in extra costs to the state, either through social care costs or by increasing the cost of housing benefit? I would welcome the Minister’s comments on the extent to which he believes the changes before the House will meet those tests.
The annual workplace pension survey carried out by the National Association of Pension Funds this year showed that only 19% of savers feel very capable of knowing what to do with their savings. That is ahead of the very major changes about to take effect, and we can be certain that consumer bewilderment will rocket from next April. The new arrangements are supposed to be in place from that date—in less than six months—but we do not yet know how they will work.
In previous discussion about the form that the guidance will take, the Minister said that
“it is not formal, detailed or product-specific”.
That is rather different from what was said by the Financial Conduct Authority when it launched its consultation on guidance. It seemed to envisage something rather more substantial than the Minister suggested in his remarks, but the FCA will produce only the standards; Her Majesty’s Treasury will oversee the drafting of the guidance. Nobody can yet feel confident about what will emerge from that process. A number of questions must be asked, such as the one posed by my hon. Friend the Member for Edmonton (Mr Love) earlier. It is not clear even who exactly will pay for the advice or through what mechanism it will be paid for. I would welcome the Minister’s comments on how he envisages that process working.
The challenges were helpfully illuminated by the article on the front page of The Daily Telegraph on Saturday which said, “Pension mis-selling: scandal hits 100,000 retired savers a year”. The article explained that
“one in four pensioners who retired with a private pension in the past seven years is entitled to a larger annual pension income.
Savers with medical conditions including diabetes, high blood pressure and even smokers should have been offered an increased annuity based on their lower life expectancy.”
It went on to say that
“just seven per cent of those who are entitled to the increased pay outs have automatically received them. Studies indicate the true figure should be closer to 60 per cent.
Now Aviva, Britain’s largest insurer, is paying compensation and increasing the annual payouts of hundreds of customers after discovering staff sold inappropriate deals.”
Crispin Blunt
I am interested in the issue because two highly innovative companies in my constituency, Partnership and Just Retirement, sold these products to people approaching the point where they had to make a decision about an annuity. Of course, they are anxious about guidance because if people are given guidance about the nature of the market, they can then go to the right place to make those decisions. Is the right hon. Gentleman saying that existing providers should have provided such guidance? He used the words “should have”. These products were available in the market. There was a failure in the previous annuity market which I hope this guidance will address, pointing people to the right kinds of provider.
Stephen Timms
We welcomed the new flexibility that is being provided. I hope the guidance that we are legislating for will deliver the improvement that the hon. Gentleman describes, but we cannot yet be confident that that will be the case. This brief debate gives us an opportunity to press the Minister to give us rather more reassurance about that. I shall refer to some of the comments of JustRetirement, one of the companies that the hon. Member for Reigate (Crispin Blunt) mentioned.
The most recent Association of British Insurers data show that overall annuity sales are down 14% from the second quarter of this year, and by 56% compared with the third quarter of last year. Consumers are presumably waiting until the reforms go live in April next year before deciding how to use their defined contribution pension savings. The same ABI data show external annuity sales—that is, annuities bought on the open market—down from 49% to 35% in the third quarter of this year. Internal annuity sales, where an annuity is bought from the incumbent pension provider, have increased from 51% to 65% in the same period. The overall share of enhanced annuity sales has fallen from 28% to 22%.
The ABI data highlight the risk of the kind of consumer detriment described in the article in The Daily Telegraph on Saturday. Together, they suggest that problems will continue unless the Financial Conduct Authority intervenes actively. Just Retirement makes the point particularly strongly and effectively that there is an urgent need for a second line of defence requirement for providers. What happens if the guidance on offer is not taken up? That is not provided for in the amendments.
Legal and General has highlighted the lesson from the pilot that it undertook with public support—that in practice the guidance on offer will very likely not be taken up. As the Minister knows, the take-up was very small—2.5%—in the pilot that it set up and supported. If that happens on a significant scale when these arrangements come into force next year, it opens up the possibility of very large-scale new consumer detriment. JustRetirement, along with others, is right to argue that by introducing a second line of defence requirement, the FCA can apply a crucial brake against this potential future consumer detriment by requiring providers to check consumers’ circumstances when they come to access their DC pension savings.
The hon. Member for Gloucester (Richard Graham) asked whether the guidance would take account of other financial assets beyond DC pension savings. That is a good question.
Mr Love
The Minister alluded to discussions taking place between the Department and the FCA, but the formal FCA position given earlier in the consideration of the Bill was that consumer take-up would be a matter of public choice, leaving it to the person concerned. With all the emerging evidence, surely we cannot be confident that that will answer the question.
Stephen Timms
I fear my hon. Friend is right. If in practice only a tiny proportion of people, or even a modest proportion, take up the guidance being offered, there is every chance of very serious problems in this market in the future. The House cannot be satisfied with that likelihood.
A number of organisations have pressed vigorously for a second line of defence requirement and they make a telling case. Proceeding without that safeguard will leave many consumers exposed—we should bear in mind that this is all supposed to happen from next April—making people guinea pigs and opening up the real possibility of another mis-selling scandal in the coming months.
Richard Graham
The right hon. Gentleman raises an issue that may not technically arise from the amendments that we are debating, but in which all hon. Members have some interest. What could a possible second line of defence look like?
Stephen Timms
That is a good question. I do not have a proposition to make. I would hope that those who are reflecting on these matters, particularly in the FCA, will be giving that some thought. There is time for it to incorporate something else and to put that second line of defence in its conduct rules. What it would look like, I am not in a position to propose this afternoon, but the need for it is clear. If the hon. Gentleman is about to propose something, I would welcome that.
Richard Graham
The right hon. Gentleman is being very generous and Madam Deputy Speaker is indulging us gently so I will be brief. I guess—perhaps the Minister might nod sagely at this stage—that this is an issue primarily for the FCA, but I hope that the message has gone out from us today that we are interested in it.
Stephen Timms
I am grateful to the hon. Gentleman. I hope that those who follow these debates will take that as an endorsement of the need for that second line of defence to be devised and put in place. If it was not there, there is a real risk of exposing consumers to risk of a kind that we have all seen before, and which would undermine these important reforms from the outset.
As the Minister explained, independent financial advice amendments are set out in new clauses 7 to 13. New clause 7 requires that when a member requests a transfer of safeguarded benefits, which are anything other than the cash balance or other money purchase benefits, with a view to acquiring flexible benefits, which are anything that is not safeguarded, the trustees
“must check that the member or survivor has received appropriate independent advice”.
I want to pick up a number of issues. What exactly are the trustees being required to do? Are they being asked to evaluate the appropriateness of the advice that was given to the scheme member? It does not seem right that they should be called upon to do that. It is quite a big undertaking for them and they are probably not in a position to do it. That wording could be understood to mean that that is what they are being asked to do. I would be grateful if the Minister commented on that.
We are seeing the creation of two new categories of benefits—safeguarded benefits and flexible benefits. I gather that the use of these terms is completely new; they are not used elsewhere in the statute. We have three new categories of scheme set out in the Bill, but this is the first time that we have had reference to safeguarded and flexible benefits. The use of those terms seems unfortunate, because safeguarded rights has a particular meaning, which was familiar when, admittedly now rather a long time ago, I was in the office that the Minister now holds. In the context of contracting out, safeguarded rights had a particular meaning. That term is now being introduced in the amendments before us to mean something completely different. The term “flexible” also has a specific meaning in pensions tax terms. Again, there is a real risk of confusion in reusing that particular term to mean something very different from the one people familiar with pensions tax arrangements understand it to mean.
The National Association of Pension Funds has argued that the statute should state that where the member has requested a transfer of his or her benefits, other than cash balance or other money purchase benefits to a scheme in which they will be paid a cash balance or money purchase benefits, the trustees should require appropriate proof from the member that he or she has received independent financial advice from a person authorised by the Financial Conduct Authority to give such advice. The regulations could define “appropriate financial advice” in that way. The NAPF makes the point that the language in front of us is rather ambiguous about what exactly is envisaged. Perhaps the Minister could comment on the alternative wording proposed by the NAPF, which it thinks would make it clearer and would not give the impression that trustees were being called upon to do something that is actually very difficult for them.
New schedule 1, as the Minister has told us, deals with the detail of the calculation of the cash equivalent transfer valuation, replacing the current CETV provisions under the 1993 Act. I fear that the tangle gets worse here. The distinction is between money purchase benefits, flexible benefits that are not money purchase benefits—in other words, cash balance benefits—and benefits that are not flexible benefits, previously defined as safeguarded benefits. There are also transferable benefits, which are benefits
“by virtue of which this Chapter applies to the member.”
This is all quite complicated stuff. One of the fears is that the changes in terminology, and the reuse of previously familiar terms to mean completely different things, significantly increase the amount of confusion being created. Instead of just removing the current statutory requirement that all benefits be transferred if a member wants to transfer any benefits, the effect here is to prohibit schemes from having rules that require transfer of other categories of benefits if the member wants to transfer only one category, or that
“prevent a member who exercises a right under this Chapter in relation to a category of benefits from accruing rights to benefits in another category.”
Again, the NAPF makes the point that that last provision is “incredibly wide”. It points out that schemes do not let members participate in various sections willy-nilly; there are all sorts of rules about who can accrue what sorts of benefits and under what circumstances. The fact that somebody has asked for a CETV in one section of the scheme should not entitle them to benefits in other sections, but that is the way that this provision has been written. Perhaps the Minister could comment on whether that is what he really intends.
New clauses 14 to 16 seem to allow the Secretary of State to forbid draw-down from schemes that give members a guaranteed return, because draw-down can only be from money purchase benefits. That seems odd as well. Perhaps the Minister could tell us whether he or his officials discussed that with anybody before producing these new clauses. Certainly, the NAPF tells me that it is not aware of any discussions about that with it, or with anybody else. It well understands that schemes with guarantees must comply with the funding regime, but it does not understand why they should not be allowed to do draw-down or UFPLS—uncrystallised funds pension lump sum. Perhaps the Minister could comment on that.
The Bill requires members of defined benefit schemes to have received independent financial advice before being permitted to transfer into a defined contribution arrangement, unless they have pension wealth amounting to less than £30,000. The NAPF is concerned that that will impose a requirement that it would be very difficult, if not impossible, to meet. People will be required to prove that they do not have pension wealth in excess of £30,000, which will be very difficult for the average saver. There is the potential for a lot of confusion for savers attempting to assess their level of pension wealth. They might not realise that previously crystallised pension assets will be counted towards that threshold. They might find it difficult to assess the current value of such assets.
The average person may well not understand—nor should they be expected to understand—that the £30,000 will be measured not by the current CETV system but using the methodology created to measure benefits against the lifetime allowance, information that members are not currently entitled to get from other schemes. As a result, many defined benefit members will not be able to exercise their rights in the way that the Bill intends. The NAPF urges that savers should be able to access a total of £30,000 of defined benefit benefits calculated on a CETV basis, regardless of any additional defined contributions savings that they may have. Will the Minister respond to that point?
As with the previous group of amendments, I ask the Minister to set out his intentions on the regulations that are envisaged. He gave a clear and helpful response to my earlier question, but as he is well aware, it is good practice where regulations are referred to in primary legislation for Members who are scrutinising that legislation at least to have a draft in front of them when determining whether they support the provisions. The Minister said that it was not possible to give the costs for trustees because there was not yet a draft of the regulations. I think he will accept that it is very difficult for Members to decide whether to support these provisions if the House has not been told the cost for those who have to operate the regulations. Telling Members that the Government have no idea, at this stage, of what the cost of all this will be for everybody makes it impossible for us to do the job that we are required to do in properly scrutinising the costs and benefits that the legislation provides.
I was rather down-hearted by the content of the Minister’s previous answer, but I will ask the question again as regards these measures. Does he anticipate bringing forward the regulations on the same sort of time scale as the one he indicated earlier? Is there any prospect at least that draft regulations might be available to Members in the other place when they scrutinise the Bill? Does he expect that, as he said before, the majority of the regulations will be subject to the negative rather than the affirmative procedure? Will he draw the House’s attention to any exceptions, as he did last time, and point to those that will be subject to the affirmative procedure?
I am not going to urge the House to vote against any of the measures before us. I look forward to hearing the hon. Member for Reigate (Crispin Blunt) speak about his amendment. I have to tell the Minister that the House is being placed in a pretty unsatisfactory situation. I hope that even though we have not been able properly to scrutinise these measures because of the lack of information to support that scrutiny, he might encourage us by saying that those in the other place will have a better chance to do so.
Crispin Blunt
I am delighted to follow the right hon. Member for East Ham (Stephen Timms) and to know that I have the opportunity to persuade the massed ranks of the Labour party of the merits of my amendment. I shall do my very best to do so.
Four of the most significant players in the United Kingdom pensions market are based in my constituency of Reigate: Just Retirement, Legal and General, Partnership, and Fidelity. I should declare, if it is an interest, that my son works for one of those companies—Just Retirement. Between them, they employ a pretty significant number of the constituents I am privileged to represent. The past six months since the announcement in the Budget of the measures in this Bill have not been easy for them. The number of annuities purchased has dropped off a cliff, as customers and financial advisers await the implementation of the reforms.
Overall, however, the need for and the rightness of the reforms cannot be doubted. The pensions market has for too long been shackled by the obligation to annuitise; annuity rates have fallen consistently over the past two decades; and strenuous competition and liberalisation is just what the industry needs if each new batch of retirees are not going to find themselves commensurately worse off than their predecessors. The proposals are right not only on a practical level, but ethically as well. It is farcical that we have deemed retirees incapable of managing their own finances and have paternalistically restricted access to the money for which they have worked hard throughout their lives.
Richard Graham
My hon. Friend is making some good points on an important issue, but does he agree that the providers and creators in financial companies have missed a trick over the years with regard to product innovation, and that they have depended too much on the monopoly of annuitisation, which has inhibited them—in effect, it has prevented them—from creating new products more suited to many of our constituents?
Crispin Blunt
My hon. Friend is absolutely right. That is the market in which Just Retirement and Partnership, as two smaller companies, identified the need for better, value-for-money products for individuals such as smokers and others with more limited life expectancy so that they could get greater annuity rates. They tried to promote those products in the market, but their problem was inertia in the market. People simply did not evaluate the options open to them and simply rolled over their pension pot provision in order to get an annuity from their existing provider, without looking at what was available in the rest of the market. What we are trying to do with the guidance—this is why I wholeheartedly support the reforms—is make sure that we create a much more active, liberal market whereby people are aware that they have choices to exercise and are able get the information in order to do so in an informed way.
Richard Graham
Some Opposition members of the Bill Committee raised concerns about guidance, but does my hon. Friend agree that the fundamental point of the changes that this Bill and the Treasury’s Taxation of Pensions Bill will introduce is recognition that annuitisation as was will undoubtedly lead to some scandals and mis-selling, which this Bill should put right and prevent in the future?
Crispin Blunt
That was the exact result of the paternalistic way in which we legislated to require annuities. Frankly, it led to market failure as a result of inertia in the market and people not exercising the choices available to them, because we seemed to be telling them precisely what they had to do. Now that we are liberalising the system and giving people the responsibility to manage the money they have saved, we obviously have to deal with the vexed issue of guidance to make sure that people make sensible decisions, by and large, but at least they should be informed decisions about the resources they have saved. These market reforms are founded on a belief in consumer empowerment, but without the effective implementation of the guidance guarantee, they may fail. That is why the guidance guarantee is so important.
We have already heard about the detail of and debated the need for a second line of defence, in that the Financial Conduct Authority must protect the estimated 8% to 96% of people—rather a wide estimate—who might not take up the guidance. That, however, is not the purpose of amendment 73.
The industry and consumers need the Treasury to take a lead and confirm the contents of the guidance. Why the Treasury continues to maintain its conspiracy of silence is a mystery to me. It is of some concern that four and a half months before the start date, the FCA, Citizens Advice, the Pensions Advisory Service and providers have no concrete clue about exactly what the guidance will entail, including whether it will consider sources of income that are alternatives to defined contribution pension schemes.
Dominic Lindley, an author and consultant at Which?, gave evidence in Committee suggesting that as little as 4% of a saver’s wealth is tied up in defined- contribution schemes. The over-55s have an average of £271,000 invested in property, and it is natural that such assets should increasingly form a component of retirement income. The average amount lent through an equity release scheme jumped 12% to £67,000 last year, while defined contribution pension pots remain stagnant at £20,000 on average.
The Conservative party and I presume our allies—including the right hon. Member for Sutton and Cheam (Paul Burstow), who supports my amendment 73—have always believed in the value of property ownership, and the Government must reflect that in their pensions policy. That is why we must recognise that equity release will be a critical part of future retirement provision. When we appreciate that £1.4 trillion-worth of property assets are held by older people, that puts into perspective the scale of the assets that have the potential to give older people a more comfortable retirement, if they can properly access them.
In Committee, the Minister said that he anticipated—he repeated this in an intervention—that the information that consumers would be encouraged to gather in a standardised format before they received the guidance would include state pension rights and assets such as housing equity. He also remarked that the more they put into the guidance session, the more they would get out of it.
The Equity Release Council is pleased by the recognition that assets other than defined contribution pension savings should be taken into consideration. However, that has not been explicitly stated in the Bill, and so far it relates only to the initial phone call to set up the guidance session. I support the Equity Release Council’s wish for the Government explicitly to recognise that housing wealth represents a significant source of potential retirement income, and for that to be considered during the delivery of pensions guidance.
I will therefore listen very carefully to the Minister before I invite the massed ranks of Opposition Members and, I hope, Government Members to support my amendment 73. I am reasonably hopeful that the Minister will give me a satisfactory response.
Mr Love
There is a clear—well, not so clear—dividing line between generic advice and product-specific advice. The hon. Gentleman seems to be suggesting that where there are significant housing assets, part of the guidance guarantee should include advice on equity release. Is he straying across that line?
Crispin Blunt
I am trying to suggest what is in the amendment:
“Individuals delivering the pensions guidance must ask those receiving the guidance about other potential sources of retirement income in addition to defined contribution pension schemes; this must include an assessment of assets such as housing wealth, savings and investments.”
It is not meant to be prescriptive, but if someone has a tiny portfolio as their defined contribution scheme, relative to their whole portfolio, why are they not directed to their major asset, which is likely to be their house? What consideration might they give to using that asset to make their retirement more comfortable than it would otherwise be?
Pension reform seeks to give people sensible access to their assets, and for them to make sensible decisions. With equity release, for example, does it make sense to sell and downsize and give the estate agent a whack of money while being forced to move in order to release assets, or rather to stay in the house and release assets through an equity release scheme?
Richard Graham
It is an interesting point, and I am sure my hon. Friend would agree that the difficulty in the wording is because it is up to the individual to explain their circumstances and list their own assets, if indeed they have any. The vast majority of my constituents—and, I suspect, those of many other Members—have little in the way of assets, other than what they have been encouraged or able to save through their pension.
Crispin Blunt
Everybody’s position will be different. There will be people with small pensions sitting in quite large houses, and they will have limited income but a significant capital asset. When they receive advice on pension provision on retirement, what is their plan to be? We must try to get such people into the best possible place and to make sensible decisions about their future. It is not only the Equity Release Council saying that.
David Mowat (Warrington South) (Con)
I have been reflecting on the wording of the amendment and the use of the word “must”. Had adequate guidance been provided, it would have taken into account the whole gamut of somebody’s circumstances. If that question was not asked, however, what remedy does my hon. Friend suggest? Is he saying that the guidance would void future contracts? If an advisor or guider had not asked the question suggested in the amendment, would any contract subsequently entered into be voided?
Crispin Blunt
Those would be matters for the FCA. It would regulate the guidance and say how it should be implemented, and state the consequences if people are misguided in the process. The point about putting “must” into the Bill is to be clear that the rather basic duty to assess everybody’s assets would be a requirement. What the consequences would be if misguidance was delivered would be a matter for the FCA. I do not want to get into that territory—it is a rather more expert territory than I would want to address to provide the solution my hon. Friend seeks.
I will conclude with a quote in support of my arguments from the director of policy and deputy director general of the Association of British Insurers, Huw Evans. He made it clear today that:
“While the Treasury is responsible for deciding the content of the guidance and delivering the online service, other critical partners also need certainty soon including the pension providers who have to signpost their customers to it, the FCA which needs to regulate it and the Government’s formal delivery partners, Citizens Advice and the Pensions Advisory Service…It is critical for the success of the reforms that the vast majority of customers use their new-found freedoms to make a choice that is right for them…It is very important at this stage that Ministers hold their nerve and stick to their original plan of a broader based guidance service that can genuinely help people approaching retirement to consider everything they need to be thinking about to take decisions about their finances…The Chancellor was right to think a guidance service was a necessary ingredient in the new world of pension freedom; now he needs to ensure it is worth having.”
That is what amendment 73 seeks to assist in doing.
Paul Burstow (Sutton and Cheam) (LD)
I will be very brief in my support of the amendment that stands in my name and the name of my hon. Friend the Member for Reigate (Crispin Blunt).
Steve Webb
This has been a helpful debate covering a wide range of issues. I shall address the questions raised by the right hon. Member for East Ham (Stephen Timms), particularly about the Government new clauses, before moving on to the guidance guarantee.
On the budget freedoms, the right hon. Gentleman said the Labour party had set out three tests. I assume he thinks that if any of them are not successful, Labour will oppose the budget freedoms, though I am not clear if that is the logic of his position. We think those tests are met—I shall run through them—but I think Labour is a little ambivalent: it is instinctively paternalistic and does not really like these freedoms, but it realises they are popular so it decides to set some tests so it sounds as if it is scrutinising. It is unclear, however, whether Labour is committed to seeing these things through if it takes up office—but we will see, perhaps.
The right hon. Gentleman set out his three tests. First, he asked whether reliable advice would be available. He said “advice”, but we are not promising advice; we are promising guidance. He knows that those are different, so I am not sure that the test is the right question. If the question is, “Will reliable guidance be available?”, the answer is, “Absolutely”. We have made it clear that people will have the choice of face-to-face, phone-based or internet-based guidance, and that it will be of a high quality and delivered by trusted partners, such as the Pensions Advisory Service, the network of citizens advice bureaux and the Treasury’s own website. We will require providers to flag the guidance up when people try to access their money, possibly through the provision of wake-up packs.
On take-up, which my hon. Friend the Member for Reigate (Crispin Blunt) joked about, clearly there have been a variety of trials, tests and surveys. The Legal & General pilot, which was mentioned, had a 2% or 3% take-up, but the Chartered Insurance Institute explained it to people and told us that demand could be as high as 90%. I am confident it will be in the latter range. It is important to stress, however, that we are evolving—a theme to which I shall return in a moment. This is work in progress. We are talking to people in this target group about what they want from the guidance; using behavioural insights to maximise take-up; and trying to find out what people want from the sessions and what means of communication work for them.
I hear the plea of my hon. Friend the Member for Reigate and the firms in his constituency—they want certainty, they want it now, they want it in the Bill—but the crucial thing is that when we get to April, we have something that works and which has been tested and refined. That is the tension.
Everybody wants certainty; barely a day goes by when I am not at a pensions conference where someone is not asking about guidance and demanding certainty, when what they really want is something that works. That is one of our reservations about trying to spell it all out in the Bill. We want to talk to the people affected. It has been said that the Pensions Advisory Service does not know what it will be asked to do, but it is in and out of my office and the Treasury all the time. It has people on the Treasury team drawing up the plans. Of course, these things are not finalised, but the PAS and Citizens Advice are working hand in glove with the Treasury as our delivery partners.
Crispin Blunt
I would be grateful if the Minister got it across to his Treasury colleagues that this is not just about ensuring that the guidance works; it is about the detailed regulations, as yet unavailable, for the products that will replace much of the annuity market and which companies will have immense difficulty designing if they are not told the exact requirements. I realise this is an issue for the Treasury and the Prudential Regulation Authority—as I understand it—but I would be grateful if he took that message back to them.
Steve Webb
I can perhaps distinguish between the specification by the Government and the Financial Conduct Authority of what the guidance will contain and the issue of product regulation, which are obviously two different things. On the former, my hon. Friend will know that the FCA set out some ideas about what the guidance should contain and consulted on them, and we will shortly be publishing its conclusions.
This has been a consultative process. We were condemned on Budget day for not having consulted, but when we consult extensively, we are condemned for not having definite answers—you’re damned if you do and damned if you don’t. I hear what my hon. Friend says though. We are trying to get to a position where we can be as clear as possible as soon as possible about the content of the guidance and the process, while trying to evolve, learn, listen and refine our approach, so that when it goes live in April we are in a good place.
I am not absolutely sure I understand what people who are thinking of bringing out products need to know. There is already an FCA regulatory regime and a duty on providers to treat customers fairly. In general the FCA does not pre-approve products so it is not the case that a provider comes up with a product, goes off to the FCA and says, “Is this all right?” That is not the way it works, but I do know that the FCA is in dialogue with the product providers, including those in my hon. Friend’s constituency, about the sorts of products they are thinking of bringing forward.
Crispin Blunt
There is a different set of issues, arising particularly out of EU Solvency II, but there is the same time scale and it is the PRA that is having to provide product regulation around this. That is not an issue for the Minister’s Department, but I just thought, as I am seeking a meeting with the Exchequer Secretary to address this—we have yet to get a date—that I would use this occasion to make a similar point to the Minister and invite him to get that message across.
Steve Webb
I am very happy to relay to the Exchequer Secretary that my hon. Friend is seeking such a meeting.
We believe that reliable and high-quality guidance will be available. The right hon. Member for East Ham asked about those on lower incomes. The irony is that in the bad old world it was the people in the middle who were completely stuck. If someone had a tiny pension pot, they could take the cash, and if they had a big pension pot, they had choices and draw-down and probably paid for some advice. It was all those poor souls in the middle who just ended up having to buy an annuity faute de mieux. This new reform gives new options and new choices to those on lower and middle incomes who have not had them before, so it seems to us that we are being fairer to those in that group. They can buy an annuity if they want to, but we are giving them new options, so we do not think we have any problem with that test.
The right hon. Gentleman asked finally about the issue of costs to the Exchequer. He will be aware that these are being updated at the time of the autumn statement, so we will be providing fresh estimates of the tax implications of the changes and the public expenditure implications, but I would say that in its July long-term fiscal report the OBR did not assume any impact on public spending from these reforms. I do not think that by that it meant there would be nil, and I do not mean there would be nil, but think of the context of long-term pension spending, the very substantial reforms we have brought in to the state pension age, the new single tier pension and the multiple tens of billions of pounds-worth of reforms—we are not talking anything like that in respect of the implication for public spending of these new freedoms.
Will there be somebody who blows the lot and claims a means-tested benefit? Yes, there will—having said which, we already have rules in place for those who artificially dispose of their capital, as the right hon. Gentleman well knows. So there are safeguards. We may find that public expenditure is saved; we already know from survey evidence that pension saving is more popular as a result of our freedoms. If more people decide to save for their retirement through pension saving and have more income and wealth in retirement, we may save money. We do not expect a substantial impact on public spending, therefore, although I am not saying it will be zero. We will provide updated estimates at the time of the autumn statement.
The right hon. Gentleman asked about who will pay for the guidance and he seemed to think there was some confusion. I do not think there is any confusion. The £20 million that the Chancellor has identified is seed-corn funding to get the thing going, and it is already being spent as we speak—on designing the website and getting things started. Once it is up and running there will be a levy on the financial services industry. The FCA has already put out a consultation on exactly how that will fall.
Basically, the idea is that those firms that will benefit should pay the levy, but we are also consulting on exempting small firms of advisers with low turnover from paying the levy. So unless I have missed something, I do not think there is any uncertainty about who is going to be paying for this: it will not be the consumer directly; it will be a levy on the financial services industry.
The issue was raised—and this phrase has come up—of a second line of defence, and that is an important concept. As we discussed a moment ago, what happens when people have not accessed the guidance, or indeed if they have? The FCA has committed to consider this issue and it will be publishing an update on its requirement on pension providers very shortly. We have had some discussions as to whether that will be by Christmas, by winter or by late autumn, but it will be very shortly, so we will have more information on that. I assure the House that the FCA is taking this issue seriously.
Steve Webb
This is in response to a consultation. During the consultation, one of the issues raised was about people who had not accessed the guidance. This is the response to that.
Reference was made to a story in The Daily Telegraph about people buying annuities that were not as good as they should have been, given their health condition. The FCA is undertaking a thematic review of the annuity market and looking at at-retirement choices. A lot of reporting and recommendations from the FCA will come out over the next couple of months. The Government have investigated some of the failures of the annuities market. We are tackling them by giving people new choices and it is about time that that was done.
The right hon. Member for East Ham asked about DB to DC transfers and what trustees have to do. They have to make sure that, before a DB to DC transfer happens, the member has accessed independent financial advice by a regulated IFA or similar. They do not have to look at what the IFA has said and see whether it is any good or appropriate; that is not what we mean. But before they say yes to the transfer, each trustee will have to say to the scheme member, “Have you accessed independent financial advice?” That is only right and proper because, in general, we still think that most DB scheme members should remain in DB. That will be the right thing for most. That is why we think the advice test is the right thing to do.
The right hon. Gentleman asked about forbidding draw-down in schemes that provide cash-balance benefits. To be clear: our intention is to ensure that members are appropriately protected by ring-fencing their pots from those of other members. That means that assets must always meet the liabilities in relation to those benefits. Keeping conversion to money purchase is the simplest way of achieving that. This is about ring-fencing cash-balance benefits.
The right hon. Gentleman asked how people would calculate their overall level of pension wealth from the point of view of the £30,000 threshold. Obviously, the details of that will be set out in regulations. We are consulting the NAPF on that. It is interesting that the NAPF thinks that nobody is talking to it; we talk to the NAPF all the time. We are also consulting the ABI and other interested parties.
The nitty-gritty of how we set the £30,000, what it includes and whether it is all of someone’s assets will be subject to detailed discussions and regulation. But the principle has to be right: if we are to require people to have advice, we do not want people to be forced to pay, say, £1,000 for advice if they only have a pension pot of £5,000 or £12,000. There has to be some sort of cut-off. Clearly, we need a sensible operational definition of what that is, but I do not think the principle is at issue.
Stephen Timms
I am grateful to the Minister for giving way and for the thorough way in which he is responding. May I take him back to his response to my question on the duties of trustees in an instance where a member wants to switch from DB to DC? The proposition from the NAPF was that the sole responsibility of trustees should be to require adequate proof from the member that they have received independent financial advice from a person authorised by the FCA to give such advice. It sounds to me that the Minister is saying that that is what he intends. Is he happy with that form of wording proposed by the NAPF?
Steve Webb
I am aware that our conversations are occasionally listened into by lawyers, so I am reluctant on the hoof to say that the wording from the NAPF is better than the wording that my lawyers have come up with, which is in the Bill. Clearly the point is not that the trustees have to second-guess an independent financial adviser—that is absolutely not what we are saying—but we are concerned to make sure that trustees do not simply nod through DB to DC transfers without ensuring that the scheme member has accessed suitable financial advice.
The right hon. Gentleman asked whether regulations will be under the negative procedure or affirmative procedure. In general they will be under the negative procedure, but the regulations under new section 97A(11) in new clause 26 are affirmative. Given the speed at which we are working and the importance of getting all this in place, it is not realistic to think that we will have draft regulations for their lordships’ consideration in a few weeks’ time. But their lordships obviously will want to probe the likely content of the regulations and we will continue to try to be as helpful as we can in that regard.
Stephen Timms
Will the Minister accept that it is pretty unsatisfactory for the Bill to go through both Houses with the Members of neither of them having a draft of the regulations to consider so that they can see what exactly the Government have in mind?
Steve Webb
No, I would not accept that. The right hon. Gentleman will know, from having taken quite a few Bills through the House, that there is a balance to be struck among primary powers, giving the House a general sense of direction, our stating on the record what the regulations seek to do and separate scrutiny for the regulations themselves. We will always try to make clear our intentions and what the regulations will try to achieve and we will continue to talk to the experts outside and inside Government about the fine detail. It is perfectly normal to pass primary legislation without every last regulation being produced in draft form. The right hon. Gentleman was responsible for welfare reform legislation in which large swathes of regulations were not produced in draft form when Royal Assent was given.
Stephen Timms
The right hon. Gentleman is pressing my memory with that, but my understanding of what has generally been regarded as good practice is that there should at least be draft regulations in front of Members. We do not necessarily need every last detail and he is quite right to make the point that there will be further discussions before things are finalised, but for Members of neither House to be able to see even a draft of the regulations is unusual and pretty unsatisfactory.
Steve Webb
I do not agree that it is either unusual or unsatisfactory. It is clearly important that the House accepts and is familiarised with the basic principles of approach and that we set out what will be in the regulations and what we are going to try to achieve through them, but often the regulations will be subject to separate consultation exercises. There is an awful lot of scrutiny; I can assure the right hon. Gentleman that these things are never knowingly unscrutinised.
The right hon. Gentleman asked about the timetable. Let us put it this way: our lawyers are not taking Christmas holidays. We are working as fast as we can.
Mr Gregory Campbell (East Londonderry) (DUP)
The Minister talks about the lawyers not taking Christmas holidays. We are almost in December, so how certain can those people across the United Kingdom who are preparing for retirement in April, May or June of next year be in the weeks that follow the autumn statement and the non-holiday taking of the lawyers that they will have clarity, and that it will come before April?
Steve Webb
I think that the grouping of the amendments means that we are muddying together two completely separate things. The guidance guarantee and the budget freedoms will be in place on 6 April and the legislative framework will be in place—period.
Also in this group are regulations about defined ambition pensions, risk sharing and so on and they must be in place by April 2016. I think perhaps our conversation has been slightly at cross purposes. What has to be in place by April 2015 will be. There has been lots of consultation and a lot of it is not about regulation but about FCA rules. The FCA has already been consulting extensively and will publish more shortly. Separately, we will have many regulations to produce on defined ambition and so on. That will take longer and there will be further consultations on all that. I do not think there is anything particularly unprecedented about any of this.
Let me move on, finally, to amendment 73, tabled by my hon. Friend the Member for Reigate and my right hon. Friend the Member for Sutton and Cheam (Paul Burstow). They obviously raise an important point about the context of the guidance guarantee and the fact that DC pension pots these days, although hopefully not in the distant future, might be only a small part of people’s overall retirement wealth. I would not dispute for a moment the premise that decisions have to be made in context and that, as far as possible, we want well-informed consumers making the best decisions in their own interests.
I do not want to over-promise what this relatively limited conversation can cover or achieve. It clearly is not regulated financial advice. It is not a fact check or a fact finder. It will not lead people to say at the end, “It’s equity release for me.” I am not saying that that is what my right hon. and hon. Friends are saying, but we must be absolutely clear that we will not stretch this thing to achieve other goals, laudable as they might be, when they are not what it is being set up to do. For example, people who do not have DC pension pots might also want to think about equity release, but they will not access the guidance guarantee because they will not have a pot. If we think people should be accessing equity release more often, we need policies to deliver that. Shoehorning them into the guidance guarantee inappropriately will hit some people and not others. We must ensure that the guidance conversation delivers what it is meant to do and if we try to cram too much into it, we risk undermining that. That is one of the things we are testing through the surveying we are doing and through behavioural testing. If we bombard people with lots of products, issues and options, one of the worries is that they will just buy an annuity with their own provider and we will almost go back to where we started. So we are trying to strike that balance, and I wanted to put the caveat in first.
Let me now try to be a little more positive. My hon. Friend the Member for Reigate asked for more detail on the guidance guarantee. Our colleagues at the Treasury have committed to providing further information in an update on progress on implementation that will be published before the end of the year on 31 December. That deals with the guidance guarantee.
To be clear, I would welcome the opportunity provided by my hon. Friends to clarify that the objective of the guidance is to ensure that consumers are empowered to make effective decisions about their retirement income options. While the focal point for the guidance session will be an individual’s DC pot, the guidance will cover the range of issues that affect an individual’s financial decision-making. That includes their wider financial circumstances—debts, others assets including their home and their personal motivations and goals, including attitudes to risk, desire for an income and so forth.
This is all provided for in the FCA’s proposed standards, which will be published in final form very shortly. They require that the guidance service encourages people to provide relevant information about their financial and personal circumstances and their objectives to ensure that they can get maximum value from their guidance. The financial information might include pension pots or benefits, other sources of wealth or income, including where the individual has a spouse or partner, tax status and debt position.
Our colleagues at the Treasury, along with the delivery partners, are working up the detail of the guidance in line with FCA standards, including scope and what it should cover. I hope my right hon. and hon. Friends will accept that it is not appropriate to hardwire those things directly into the Bill. My hon. Friend the Member for Reigate said during the course of the Taxation of Pensions Bill:
“It will have to be capable of being improved in the light of experience”.—[Official Report, 29 October 2014; Vol. 587, c. 340.]
I agree with him on that point. Stipulating these things in legislation does not allow us to adapt the guidance in this way. We want to give people context, but not try to hardwire things into primary legislation when we are trying to evolve the best possible guidance offer.
I should stress, as I have said, that we are not talking about regulated financial advice. Guidance will help consumers consider their assets such as housing, wealth, savings and investment in the context of their retirement decision, but it is not a fully holistic financial planning service, such as one might get from multiple sessions with a professional regulated financial adviser. We are clear that the guidance will not replicate the services of professional financial advice, but will complement it. We will ensure that the consumers know both the value of seeking financial advice and where to go next. Referring again to Second Reading of the Taxation of Pensions Bill, my hon. Friend made the point:
“If the guidance can push people in that direction, to properly regulated and properly informed independent financial advisers, we will have properly informed consumers making proper choices.”—[Official Report, 29 October 2014; Vol. 587, c. 341.]
I am happy to reassure him that the guidance will do just that.
My right hon. Friend the Member for Sutton and Cheam asked about social care. I can assure him that our Treasury colleagues are working on how to hand individuals on to the right place after using guidance. On social care, we are in discussions with a range of organisations, including Age UK, while we are discussing with the Department of Health how to link in to the statutory duty on local authorities, in which I believe my right hon. Friend might have had some involvement, to refer people to local care and advice services. I can assure both my hon. Friend and my right hon. Friend that we take these issues seriously. This is not advice; it is guidance, but it is guidance in a financial context. We want to equip consumers to make the best choices they can. I hope the House will leave us with flexibilities to go on evolving that, while recognising that greater certainty is needed as soon as possible.
Crispin Blunt
I am grateful to my right hon. Friend for his answers. There will obviously be an ongoing debate about this issue. He is right to turn my own words round on me, when I made comments on the other Bill associated with these measures. I shall not seek to press my amendment.
Steve Webb
I am grateful to my hon. Friend and my right hon. Friend the Member for Sutton and Cheam for tabling their amendment, providing an opportunity to discuss these important issues. I commend new clause 7 to the House.
Question put and agreed to.
New clause 7 accordingly read a Second time, and added to the Bill.
New Clause 8
Power to require employer to arrange advice for purposes of section (Independent advice in respect of conversions and transfers: Great Britain)
‘(1) The Secretary of State may by regulations specify circumstances in which an employer must arrange or pay for a member of a pension scheme, or a survivor of a member of a pension scheme, to receive appropriate independent advice for the purpose of satisfying a requirement imposed by section (Independent advice in respect of conversions and transfers: Great Britain).
(2) Regulations under subsection (1) may, in particular—
(a) impose limitations on the amount that an employer may be required to pay;
(b) prohibit an employer from seeking in any way to recover, from a member or survivor, costs incurred by the employer in complying with the regulations;
(c) provide for section 10 of the Pensions Act 1995 (civil penalties) to apply to a failure by an employer to comply with the regulations.
(3) In this section “employer” has the meaning given by regulations made by the Secretary of State.”—(Steve Webb.)
This gives the Secretary of State the ability to make regulations requiring an employer to pay for the advice required by NC7 in the circumstances specified in the regulations.
Brought up, read the First and Second time, and added to the Bill.
New Clause 9
Independent advice: consequential amendments - Great Britain
‘(1) The Pension Schemes Act 1993 is amended as follows.
(2) In section 99 (trustees’ duties after exercise of option), after subsection (1) insert—
“(1A) Subsection (2) does not apply if—
(a) the trustees or managers have been unable to carry out the check required by section (Independent advice in respect of conversions and transfers: Great Britain) of the Pension Schemes Act 2014 by reason of factors outside their control, or
(b) the trustees or managers have carried out the check required by section (Independent advice in respect of conversions and transfers: Great Britain) of the Pension Schemes Act 2014 but the check did not confirm that the member had received appropriate independent advice.”
(3) In section 101J (time for compliance with transfer notice in respect of pension credit benefits), after subsection (2) insert—
“(2A) Subsection (1) does not apply if—
(a) the trustees or managers have been unable to carry out the check required by section (Independent advice in respect of conversions and transfers: Great Britain) of the Pension Schemes Act 2014 by reason of factors outside their control, or
(b) the trustees or managers have carried out the check required by section (Independent advice in respect of conversions and transfers: Great Britain) of the Pension Schemes Act 2014 but the check did not confirm that the member had received appropriate independent advice.”” .—(Steve Webb.)
This amendment is consequential upon NC7
Brought up, read the First and Second time, and added to the Bill.
New Clause 10
Independent advice in respect of conversions and transfers: Northern Ireland
‘(1) Where a member of a pension scheme has subsisting rights in respect of any safeguarded benefits, or a survivor of a member has subsisting rights in respect of any safeguarded benefits, the trustees or managers must check that the member or survivor has received appropriate independent advice before—
(a) converting any of the benefits into different benefits that are flexible benefits under the scheme;
(b) making a transfer payment in respect of any of the benefits with a view to acquiring flexible benefits for the member or survivor under another pension scheme.
(2) The Department for Social Development in Northern Ireland may by regulations make provision about—
(a) what the trustees or managers must do to check that a member or survivor has received appropriate independent advice for the purposes of subsection (1), and
(b) when the check must be carried out for the purposes of that subsection.
(3) The Department for Social Development in Northern Ireland may by regulations create exceptions to subsection (1).
(4) In subsection (1)(b) the reference to another pension scheme includes a scheme established in a country or territory outside Northern Ireland.
(5) Where the trustees or managers fail to carry out a check required by this section, Article 10 of the Pensions (Northern Ireland) Order 1995 (S.I. 1995/3213 (N.I. 22)) (civil penalties) applies to any trustee or manager who failed to take reasonable steps to ensure that the check was carried out.
(6) Failure to carry out a check required by this section does not affect the validity of any transaction.
(7) In this section—
“appropriate independent advice” has the meaning given by regulations made by the Department for Social Development in Northern Ireland;
“safeguarded benefits” means any benefits other than —
(a) money purchase benefits, and
(b) cash balance benefits.”—(Steve Webb.)
This provides that before trustees or managers of a pension scheme (in Northern Ireland) in which a person has safeguarded benefits convert them into flexible benefits, or make a transfer to another scheme to acquire flexible benefits, they must check that the person has received appropriate independent advice.
Brought up, read the First and Second time, and added to the Bill.
New Clause 11
Power to require employer to arrange advice for purposes of section (Independent advice in respect of conversions and transfers: Northern Ireland)
‘(1) The Department for Social Development in Northern Ireland may by regulations specify circumstances in which an employer must arrange or pay for a member of a pension scheme, or a survivor of a member of a pension scheme, to receive appropriate independent advice for the purpose of satisfying a requirement imposed by section (Independent advice in respect of conversions and transfers: Northern Ireland).
(2) Regulations under subsection (1) may, in particular—
(a) impose limitations on the amount that an employer may be required to pay;
(b) prohibit an employer from seeking in any way to recover, from a member or survivor, costs incurred by the employer in complying with the regulations;
(c) provide for Article 10 of the Pensions (Northern Ireland) Order 1995 (S.I. 1995/3213 (N.I. 22)) (civil penalties) to apply to a failure by an employer to comply with the regulations.
(3) In this section “employer” has the meaning given by regulations made by the Department for Social Development in Northern Ireland.” .—(Steve Webb.)
The Department for Social Development in Northern Ireland can make regulations requiring an employer to pay for the advice required by NC10 in the circumstances specified in the regulations.
Brought up, read the First and Second time, and added to the Bill.
New Clause 12
Independent advice: consequential amendments - Northern Ireland
‘(1) The Pension Schemes (Northern Ireland) Act 1993 is amended as follows.
(2) In section 95 (trustees’ duties after exercise of option), after subsection (1) insert—
“(1A) Subsection (2) does not apply if—
(a) the trustees or managers have been unable to carry out the check required by section (Independent advice in respect of conversions and transfers: Northern Ireland) of the Pension Schemes Act 2014 by reason of factors outside their control, or
(b) the trustees or managers have carried out the check required by section (Independent advice in respect of conversions and transfers: Northern Ireland) of the Pension Schemes Act 2014 but the check did not confirm that the member had received appropriate independent advice.”
(3) In section 97J (time for compliance with transfer notice in respect of pension credit benefits), after subsection (2) insert—
“(2A) Subsection (1) does not apply if—
(a) the trustees or managers have been unable to carry out the check required by section (Independent advice in respect of conversions and transfers: Northern Ireland) of the Pension Schemes Act 2014 by reason of factors outside their control, or
(b) the trustees or managers have carried out the check required by section (Independent advice in respect of conversions and transfers: Northern Ireland) of the Pension Schemes Act 2014 but the check did not confirm that the member had received appropriate independent advice.”” .—(Steve Webb.)
This amendment is consequential upon NC10.
Brought up, read the First and Second time, and added to the Bill.
New Clause 13
Independent advice: income tax exemption
‘(1) In Part 4 of the Income Tax (Earnings and Pensions) Act 2003 (employment income: exemptions), in Chapter 9 (exemptions: pension provision), after section 308A insert—
“308B Independent advice in respect of conversions and transfers of pension scheme benefits
(1) No liability to income tax arises in respect of—
(a) the provision to an employee or former employee of appropriate independent advice, or
(b) the payment or reimbursement, to or in respect of an employee or former employee, of the cost of such advice,
if conditions A to C are met.
(2) Condition A is that the provision, payment or reimbursement is required by regulations under section (Power to require employer to arrange advice for purposes of section (Independent advice in respect of conversions and transfers: Great Britain)) or (Power to require employer to arrange advice for purposes of section (Independent advice in respect of conversions and transfers: Northern Ireland)) of the Pension Schemes Act 2014 (power to require employer to arrange independent advice in respect of conversions and transfers).
(3) If condition A is met only as respects part of the payment or reimbursement because the amount of the payment or reimbursement exceeds the amount required to be paid or reimbursed, subsection (1) applies in respect of that part.
(4) Condition B is that the provision, payment or reimbursement is not pursuant to relevant salary sacrifice arrangements.
(5) Condition C is that such other requirements as may be specified in regulations made by the Treasury are satisfied in relation to the provision, payment or reimbursement.
(6) In this section—
“appropriate independent advice”—
(a) in relation to England and Wales and Scotland, has the meaning given by regulations under section (Independent advice in respect of conversions and transfers: Great Britain) of the Pension Schemes Act 2014;
(b) in relation to Northern Ireland, has the meaning given by regulations under section (Independent advice in respect of conversions and transfers: Northern Ireland) of that Act;
“relevant salary sacrifice arrangements” means arrangements (whenever made, whether before or after the employment began) under which an employee gives up the right to receive an amount of general earnings or specific employment income in return for the provision of appropriate independent advice or the payment or reimbursement of the cost of such advice.”
(2) In that Part of that Act, in section 228 (effect of exemptions on liability under provisions outside Part 2), in subsection (2), after paragraph (d) insert—
“(da) section 308B (independent advice in respect of conversions and transfers of pension scheme benefits),”.
(3) The amendments made by this section have effect for the tax year 2015-16 and subsequent tax years.” .—(Steve Webb.)
This amendment is consequential upon NC7, NC8, NC10 and NC11. It prevents the cost of independent financial advice, relating to the conversion or transfer of certain pension benefits, that is paid for or reimbursed by an employer from being treated as a taxable benefit in kind for income tax purposes if conditions are met.
Brought up, read the First and Second time, and added to the Bill.
New Clause 14
Sums or assets that may be designated as available for drawdown: Great Britain
‘(1) In the case of a member of an occupational pension scheme the only sums or assets that may be designated as available for the payment of drawdown pension for the member under the scheme are sums or assets held for the purposes of providing money purchase benefits to or in respect of the member.
(2) In the case of a survivor of a member of an occupational pension scheme the only sums or assets that may be designated as available for the payment of dependants’ drawdown pension for the survivor under the scheme are sums or assets held for the purposes of providing money purchase benefits to the survivor.
(3) This section overrides any provision of an occupational pension scheme to the extent that there is a conflict.
(4) This section does not apply in relation to sums or assets designated before 6 April 2015.” .—(Steve Webb.)
This ensures that occupational pension schemes may only pay drawdown pensions out of assets held for the purpose of providing money purchase benefits. The requirement applies to assets designated on or after 6 April 2015 as available for payment of drawdown, and overrides any conflicting provision in scheme rules.
Brought up, read the First and Second time, and added to the Bill.
New Clause 15
Provision about conversion of certain benefits for drawdown: Great Britain
‘(1) The Secretary of State may by regulations make provision about the conversion of benefits under an occupational pension scheme in circumstances where—
(a) a member of the scheme, or a survivor of a member of the scheme, has subsisting rights in respect of any flexible benefits other than money purchase benefits under the scheme, and
(b) the member or survivor exercises an option to convert any of the benefits into money purchase benefits for the purposes of enabling sums or assets to be designated as available for the payment of drawdown pension or dependants’ drawdown pension.
(2) Regulations under subsection (1) may, in particular, make provision about how the rate or amount of any benefits not converted are to be calculated in future.
(3) In relation to a conversion that takes place before the member or survivor reaches normal pension age, regulations under subsection (1) may in particular make provision about—
(a) the manner in which benefits are to be calculated for the purpose of converting them into money purchase benefits;
(b) the use of any power to reduce benefits.
(4) Regulations made under this section may include provision for them to override the provisions of a pension scheme to the extent that there is a conflict.” .—(Steve Webb.)
This provides a power to make regulations in relation to the conversion of flexible benefits into money purchase benefits for the purpose of paying a drawdown pension, where an occupational scheme offers that option to members or their survivors. The clause outlines particular areas which such regulations may cover.
Brought up, read the First and Second time, and added to the Bill.
New Clause 16
Provision about calculation of lump sums: Great Britain
‘(1) The Secretary of State may by regulations make provision about the calculation of lump sums in circumstances where—
(a) a member of an occupational pension scheme, or a survivor of a member of the scheme, has subsisting rights in respect of any flexible benefits other than money purchase benefits under the scheme, and
(b) the member or survivor exercises an option to be paid a lump sum in respect of any of those benefits.
(2) Regulations under subsection (1) may, in particular, make provision about how the rate or amount of any remaining benefits are to be calculated in future.
(3) In a case where a member or survivor exercises an option to be paid a lump sum before reaching normal pension age, regulations under subsection (1) may in particular make provision about—
(a) the manner in which benefits are to be calculated for the purpose of determining the amount available for the payment of the lump sum;
(a) the use of any power to reduce the amount of the lump sum.
(4) Regulations made under this section may include provision for them to override the provisions of a pension scheme to the extent that there is a conflict.” .—(Steve Webb.)
This provides a power to make regulations in relation to the payment of lump sums by occupational pension schemes in respect of flexible benefits. The clause outlines particular areas which such regulations may cover.
Brought up, read the First and Second time, and added to the Bill.
New Clause 17
Restrictions on conversion of benefits during winding up etc: Great Britain
‘(1) In section 73A of the Pensions Act 1995 (operation of scheme during winding up period), after subsection (6) insert—
“(6A) During the winding up period no right or entitlement of any member, or of any other person in respect of a member, to a benefit that is not a money purchase benefit is to be converted into, or replaced with, a right or entitlement to a money purchase benefit under the scheme rules.”
(2) In section 73B of that Act (sections 73 and 73A: supplementary), in subsections (1) and (3), after “section 73A(3)” insert “or (6A)”.
(3) In section 135 of the Pensions Act 2004 (restrictions on winding up, discharge of liabilities etc during assessment period), in subsection (4), before paragraph (a) insert—
“(za) no right or entitlement of any member, or of any other person in respect of a member, to a benefit that is not a money purchase benefit is to be converted into, or replaced with, a right or entitlement to a money purchase benefit under the scheme rules,”.” .—(Steve Webb.)
Where an occupational pension scheme is winding up or being assessed for transfer into the Pension Protection Fund, this amendment prevents any right under the scheme to a benefit which is not a money purchase benefit being converted into a money purchase benefit.
Brought up, read the First and Second time, and added to the Bill.
New Clause 18
Restriction on payment of lump sums during PPF assessment period: Great Britain
‘(1) Section 138 of the Pensions Act 2004 (payment of scheme benefits during assessment period) is amended as follows.
(2) In subsection (1), after “Subsections (2)” insert “, (2A)”.
(3) After subsection (2) insert—
“(2A) Benefits in the form of a lump sum may be paid to or in respect of a member under the scheme rules during the assessment period only in the circumstances in which, and to the extent to which, lump sum compensation would be payable to or in respect of the member in accordance with this Chapter if—
(a) the Board assumed responsibility for the scheme in accordance with this Chapter, and
(b) the assessment date referred to in Schedule 7 were the date on which the assessment period began.”
(4) In subsection (3), omit “But”.
(5) In subsection (5), for “subsection (2)” substitute “subsections (2) and (2A)”.
(6) In subsection (6), for “subsection (3)” substitute “subsections (2A) and (3)”.
(7) In subsection (7), after “Subsections (2),” insert “(2A),”.
(8) In subsection (8), after “subsections (2)” insert “, (2A)”.
(9) In subsection (9), for “subsections (2) and (3)” substitute “subsections (2) to (3)”.
(10) After subsection (9) insert—
“(9A) Regulations may make provision as to circumstances in which benefits in the form of a lump sum are to be treated for the purposes of subsection (2A) as being paid in the circumstances in which lump sum compensation would be payable in accordance with this Chapter.
(9B) Regulations may create exceptions to subsection (2A).”
(11) In subsection (12), for “subsection (2)” substitute “subsections (2) and (2A)”.
(12) In subsection (13), after “subsection (2)” insert “, (2A)”.” .—(Steve Webb.)
This clarifies restrictions on the payment of benefits by an occupational pension scheme which is being assessed for transfer into the Pension Protection Fund. It specifies the types of lump sums that can be paid, and includes a power to make further provision in relation to particular circumstances.
Brought up, read the First and Second time, and added to the Bill.
New Clause 19
Sums or assets that may be designated as available for drawdown: Northern Ireland
‘(1) In the case of a member of an occupational pension scheme the only sums or assets that may be designated as available for the payment of drawdown pension for the member under the scheme are sums or assets held for the purposes of providing money purchase benefits to or in respect of the member.
(2) In the case of a survivor of a member of an occupational pension scheme the only sums or assets that may be designated as available for the payment of dependants’ drawdown pension for the survivor under the scheme are sums or assets held for the purposes of providing money purchase benefits to the survivor.
(3) This section overrides any provision of an occupational pension scheme to the extent that there is a conflict.
(4) This section does not apply in relation to sums or assets designated before 6 April 2015.” .—(Steve Webb.)
This ensures that occupational pension schemes may only pay drawdown pensions out of assets held for the purpose of providing money purchase benefits. The requirement applies to assets designated on or after 6 April 2015 as available for payment of drawdown, and overrides any conflicting provision in scheme rules.
Brought up, read the First and Second time, and added to the Bill.
New Clause 20
Provision about conversion of certain benefits for drawdown: Northern Ireland
‘(1) The Department for Social Development in Northern Ireland may by regulations make provision about the conversion of benefits under an occupational pension scheme in circumstances where—
(a) a member of the scheme, or a survivor of a member of the scheme, has subsisting rights in respect of any flexible benefits other than money purchase benefits under the scheme, and
(b) the member or survivor exercises an option to convert any of the benefits into money purchase benefits for the purposes of enabling sums or assets to be designated as available for the payment of drawdown pension or dependants’ drawdown pension.
(2) Regulations under subsection (1) may, in particular, make provision about how the rate or amount of any benefits not converted are to be calculated in future.
(3) In relation to a conversion that takes place before the member or survivor reaches normal pension age, regulations under subsection (1) may in particular make provision about—
(a) the manner in which benefits are to be calculated for the purpose of converting them into money purchase benefits;
(b) the use of any power to reduce benefits.
(4) Regulations made under this section may include provision for them to override the provisions of a pension scheme to the extent that there is a conflict.” .—(Steve Webb.)
This provides a power to make regulations in relation to the conversion of flexible benefits into money purchase benefits for the purpose of paying a drawdown pension, where an occupational scheme offers that option to members or their survivors. The clause outlines particular areas which such regulations may cover.
Brought up, read the First and Second time, and added to the Bill.
New Clause 21
Provision about calculation of lump sums: Northern Ireland
‘(1) The Department for Social Development in Northern Ireland may by regulations make provision about the calculation of lump sums in circumstances where—
(a) a member of an occupational pension scheme, or a survivor of a member of the scheme, has subsisting rights in respect of any flexible benefits other than money purchase benefits under the scheme, and
(b) the member or survivor exercises an option to be paid a lump sum in respect of any of those benefits.
(2) Regulations under subsection (1) may, in particular, make provision about how the rate or amount of any remaining benefits are to be calculated in future.
(3) In a case where a member or survivor exercises an option to be paid a lump sum before reaching normal pension age, regulations under subsection (1) may in particular make provision about—
(a) the manner in which benefits are to be calculated for the purpose of determining the amount available for the payment of the lump sum;
(a) the use of any power to reduce the amount of the lump sum.
(4) Regulations made under this section may include provision for them to override the provisions of a pension scheme to the extent that there is a conflict.” .—(Steve Webb.)
This provides a power to make regulations in relation to the payment of lump sums by occupational pension schemes in respect of flexible benefits. The clause outlines particular areas which such regulations may cover.
Brought up, read the First and Second time, and added to the Bill.
New Clause 22
Restrictions on conversion of benefits during winding up etc: Northern Ireland
‘(1) In Article 73A of the Pensions (Northern Ireland) Order 1995 (S.I. 1995/3213 (N.I. 22)) (operation of scheme during winding up period), after paragraph (6) insert—
“(6A) During the winding up period no right or entitlement of any member, or of any other person in respect of a member, to a benefit that is not a money purchase benefit is to be converted into, or replaced with, a right or entitlement to a money purchase benefit under the scheme rules.”
(2) In Article 73B of that Order (Articles 73 and 73A: supplementary), in paragraphs (1) and (3), after “Article 73A(3)” insert “or (6A)”.
(3) In Article 119 of the Pensions (Northern Ireland) Order 2005 (S.I. 2005/255 (N.I. 1)) (restrictions on winding up, discharge of liabilities etc during assessment period), in paragraph (4), before sub-paragraph (a) insert—
“(za) no right or entitlement of any member, or of any other person in respect of a member, to a benefit that is not a money purchase benefit is to be converted into, or replaced with, a right or entitlement to a money purchase benefit under the scheme rules,”.” .—(Steve Webb.)
Where an occupational pension scheme is winding up or being assessed for transfer into the Pension Protection Fund, this amendment prevents any right under the scheme to a benefit which is not a money purchase benefit being converted into a money purchase benefit.
Brought up, read the First and Second time, and added to the Bill.
New Clause 24
Rights to transfer benefits
Schedule (Rights to transfer benefits) contains amendments that confer new statutory rights to transfer benefits.” .—(Steve Webb.)
This introduces a new Schedule which makes changes to the right a member has to transfer their pension savings prior to accessing those savings.
Brought up, read the First and Second time, and added to the Bill.
New Clause 25
Restriction on transfers out of public service defined benefits schemes: Great Britain
‘(1) The Pension Schemes Act 1993 is amended as follows.
(2) In section 95 (ways of taking right to cash equivalent), in subsection (2), after “occupational pension scheme” insert “that is not an unfunded public service defined benefits scheme”.
(3) In section 95, after subsection (2) insert—
“(2A) In the case of a member of an occupational pension scheme that is an unfunded public service defined benefits scheme, the ways referred to in subsection (1) are—
(a) for acquiring transfer credits allowed under the rules of another occupational pension scheme if—
(i) the benefits that may be provided under the other scheme by virtue of the transfer credits are not flexible benefits,
(ii) the trustees or managers of the other scheme are able and willing to accept payment in respect of the member’s transferrable rights, and
(iii) the other scheme satisfies requirements prescribed in regulations made by the Secretary of State or the Treasury;
(b) for acquiring rights allowed under the rules of a personal pension scheme if—
(i) the benefits that may be provided under the personal pension scheme by virtue of the acquired rights are not flexible benefits,
(ii) the trustees or managers of the personal pension scheme are able and willing to accept payment in respect of the member’s transferrable rights, and
(iii) the personal pension scheme satisfies requirements prescribed in regulations made by the Secretary of State or the Treasury;
(c) for purchasing from one or more insurers such as are mentioned in section 19(4)(a), chosen by the member and willing to accept payment on account of the member from the trustees or managers, one or more annuities which satisfy requirements prescribed in regulations made by the Secretary of State or the Treasury;
(d) for subscribing to other pension arrangements which satisfy requirements prescribed in regulations made by the Secretary of State or the Treasury.
(2B) The Treasury may by regulations provide for sub-paragraph (i) of subsection (2A)(a) or (b) not to apply in prescribed circumstances or in relation to prescribed schemes or schemes of a prescribed description.
(2C) In subsection (2A) “unfunded public service defined benefits scheme” means a public service pension scheme that—
(a) is a defined benefits scheme within the meaning given by section 37 of the Public Service Pensions Act 2013, and
(b) meets some or all of its liabilities otherwise than out of a fund accumulated for the purpose during the life of the scheme.”
(4) In section 95(5)(a), for “subsection (2) is” substitute “subsections (2) and (2A) are”.
(5) In section 95(6)—
(a) after “subsections (2)” insert “, (2A)”;
(b) after “subsection (2)” insert “or (2A)”.
(6) In section 96 (further provisions concerning exercise of option under section 95), in subsection (2)(b), after “subsection (2)” insert “, subsection (2A)”.
(7) In section 100 (withdrawal of applications), in subsection (2), after “subsection (2)” insert “, subsection (2A)”.
(8) The amendments made by this section have no effect in relation to an application made under section 95(1) of the Pension Schemes Act 1993 before 6 April 2015.
(9) Until the coming into force of the first regulations made under a provision of section 95(2A) of the Pension Schemes Act 1993 specified in the first column of the table, regulations made under the provision of section 95(2) of that Act specified in the corresponding entry in the second column apply (with any necessary modifications) for the purposes of the provision specified in the first column—
Provision of section 95(2A) | Provision of section 95(2) |
|---|---|
Paragraph (a)(iii) | Paragraph (a)(ii) |
Paragraph (b)(iii) | Paragraph (b)(ii) |
Paragraph (c) | Paragraph (c) |
Paragraph (d) | Paragraph (d).” |
This amendment restricts the right under the Pension Schemes Act 1993 to transfer from one pension scheme to another, so as to prevent a member of an unfunded public service defined benefits scheme using that right to transfer to another pension scheme in which they can obtain flexible benefits.—(Steve Webb.)
Brought up, read the First and Second time, and added to the Bill.
New Clause 27
Public service defined benefits schemes: consequential amendments: Great Britain
‘(1) In the Pension Schemes Act 1993, in section 182 (orders and regulations: general provisions), after subsection (1) insert—
“(1A) Subsection (1) does not apply to the power of the Scottish Ministers to make regulations under section 97B(11).”
(2) In that Act, in section 185 (consultations about other regulations), after subsection (5) insert—
“(5A) Subject to subsection (5C), before the Treasury (acting alone) make any regulations under section 95, 97A or 97C they shall consult such persons as they may consider appropriate.
(5B) Subject to subsection (5C), before the Scottish Ministers make any regulations under section 97B(11) they shall consult such persons as they may consider appropriate.
(5C) Subsections (5A) and (5B) do not apply to regulations in the case of which the Treasury or (as the case may be) the Scottish Ministers consider consultation inexpedient because of urgency or to regulations of the type described in subsection (2)(b) or (e)).”
(3) In that Act, in section 186 (Parliamentary control of orders and regulations)—
(a) in subsection (1) (negative procedure), after “Secretary of State” insert “or the Treasury”;
(b) in subsection (3) (affirmative procedure), after paragraph (e) insert “, or
(f) regulations made under section 97A(11)”;
(c) after subsection (5) insert—
“(6) Regulations made by the Scottish Ministers under section 97B(11) are subject to the affirmative procedure (see Part 2 of the Interpretation and Legislative Reform (Scotland) Act 2010 (asp 10)).”
(4) In the Pensions Act 2004, in section 18 (pension liberation: interpretation), in subsection (4)(a) (meaning of “authorised way”), omit “subsection (2) or, as the case may be, subsection (3) of”.
(5) The consultation requirement in section 185(5A) of the Pension Schemes Act 1993 (inserted by subsection (2)) may be satisfied by things done before the day on which this Act is passed.” .—(Steve Webb.)
This amendment makes amendments to pensions legislation that are consequential on NC25 and NC26.
Brought up, read the First and Second time, and added to the Bill.
New Clause 28
Restriction on transfers out of public service defined benefits schemes: Northern Ireland
‘(1) The Pension Schemes (Northern Ireland) Act 1993 is amended as follows.
(2) In section 91(2), after “occupational pension scheme” insert “that is not an unfunded public service defined benefits scheme”.
(3) In section 91, after subsection (2) insert—
“(2A) In the case of a member of an occupational pension scheme that is an unfunded public service defined benefits scheme, the ways referred to in subsection (1) are—
(a) for acquiring transfer credits allowed under the rules of another occupational pension scheme if—
(i) the benefits that may be provided under the other scheme by virtue of the transfer credits are not flexible benefits,
(ii) the trustees or managers of the other scheme are able and willing to accept payment in respect of the member’s transferrable rights, and
(iii) the other scheme satisfies requirements prescribed in regulations made by the Department or the Department of Finance and Personnel;
(b) for acquiring rights allowed under the rules of a personal pension scheme if—
(i) the benefits that may be provided under the personal pension scheme by virtue of the acquired rights are not flexible benefits,
(ii) the trustees or managers of the personal pension scheme are able and willing to accept payment in respect of the member’s transferrable rights, and
(iii) the personal pension scheme satisfies requirements prescribed in regulations made by the Department or the Department of Finance and Personnel;
(c) for purchasing from one or more insurers such as are mentioned in section 15(4)(a), chosen by the member and willing to accept payment on account of the member from the trustees or managers, one or more annuities which satisfy requirements prescribed in regulations made by the Department or the Department of Finance and Personnel;
(d) for subscribing to other pension arrangements which satisfy requirements prescribed in regulations made by the Department or the Department of Finance and Personnel.
(2B) The Department of Finance and Personnel may by regulations provide for sub-paragraph (i) of subsection (2A)(a) or (b) not to apply in specified circumstances or in relation to specified schemes or schemes of a specified description.
(2C) In subsection (2A) “unfunded public service defined benefits scheme” means a public service pension scheme that—
(a) is a defined benefits scheme within the meaning given by section 34 of the Public Service Pensions Act (Northern Ireland) 2014, and
(b) meets some or all of its liabilities otherwise than out of a fund accumulated for the purpose during the life of the scheme.”
(4) In section 91(5)(a), for “subsection (2) is” substitute “subsections (2) and (2A) are”.
(5) In section 91(6)—
(a) after “subsections (2)” insert “, (2A)”;
(b) after “subsection (2)” insert “or (2A)”.
(6) In section 92 (further provisions concerning exercise of option under section 91), in subsection (2)(b), after “subsection (2)” insert “, subsection (2A)”.
(7) In section 96 (withdrawal of applications), in subsection (2), after “subsection (2)” insert “, subsection (2A)”.
(8) The amendments made by this section have no effect in relation to an application made under section 91 of the Pension Schemes (Northern Ireland) Act 1993 before 6 April 2015.
(9) Until the coming into force of the first regulations made under a provision of section 91(2A) of the Pension Schemes (Northern Ireland) Act 1993 specified in the first column of the table, regulations made under the provision of section 91(2) of that Act specified in the corresponding entry in the second column apply (with any necessary modifications) for the purposes of the provision specified in the first column—
Provision of section 91(2A) | Provision of section 91(2) |
|---|---|
Paragraph (a)(iii) | Paragraph (a)(ii) |
Paragraph (b)(iii) | Paragraph (b)(ii) |
Paragraph (c) | Paragraph (c) |
Paragraph (d) | Paragraph (d).” |
This amendment makes for Northern Ireland provision parallel to that made by NC25.—(Steve Webb.)
Brought up, read the First and Second time, and added to the Bill.
New Clause 29
Reduction of cash equivalents: funded public service defined benefits schemes: Northern Ireland
‘(1) The Pension Schemes (Northern Ireland) Act 1993 is amended as follows.
(2) In section 93 (calculation of cash equivalents), in subsection (1)—
(a) after “verified” insert “—
(a) ”;
(b) at the end insert “, and
(b) where a designation has been made under section 93A, in accordance with regulations under section 93B.”
(3) After section 93 insert—
“93A Designation of funded public service defined benefits schemes
(1) The relevant Department may designate a funded public service defined benefits scheme as a scheme to which regulations under section 93B are to apply for a specified period of no more than 2 years.
(2) The power under subsection (1) may be exercised only if the relevant person considers that—
(a) there is an increased likelihood of payments out of public funds, or increased payments out of public funds, having to be made into the scheme so that it can meet its liabilities, and
(b) the increased likelihood is connected with the exercise or expected future exercise of rights to take a cash equivalent acquired under section 90.
(3) The power under subsection (1) may be exercised in relation to the whole or any part of a scheme.
(4) In the application of subsection (2) to part of a scheme, paragraph (a) is to be read as if it referred to the scheme’s liabilities relating to that part.
(5) A designation under subsection (1)—
(a) may be extended (on more than one occasion) for a period of no more than 2 years;
(b) may be revoked.
(6) The relevant Department must give notice in writing of a designation or its extension or revocation to the trustees or managers of the scheme (except in a case where the relevant Department is the trustees or managers).
(7) If the trustees or managers of a funded public service defined benefits scheme, or part of such a scheme, that is not designated under this section consider that the conditions in paragraphs (a) and (b) of subsection (2) are met in relation to the scheme or part they must notify—
(a) the Department of Finance and Personnel, and
(b) (where relevant) each Northern Ireland department by whom, or with whose approval, the scheme was established.
(8) If the trustees or managers of a scheme, or part of a scheme, that is designated under this section consider that the conditions in paragraphs (a) and (b) of subsection (2) are no longer met in relation to the scheme or part they must notify—
(a) the Department of Finance and Personnel, and
(b) (where relevant) each Northern Ireland department by whom, or with whose approval, the scheme was established.
(9) In this section—
“funded public service defined benefits scheme” means a public service pension scheme that—
(a) is a defined benefits scheme within the meaning given by section 34 of the Public Service Pensions Act (Northern Ireland) 2014, and
(b) meets its liabilities out of a fund accumulated for the purpose during the life of the scheme;
“local authority” means a district council constituted under section 1 of the Local Government Act (Northern Ireland) 1972;
“payment out of public funds” means a payment provided directly or indirectly—
(a) out of the Northern Ireland Consolidated Fund;
(b) by a local authority;
“the relevant Department”, in relation to a funded public service defined benefits scheme, means either of the following—
(a) the Department of Finance and Personnel, or
(b) any Northern Ireland department by whom, or with whose approval, the scheme was established.
(10) The Department of Finance and Personnel may by regulations make modifications of the definition of “the relevant Department” in subsection (9).”
(4) After section 93A (inserted by subsection (3)) insert—
“93B Reduction of cash equivalents in case of section 93A designated schemes
(1) The Department of Finance and Personnel may by regulations provide that where, under section 91(1), a member of a designated scheme requires the trustees or managers to use a cash equivalent for acquiring flexible benefits under the rules of another pension scheme the cash equivalent must be reduced by an amount determined in accordance with the regulations.
(2) Regulations under subsection (1) may not require a reduction in cases where a scheme ceases to be a designated scheme before the date on which the trustees or managers do what is needed to carry out what the member requires.
(3) Regulations under subsection (1) may produce the result (alone or in conjunction with regulations under section 93) that the amount by which a cash equivalent is to be reduced is such an amount that a member has no right to receive anything.
(4) In subsection (1), “designated scheme” means a funded public service defined benefits scheme, or part of such a scheme, that (on the date of the application under section 91(1)) is designated under section 93A.”” .—(Steve Webb.)
This amendment makes for Northern Ireland provision parallel to that made by NC26.
Brought up, read the First and Second time, and added to the Bill.
New Clause 30
Public service defined benefits schemes: consequential amendments: Northern Ireland
‘(1) In the Pension Schemes (Northern Ireland) Act 1993, in section 176 (general interpretation), in subsection (1), in the definition of “regulations”, after “means” insert “, unless the context otherwise requires,”.
(2) In that Act, in section 181 (Assembly etc control of regulations and orders)—
(a) in subsection (2) (regulations and orders subject to confirmatory procedure), at the end insert “and to regulations made by the Department of Finance and Personnel under section 93A(10)”;
(b) in subsection (4) (regulations and orders subject to negative resolution), for “shall” substitute “and regulations made by the Department of Finance and Personnel under section 91 or 93B shall”.
(3) In the Pensions (Northern Ireland) Order 2005 (S.I. 2005/255 (N.I. 1)), in Article 14 (pension liberation: interpretation), in paragraph (4)(a) (meaning of “authorised way”), omit “subsection (2) or, as the case may be, subsection (3) of”.” .—(Steve Webb.)
This amendment makes amendments to pensions legislation that are consequential on NC28 and NC29.
Brought up, read the First and Second time, and added to the Bill.
New Clause 31
Meaning of “flexible benefit”
In this Part “flexible benefit”, in relation to a member of a pension scheme, means—
(a) a money purchase benefit,
(b) a cash balance benefit, or
(c) a benefit, other than a money purchase benefit or cash balance benefit, calculated by reference to an amount available for the provision of benefits to or in respect of the member (whether the amount so available is calculated by reference to payments made by the member or any other person in respect of the member or any other factor).” .—(Steve Webb.)
This is to be added to Part 4 of the Bill. The definitions are intended to govern the interpretation of the new clauses about independent advice, drawdown and lump sums (also to be added to Part 4). The definitions are also applied by some of the amendments to other legislation.
Brought up, read the First and Second time, and added to the Bill.
New Clause 32
Meaning of “cash balance benefit
‘(1) In this Part “cash balance benefit”, in relation to a member of a pension scheme, means a benefit calculated by reference to an amount available for the provision of benefits to or in respect of the member (“the available amount”) where there is a promise about that amount.
(2) But a benefit is not a “cash balance benefit” if, under the scheme—
(a) a pension may be provided from the available amount to or in respect of the member, and
(b) there is a promise about the rate of that pension.
(3) The promise mentioned in subsection (1) includes, in particular, a promise about the change in the value of, or the return from, payments made by the member or any other person in respect of the member. The promise mentioned in subsection (2)(b) includes a promise that—
(a) the available amount will be sufficient to provide a pension of a particular rate;
(b) the rate of a pension will represent a particular proportion of the available amount.
(4) A benefit is not excluded from the definition of “cash balance benefit” by subsection (2) merely because under the scheme there is a promise that—
(a) the rate or amount of the benefit payable in respect of a deceased member will be a particular proportion of the rate or amount of the benefit which was (or would have been) payable to the member, or
(b) the amount of a lump sum payable to a member, or in respect of a deceased member, will represent a particular proportion of the available amount.” .—(Steve Webb.)
This is to be added to Part 4 of the Bill. The definitions are intended to govern the interpretation of the new clauses about independent advice, drawdown and lump sums (also to be added to Part 4). The definitions are also applied by some of the amendments to other legislation.
Brought up, read the First and Second time, and added to the Bill.
New Clause 33
Interpretation of Part 4
UK definitions
‘(1) In this Part— In any provision of this Part as it extends to England and Wales and Scotland— In any provision of this Part as it extends to Northern Ireland—
“cash balance benefit” has the meaning given by section (Meaning of “cash balance benefit”);
“dependants’ drawdown pension”, in relation to a member, has the meaning given by paragraph 18 of Schedule 28 to the Finance Act 2004;
“drawdown pension”, in relation to a survivor, has the meaning given by paragraph 4 of Schedule 28 to the Finance Act 2004;
“flexible benefit” has the meaning given by section (Meaning of “flexible benefit”);
“normal pension age”, in relation to a benefit for a member of a pension scheme or a survivor of a member, means—
(a) the earliest age at which, or earliest occasion on which, the member or survivor is entitled to receive the benefit without adjustment for taking it early or late (disregarding any special provision as to early payment on the grounds of ill health or otherwise), or
(b) if there is no such age or occasion, normal minimum pension age as defined by section 279(1) of the Finance Act 2004;
“subsisting right”—
(a) in relation to a member of a pension scheme means—
(b) in relation to a survivor of a member of a pension scheme, means any right to future benefits, or entitlement to benefits, which the survivor has under the scheme in respect of the member;
“survivor”, in relation to a member of an occupational pension scheme, means a person who has survived the member and has a right to future benefits, or is entitled to benefits, under the scheme in respect of the member;
“trustees or managers” means—
(a) in relation to a scheme established under a trust, the trustees, and
(b) in relation to any other scheme, the managers.
Great Britain only definitions
“money purchase benefits” has the meaning given by section 181 of the Pension Schemes Act 1993;
“occupational pension scheme” has the meaning given by section 1 of the Pension Schemes Act 1993;
“pension scheme” has the meaning given by section 1(5) of the Pension Schemes Act 1993.
Northern Ireland only definitions
“money purchase benefits” has the meaning given by section 176 of the Pension Schemes (Northern Ireland) Act 1993;
“occupational pension scheme” has the meaning given by section 1 of the Pension Schemes (Northern Ireland) Act 1993;
“pension scheme” has the meaning given by section 1(5) of the Pension Schemes (Northern Ireland) Act 1993.” .—(Steve Webb.)
This is expected to be added to Part 4 of the Bill and is intended to govern the interpretation of the new clauses about independent advice, drawdown and lump sums (which are also expected to be added to Part 4).
Brought up, read the First and Second time, and added to the Bill.
Clause 2
Defined Benefits scheme
Amendment made: 2, page 2, line 2, at end insert “, and
(d) such other requirements as may be specified in regulations are met.” .—(Steve Webb.)
This amendment enables the Secretary of State to make regulations to prescribe additional requirements which must be met in order for a scheme to fall within the defined benefit scheme definition.)
Clause 5
Meanings of “Pensions Promise”
Amendment made: 3, page 3, line 4, at end insert—
‘( ) A promise about the level of retirement income is not to be treated as a pensions promise if—
(a) the promise is conditional on the retirement income coming into payment by a particular date,
(b) the scheme provides for the member to be first given the promise during such period ending on that date as may be specified in regulations, and
(c) the promise is not of a description specified in regulations.”—(Steve Webb.)
Under clause 5 a pensions promise is a promise made at a time before the benefit comes into payment. This amendment makes an exception to that provision.
Clause 7
Interpretation of Part 1
Amendment made: 4, page 4, line 5 at end insert—
““regulations” means regulations made by the Secretary of State;”—(Steve Webb.)
This amendment is consequential on amendment 34. Provision about by whom regulations may be made is now to be dealt with in the relevant Part or clause.
Clause 19
Policy for Dealing with a Deficit or Surplus
Amendments made: 5, page 8, line 29, at end insert—
“() set out matters that the trustees or managers must take into account, or principles they must follow, in formulating the policy;”
The amendment allows regulations which require trustees or managers to have a policy relating to a deficit or surplus to make provision about matters to take into account and principles they must follow.
Amendment 6, page 8, line 36, after “policy” insert “, or any requirements imposed by regulations under section (Power to impose requirements about dealing with a deficit or surplus),”—(Steve Webb.)
This amendment allows regulations to require that the policy on deficits and surpluses explains the possible effect on members of any requirements imposed by regulations made under NC3.)
.
Clause 22
Transfer Value: Policy for Calculating Cash Equivalent of Benefits
Amendments made: 7, page 9, line 24, after “in” insert “the following—
(a) ”
This is one of a group of amendments to ensure the policy on calculating cash equivalents applies in all cases where trustees or managers need to calculate a cash equivalent for the member’s benefits.
Amendment 8, page 9, line 25, leave out “93A(1ZB)” and insert “93A(3)”
This is consequential on NS1, which replaces the provision mentioned in clause 22(2).
Amendment 9, page 9, line 25, at end insert—
“(b) section 101H(1) of that Act;
(c) section 29(2) and (3) of the Welfare Reform and Pensions Act 1999;
(d) any other provision specified in regulations.”
This amendment extends the scope of the policy on calculating cash equivalents to cover cash equivalents calculated for the purposes of provisions about transfers of pension credit rights and pension sharing on divorce and for other purposes specified in regulations.
Amendment 10, page 9, line 26, leave out “The regulations” and insert “Regulations under subsection (1)”
This is consequential on amendment 9.
Amendment 11, page 9, line 29, after “97” insert “or 101I”
This is consequential on amendment 9.
Amendment 12, page 9, line 30, at end insert “or section 30 of the Welfare Reform and Pensions Act 1999 or any other specified requirements”
This is consequential on amendment 9.
Amendment 13, page 9, line 31, at end insert—
“() set out matters that the trustees or managers must take into account, or principles they must follow, in formulating the policy;”—(Steve Webb.)
The amendment allows regulations which require trustees or managers to have a policy on calculating cash equivalents to make provision about matters to take into account and principles they must follow.)
Clause 23
Winding up
Amendments made: 14, page 9, line 34, at end insert—
‘( ) Regulations may make provision about the winding up of a pension scheme under which collective benefits may be provided or part of such a scheme.
( ) The regulations may, in particular, make provision about—
(a) the distribution of assets (including any order of priority);
(b) the operation of the scheme during winding up;
(c) the discharge of liabilities;
(d) excess assets on winding up.”
This confers a broader power to make provision about the winding up of schemes that provide collective benefits or parts of those schemes. Where appropriate, this will enable provision to be made that is neither corresponding nor similar to the provisions currently listed in clause 23.
Amendment 15, page 9, line 35, at the beginning insert “The”
This is consequential on amendment 14.
Amendment 16, page 9, line 35, after “may” insert “, in particular”
This is consequential on amendment 14.
Amendment 17, page 9, line 36, leave out “modify” and insert “amend or otherwise modify”
This allows the provisions listed in clause 23 to be amended.
Amendment 18, page 9, line 36, after “sections” insert “38,”
This adds to the list of winding up provisions that may be disapplied or modified etc under clause 23.
Amendment 19, page 9, line 36, leave out “and 74” and insert “, 74 and 76”
This adds to the list of winding up provisions that may be disapplied or modified etc under clause 23.
Amendment 20, page 9, line 37, leave out “in relation to collective benefits”
This amendment and amendment 21 broaden the power to make provision about winding up. In a case where a scheme contains a mixture of benefits, it might be necessary to make provision about the non-collective benefits as well as the collective benefits.
Amendment 21, page 9, line 39, leave out “in relation to collective benefits”—(Steve Webb.)
See Member’s explanatory statement for amendment 20.
Clause 24
Requirements to Obtain Actuarial Advice
Amendment made: 22, page 10, line 5, leave out “required by regulations under this Part”—(Steve Webb.)
This amendment extends the power to specify when trustees and managers must seek actuarial advice so that it can relate to decisions and actions that are beyond the scope of regulations made under Part 2 of the Bill.
Clause 29
Interpretation of Part 2
Amendments made: 23, page 10, line 34, at end insert—
““deficit”, in respect of a collective benefit, has the meaning given by section19 (but this definition does not apply in section20, which contains its own definition);”
This amendment inserts a definition of “deficit” into clause 29, and gives it the same meaning as the definition included in clause 19.
Amendment 24, page 10, line 38, at end insert—
““regulations” means regulations made by the Secretary of State;”
See Member’s explanatory statement for amendment 4.
Amendment 25, page 11, line, at end insert—
““surplus”, in respect of a collective benefit, has the meaning given by section19;”—(Steve Webb.)
This amendment inserts a definition of “surplus” into clause 29, and gives it the same meaning as the definition included in clause 19.
Clause 30
Pensions promise obtained from third party
Amendment made: 26, page 11, line 17, leave out “Regulations may” and insert “The Secretary of State may by regulations” .—(Steve Webb.)
See Member’s explanatory statement for amendment 4.
Clause 31
Duty to act in the best interests of members
Amendment made: 27, page 11, line 40, leave out “Regulations may” and insert “The Secretary of State may by regulations” .—(Steve Webb.)
See Member’s explanatory statement for amendment 4
Page 14
Amendments made: 28, page 14, line 26 leave out Clause 35
Clause 35 and Schedule 2 are superseded by NC24 and NS1.
Amendment 29, page 14, line 28,leave out Clause 36.—(Steve Webb.)
This amendment removes clause 36. For the replacement provision imposing restrictions on transfers out of public service defined benefits schemes in Great Britain, see NC25
Clause 43
Pensions guidance
Amendment made: 30, page 17, line 32, leave out “cash balance benefits or other money purchase” and insert “flexible”.—(Steve Webb.)
This amendment is consequential on amendment 56
Clause 45
Pension Scheme for Fee-paid Judges
Amendment made: 31, page 18, line 24, at end insert—
‘( ) The power under section 18(5) of the Public Service Pensions Act 2013 is to include power to provide for exceptions in the case of a person who—
(a) served as a fee-paid judge before 1 April 2012, and
(b) has been notified by the appropriate Minister that he or she will potentially be eligible for benefits under a scheme under this section in relation to that service,
(and section 18(6) to (8) of the 2013 Act apply accordingly).
( ) The power under section 18(5) of the Public Service Pensions Act (Northern Ireland) 2014 is to include power to provide for exceptions in the case of a person who—
(a) served as a fee-paid judge before 1 April 2012, and
(b) has been notified by the appropriate Minister that he or she will potentially be eligible for benefits under a scheme under this section in relation to that service,
(and section 18(7) to (9) of the 2014 Act apply accordingly).”—(Steve Webb.)
Among other things this amendment would allow regulations to be made ensuring that fee-paid judges who are subsequently appointed to the salaried judiciary are extended the same transitional protection rights as members moving between existing public service pension schemes.
Amendment made: 32, page 19, line 37, leave out clause 49—(Steve Webb.)
The purpose behind this amendment and amendments 43, 47, 51, 52, 53, 54 and 55 is to move the text of clause 49 into Schedule 3 to the Bill. This is desirable because of structural changes made to the Bill as amended in Public Bill Committee.
Clause 50
Power to make consequential amendments
Amendment made: 33, page 20, line 21, after “State” insert “or the Treasury”.—(Steve Webb.)
This gives the Treasury power to make consequential amendments etc under clause 50.
Clause 51
Regulations
Amendments made: 34, page 20, line 30, leave out subsection (1)
See Member’s explanatory statement for amendment 4.
Amendment 35, page 20, line 32, after “Regulations” insert “made by the Secretary of State or the Treasury”
This amendment is consequential upon amendment 33.
Amendment 36, page 20, line 32, at end insert—
‘( ) A power of the Department for Social Development in Northern Ireland to make regulations under this Act is exercisable by statutory rule for the purposes of the Statutory Rules (Northern Ireland) Order 1979 (S.I. 1979/1573 (N.I. 12)).”
This amendment is consequential on the new clauses to do with independent advice and drawdown.
Amendment 37, page 20, line 40, at end insert—
‘( ) Regulations made by the Department for Social Development in Northern Ireland under this Act are subject to negative resolution within the meaning of section 41(6) of the Interpretation Act (Northern Ireland) 1954 (c. 33 (N.I.)).”.—(Steve Webb.)
This amendment is consequential on the new clauses to do with independent advice and drawdown.
Clause 52
Crown application
Amendment made: 38, page 21, line 7, at end insert—
“() section31,”
This amendment ensures that clause 31 applies to schemes managed by or on behalf of the Crown.
Amendment made: 39, page 21, line 7, at end insert—
“() section (Independent advice in respect of conversions and transfers: Great Britain),
() section (Power to require employer to arrange advice for purposes of section (Independent advice in respect of conversions and transfers: Great Britain)),
() section (Independent advice in respect of conversions and transfers: Northern Ireland),
() section (Power to require employer to arrange advice for purposes of section (Independent advice in respect of conversions and transfers: Northern Ireland)),
“() section (Sums or assets that may be designated as available for drawdown: Great Britain),
() section (Provision about conversion of certain benefits for drawdown: Great Britain),
() section (Provision about calculation of lump sums: Great Britain),
() section (Sums or assets that may be designated as available for drawdown: Northern Ireland),
() section (Provision about conversion of certain benefits for drawdown: Northern Ireland), and
() section (Provision about calculation of lump sums: Northern Ireland).”.—(Steve Webb.)
This amendment ensures that the provisions listed in the amendment apply to schemes managed by or on behalf of the Crown.
Clause 53
Extent
Amendments made: 40, page 21, line 24, leave out subsection (4) and insert—
‘( ) The following extend also to Northern Ireland—
(a) section (Independent advice: income tax exemption)(3);
(b) section (Meaning of “flexible benefit”);
(c) section (Meaning of “cash balance benefit”);
(d) section (Interpretation of Part 4);
(e) this Part.”
This amendment ensures that the provisions listed have UK extent. It also replicates the effect of the subsection left out by the amendment, whilst taking account of the changes described in the Member’s explanatory statement for amendment 32.
Amendment 41, page 21, line 24, at end insert—
‘( ) The following extend to Northern Ireland only—
(a) section (Independent advice in respect of conversions and transfers: Northern Ireland);
(b) section (Power to require employer to arrange advice for purposes of section (Independent advice in respect of conversions and transfers: Northern Ireland));
(c) section (Sums or assets that may be designated as available for drawdown: Northern Ireland);
(d) section (Provision about conversion of certain benefits for drawdown: Northern Ireland);
(e) section (Provision about calculation of lump sums: Northern Ireland);
(f) section (Restriction on transfers out of public service defined benefits schemes: Northern Ireland)(8) and (9).”.—(Steve Webb.)
This amendment provides for the provisions listed in the amendment to extend to Northern Ireland only.
Clause 54
Commencement
Amendments made: 42, page 21, line 26, at end insert—
“() section43;
() section (Independent advice: income tax exemption);
() section (Provision about conversion of certain benefits for drawdown: Great Britain);
() section (Provision about calculation of lump sums: Great Britain);
() section (Provision about conversion of certain benefits for drawdown: Northern Ireland);
() section (Provision about calculation of lump sums: Northern Ireland);
() section (Rights to transfer benefits);
“() section (Reduction of cash equivalents: funded public service defined benefits schemes: Great Britain)(1) and (4);
() section (Public service defined benefits schemes: consequential amendments: Great Britain);
() section (Reduction of cash equivalents: funded public service defined benefits schemes: Northern Ireland)(1) and (4);
() section (Public service defined benefits schemes: consequential amendments: Northern Ireland);
() section (Meaning of “flexible benefit”);
() section (Meaning of “cash balance benefit”);
() section (Interpretation of Part 4);
() Schedule4;
() Schedule (Rights to transfer benefits);”
This amendment provides the provisions listed in the amendment to come into force on Royal Assent. The Bill currently provides for clause 43 and Schedule 4 (which are about the giving of pensions guidance) to be brought into force by regulations.
Amendment 44, page 21, line 29, at end insert—
‘( ) The following come into force on 6 April 2015—
(a) section (Independent advice in respect of conversions and transfers: Great Britain);
(b) section (Power to require employer to arrange advice for purposes of section (Independent advice in respect of conversions and transfers: Great Britain));
(c) section (Independent advice: consequential amendments - Great Britain);
(d) section (Independent advice in respect of conversions and transfers: Northern Ireland);
(e) section (Power to require employer to arrange advice for purposes of section (Independent advice in respect of conversions and transfers: Northern Ireland));
(f) section (Independent advice: consequential amendments - Northern Ireland);
(g) section (Sums or assets that may be designated as available for drawdown: Great Britain);
(h) section (Restrictions on conversion of benefits during winding up etc: Great Britain);
(i) section (Restriction on payment of lump sums during PPF assessment period: Great Britain);
(j) section (Sums or assets that may be designated as available for drawdown: Northern Ireland);
(k) section (Restrictions on conversion of benefits during winding up etc: Northern Ireland);
(l) section (Restriction on payment of lump sums during PPF assessment period: Northern Ireland);
(m) section (Restriction on transfers out of public service defined benefits schemes: Great Britain);
(n) section (Reduction of cash equivalents: funded public service defined benefits schemes: Great Britain)(2) and (3);
(o) section (Restriction on transfers out of public service defined benefits schemes: Northern Ireland);
(p) section (Reduction of cash equivalents: funded public service defined benefits schemes: Northern Ireland)(2) and (3).”
This amendment provides for the provisions listed in the amendment to come into force on 6 April 2015.
Amendment 45, page 21, line 31, after “regulations” insert “made by the Secretary of State”
See Member’s explanatory statement for amendment 4.
Amendment 46, page 21, line 32, leave out “4” and insert “3”
This amendment is consequential on amendment 42.
Amendment 48, page 21, line 36, leave out “Regulations may” and insert “The Secretary of State or the Department for Social Development in Northern Ireland may by regulations” .—(Steve Webb.)
See Member’s explanatory statement for amendment 4.
New Schedule 1
Rights to Transfer Benefits
Part 1
Great Britain amendments
Pension Schemes Act 1993 (c. 48)
1 The Pension Schemes Act 1993 is amended as follows.
2 (1) Chapters 4 and 5 of Part 4 of the Act become Chapters 1 and 2 of a new Part 4ZA.
(2) Accordingly—
(a) before section 93 (and before the Chapter heading above it) insert—
“Part 4ZA
Transfers and contribution refunds”;
(b) for the Chapter heading above section 93 substitute—
“Chapter 1
Transfer rights: general”;
(c) for the Chapter heading above section 101AA substitute—
“Chapter 2
Early leavers: cash transfer sums and contribution refunds”.
3 Until the coming into force of its repeal by Schedule 13 to the Pensions Act 2014, section 56 of the Pension Schemes Act 1993 (payment of state scheme premiums on termination of certified status: supplementary) has effect as if, in subsection (4)(b), for “Chapter 5 of Part 4” there were substituted “Chapter 2 of Part 4ZA”.
4 In section 73 (form of short service benefit and its alternatives), in subsection (3), for “Chapter IV of this Part” substitute “Chapter 1 of Part 4ZA”.
5 For sections 93 to 94 substitute—
“93 Scope of Chapter 1
(1) This Chapter applies to a member of a pension scheme if all of the following conditions are met.
(2) Condition 1 is that the member has accrued rights to any category of benefits under the scheme rules.
(3) Condition 2 is that no crystallisation event has occurred in relation to the member’s accrued rights to benefits in that category (see subsection (7)).
(4) Condition 3 is that—
(a) the member is no longer accruing rights to benefits in that category (see subsection (8)), and
(b) in the case of benefits that are not flexible benefits, the member stopped accruing those rights at least one year before normal pension age.
(5) But this Chapter does not apply to—
(a) a member of a salary related occupational pension scheme whose pensionable service terminated before 1 January 1986 and in respect of whom prescribed requirements are satisfied;
(b) a member of a personal pension scheme which is comprised in an annuity contract made before 4 January 1988.
(6) In this Chapter a reference to a “category” of benefits is to one of the following three categories—
(a) money purchase benefits;
(b) flexible benefits other than money purchase benefits;
(c) benefits that are not flexible benefits.
(7) For the purposes of Condition 2 a crystallisation event occurs in relation to a member’s accrued rights to benefits in a category when—
(a) payment of a pension in respect of any of the benefits has begun,
(b) in the case of money purchase benefits, sums or assets held for the purpose of providing any of the benefits are designated as available for the payment of drawdown pension (as defined by paragraph 4 of Schedule 28 to the Finance Act 2004), or
(c) in the case of a personal pension scheme, sums or assets held for the purpose of providing any of the benefits are applied for purchasing an annuity or insurance policy.
(8) For the purposes of Condition 3 a member stops accruing rights to a category of benefits when there are no longer arrangements in place for the accrual of rights to benefits in that category for or in respect of the member.
(9) In this section a reference to accrued rights does not include pension credit rights.
(10) Regulations may—
(a) provide for this Chapter not to apply in relation to a person of a prescribed description;
(b) modify the application of this Chapter in relation to a member who has accrued rights to benefits of a prescribed description.
(11) In the following provisions of this Chapter—
(a) a reference to a “member” of a pension scheme is a reference to a member to whom this Chapter applies, and
(b) a reference to a member’s “transferrable rights” are to any rights in relation to a category of benefits by virtue of which this Chapter applies to the member.
93A Right to statement of entitlement: benefits other than money purchase
‘(1) The trustees or managers of a pension scheme must, on the application of any member, provide the member with a statement of entitlement in respect of the member’s transferrable rights in relation to categories of benefits other than money purchase benefits.
(2) In the case of a member with transferrable rights in relation to two categories of benefits other than money purchase benefits, the application may relate to transferrable rights in relation to either or both of those categories.
(3) For the purposes of this Chapter a member’s “statement of entitlement” is a written statement of the amount of the cash equivalent at the guarantee date of the transferrable rights to which the application under subsection (1) relates.
(4) In this Chapter “the guarantee date” means the date by reference to which the value of the cash equivalent is calculated, and must be—
(a) within the prescribed period beginning with the date of the application, and
(b) within the prescribed period ending with the date on which the statement of entitlement is provided to the member.
(5) Regulations may make provision in relation to applications under this section and may, in particular, restrict the making of successive applications.
(6) If the trustees or managers of a pension scheme fail to comply with subsection (1), section 10 of the Pensions Act 1995 (civil penalties) applies to any trustee or manager who has failed to take all reasonable steps to secure compliance.
“94 Right to cash equivalent
(1) A member of a pension scheme who has received a statement of entitlement under section 93A acquires a right to take the cash equivalent shown in that statement in accordance with this Chapter.
(2) A member of a pension scheme who has transferrable rights in relation to money purchase benefits acquires a right to take their cash equivalent in accordance with this Chapter.”
6 (1) Section 95 (ways of taking right to cash equivalent) is amended as follows.
(2) For subsection (1) substitute—
“(1) A member of a pension scheme who has acquired a right to take a cash equivalent in accordance with this Chapter may only take it by making an application in writing to the trustees or managers of the scheme requiring them to use the cash equivalent in one of the ways specified below.
(1A) In the case of a right acquired under section 94(1), the application must be made—
(a) within the period of 3 months beginning with the guarantee date shown in the relevant statement of entitlement, and
(b) if the cash equivalent relates to benefits that are not flexible benefits, by no later than the date that falls one year before the member attains normal pension age.”
(3) In subsections (2)(a)(i) and (b)(i) and (3)(a)(i) and (b)(i), for “accrued rights” substitute “transferrable rights”.
(4) Omit subsections (7) and (8).
7 (1) Section 96 (further provisions concerning exercise of option under section 95) is amended as follows.
(2) For subsection (1) substitute—
“(1) A member who has acquired a right to take a cash equivalent under section 94(1) or (2) may exercise the option conferred by section 95(1) in relation to different portions of that cash equivalent in different ways, but a member who exercises that option must do so—
(a) in relation to the whole of that cash equivalent, or
(b) if subsection (2) applies, in relation to the whole of the balance mentioned in subsection (3).”
(3) For subsection (4) substitute—
“(4) Where a member of a pension scheme—
(a) is entitled to make an application under section 95(1) in relation to any category of benefits, and
(b) is also entitled to give a transfer notice under section 101F(1) to the trustees or managers of the scheme in relation to benefits in the same category (or would be entitled to do so but for section 101G(2)),
the member may not, if the scheme so provides, make an application under section 95(1) in relation to that category of benefits without also giving a transfer notice under section 101F(1) in relation to that category of benefits.”
8 (1) Section 97 (calculation of cash equivalents) is amended as follows.
(2) After subsection (1) insert—
“(1A) Where a member applies under section 95 to take a cash equivalent that relates to money purchase benefits, the cash equivalent is to be calculated by reference to the date of the application.”
(3) In subsection (2)—
(a) in the opening words, for “except guaranteed cash equivalents” substitute “that relate to money purchase benefits”;
(b) in paragraph (aa), for “, including a guaranteed cash equivalent,” substitute “that relates to any category of benefits”.
(4) In subsection (3), omit paragraph (a).
(5) For subsection (3A) substitute—
“(3A) For the purposes of subsection (3), the “appropriate date”—
(a) in relation to a cash equivalent that relates to benefits other than money purchase benefits, means the guarantee date for the purposes of the relevant statement of entitlement under section 93A, and
(b) in relation to a cash equivalent that relates to money purchase benefits, means the date on which the trustees or managers receive an application from the member under section 95.”
9 For section 98 substitute—
“98 Loss of right to cash equivalent
(1) A member of a pension scheme who acquires the right to take a cash equivalent under section 94(1) loses that right if no application to take the cash equivalent is made within the period specified in section 95(1A) (but this does not prevent the member later acquiring a new right to take a cash equivalent under section 94(1) in relation to the same benefits).
(2) A member of a pension scheme loses the right to take a cash equivalent in accordance with this Chapter if the scheme is wound up.”
10 (1) Section 99 (trustees’ duties after exercise of option) is amended as follows.
(2) For subsection (2) substitute—
“(2) Subject to the following provisions of this section, if the trustees or managers of a scheme receive an application under section 95 they must do what is needed to carry out what the member requires—
(a) in the case of an application that relates to benefits other than money purchase benefits, within 6 months beginning with the guarantee date shown in the relevant statement of entitlement, and
(b) in the case of an application that relates to money purchase benefits, within 6 months beginning with the date of the application.”
(3) In subsection (3)(a) omit “at any time before the expiry of the 12 months beginning with the termination date”.
(4) Omit subsection (3A).
11 After section 100 insert—
“100A Prohibition on excluding future accruals etc
Except as mentioned in sections 96(4) and 101G(4), a pension scheme may not contain rules that would have the effect of—
(a) preventing a member from exercising a right under this Chapter in relation to a category of benefits without also exercising a right under this Chapter or otherwise to require a transfer payment to be made in respect of another category of benefits, or
(b) preventing a member who exercises a right under this Chapter in relation to a category of benefits from accruing rights to benefits in another category.
100B Meaning of “scheme rules”: occupational pension schemes
‘(1) In this Chapter references to the scheme rules, in relation to an occupational pension scheme, are references to— For the purposes of subsection (1)—
(a) the rules of the scheme, except so far as overridden by a relevant legislative provision,
(b) the relevant legislative provisions, to the extent that they have effect in relation to the scheme and are not reflected in the rules of the scheme, and
(c) any provision which the rules of the scheme do not contain but which the scheme must contain if it is to conform with the requirements of Chapter 1 of Part 4 of this Act.
(d) “relevant legislative provision” means any provision contained in any of the following provisions—
(i) Schedule 5 to the Social Security Act 1989;
(ii) this Part or Chapters 2 or 3 of Part 4 or regulations made under this Part or either of those Chapters;
(iii) Part 4A of this Act or regulations made under that Part;
(iv) section 110(1) of this Act;
(v) Part 1 of the Pensions Act 1995 or subordinate legislation made or having effect as if made under that Part;
(vi) section 31 of the Welfare Reform and Pensions Act 1999;
(vii) any provision mentioned in section 306(2) of the Pensions Act 2004;
(viii) regulations made under Schedule 17 to the Pensions Act 2014;
(ix) regulations made under Schedule 18 to the Pensions Act 2014;
(x) regulations made under Part 2 of the Pension Schemes Act 2014;
(e) a relevant legislative provision is to be taken to override any of the provisions of the scheme if, and only if, it does so by virtue of any of the following provisions—
(i) paragraph 3 of Schedule 5 to the Social Security Act 1989;
(ii) section 129(1) of this Act;
(iii) section 117(1) of the Pensions Act 1995;
(iv) section 31(4) of the Welfare Reform and Pensions Act 1999;
(v) section 306(1) of the Pensions Act 2004;
(vi) regulations made under paragraph 17 of Schedule 17 to the Pensions Act 2014;
(vii) regulations made under paragraph 6 of Schedule 18 to the Pensions Act 2014;
(viii) regulations made under section28 of the Pension Schemes Act 2014.
100C Meaning of “normal pension age” in this Chapter
‘(1) In this Chapter “normal pension age”, in relation to a category of benefits under a pension scheme, means—
(a) in a case where the scheme is an occupational pension scheme and those benefits consist only of a guaranteed minimum pension, the earliest age at which the member is entitled to receive the guaranteed minimum pension on retirement from any employment to which the scheme applies,
(b) in a case where the scheme is an occupational pension scheme and the scheme provides for the member to become entitled to receive any of those benefits at a particular age on retirement from any employment to which the scheme applies, the earliest age at which the member becomes entitled to receive any of the benefits, and
(c) in any other case, normal minimum pension age as defined by section 279(1) of the Finance Act 2004.
(2) For the purposes of subsection (1) any scheme rule making special provision as to early retirement on grounds of ill-health or otherwise is to be disregarded.
100D Interpretation of Chapter
In this Chapter—
“accrued rights”, in relation to a member of a pension scheme, means rights that have accrued to or in respect of the member to benefits under the scheme;
“category”, in relation to benefits, has the meaning given by section 93(6);
“flexible benefit” has the meaning given by section (Meaning of “flexible benefit”) of the Pension Schemes Act 2014;
“guarantee date”, in relation to a member who has received a statement of entitlement, has the meaning given by section 93A;
“member” is to be read in accordance with section 93(11);
“normal pension age” has the meaning given by section 100C;
“pension credit rights”, in relation to a member of a pension scheme, means rights to benefits under the scheme which are attributable (directly or indirectly) to a pension credit;
“salary related occupational pension scheme”: an occupational pension scheme is “salary related” if—
(a) the scheme is not a scheme under which all the benefits that may be provided are money purchase benefits, and
(b) the scheme does not fall within a prescribed class;
“scheme rules”, in relation to an occupational pension scheme, has the meaning given by section 100B;
“statement of entitlement” has the meaning given by section 93A;
“transferrable rights” is to be read in accordance with section 93(11).””
12 (1) In section 101F (power to give transfer notice) is amended as follows.
(2) In subsection (1), for “pension credit benefit” substitute “pension credit rights”.
(3) After subsection (3) insert—
“(3A) An eligible member who has pension credit rights in relation to more than one category of benefits under the scheme may exercise the power to give a transfer notice in relation to the pension credit rights in relation to any one or more of those categories.”
(4) For subsection (4) substitute—
“(4) The cash equivalent for the purposes of subsection (1) shall—
(a) in a case where the pension credit rights relate to a category of benefits other than money purchase benefits, be taken to be the amount shown in the relevant statement under section 101H, and
(b) in a case where the pension credit rights relate to money purchase benefits, be determined by reference to the date the notice under that subsection is given.”
(5) For subsection (6A) substitute—
“(6A) Regulations may—
(a) provide for this Chapter not to apply in prescribed circumstances in relation to a member of a prescribed scheme or schemes of a prescribed description;
(b) modify the application of this Chapter in relation to a member who has accrued rights to benefits of a prescribed description.
(6B) In this Chapter a reference to a “category” of benefits is to one of the following three categories—
(a) money purchase benefits;
(b) flexible benefits other than money purchase benefits;
(c) benefits that are not flexible benefits.”
13 For section 101G (restrictions on power to give transfer notice) substitute—
“101G Restrictions on power to give transfer notice
(1) An eligible member may not give a transfer notice in relation to a category of benefits if a crystallisation event has occurred in relation to any of the member’s pension credit rights to benefits in that category.
(2) An eligible member may give a transfer notice in relation to a category of benefits other than money purchase benefits only if—
(a) the member has been provided with a statement under section 101H in relation to benefits in that category, and
(b) not more than 3 months have passed since the date by reference to which the amount shown in the statement is determined.
(3) An eligible member may not give a transfer notice in relation to benefits other than flexible benefits if there is less than one year to go until the member reaches normal benefit age.
(4) Where an eligible member of a qualifying scheme—
(a) is entitled to give a transfer notice in relation to any category of benefits, and
(b) is also entitled to make an application to the trustees or managers of the scheme under section 95(1) in relation to benefits in the same category (or would be entitled to do so but for section 95(1A)(a)),
the member may not, if the scheme so provides, give a transfer notice in relation to that category of benefits without also making an application under section 95(1) in relation to that category of benefits.
(5) A transfer notice may not be given if a previous transfer notice given by the member to the trustees or managers of the scheme is outstanding.
(6) For the purposes of subsection (1) a crystallisation event occurs in relation to a member’s pension credit rights to benefits in a category when—
(a) payment of a pension in respect of any of the benefits has begun,
(b) in the case of money purchase benefits, sums or assets held for the purpose of providing any of the benefits are designated as available for the payment of drawdown pension (as defined by paragraph 4 of Schedule 28 to the Finance Act 2004), or
(c) in the case of a personal pension scheme, sums or assets held for the purpose of providing any of the benefits are applied for purchasing an annuity or insurance policy.”
14 (1) Section 101H (salary related schemes: statements of entitlement) is amended as follows.
(2) For subsection (1) substitute—
“(1) The trustees or managers of a qualifying scheme must, on the application of an eligible member, provide the member with a written statement of the amount of the cash equivalent of the member’s pension credit rights in relation to categories of benefits other than money purchase benefits.
(1A) In the case of a member with pension credit rights in relation to two categories of benefits other than money purchase benefits, the application may relate to pension credit rights in relation to either or both of those categories.”
(3) In the heading for “Salary related schemes” substitute “Benefits other than money purchase”.
15 (1) Section 101J (time for compliance with transfer notice) is amended as follows.
(2) In subsection (1), for paragraphs (a) and (b) substitute—
“(a) in the case of an application that relates to benefits other than money purchase benefits, within 6 months beginning with the valuation date, and
(b) in the case of an application that relates to money purchase benefits, within 6 months of the date on which the notice is given.”
(3) For subsection (7) substitute—
“(7) In subsection (1)(a), “valuation date” means the date by reference to which the amount shown in the relevant statement under section 101H is determined.”
16 After section 101N insert—
“101NA Prohibition on excluding transfers of some rights without others etc
Except as mentioned in sections 96(4) and 101G(4), a pension scheme may not contain rules that would have the effect of—
(a) preventing a member from exercising a right under this Chapter in relation to a category of benefits without also exercising a right under this Chapter or otherwise to require a transfer payment to be made in respect of another category of benefits, or
(b) preventing a member who exercises a right under this Chapter in relation to a category of benefits from accruing rights to benefits in another category.”
17 (1) Section 101P (interpretation) is amended as follows.
(2) In subsection (1), at the appropriate places insert—
““category”, in relation to benefits, has the meaning given by section 101F(6B);”
““flexible benefit” has the meaning given by section (Meaning of “flexible benefit”) of the Pension Schemes Act 2014;”.
(3) Omit subsection (2).
(4) In subsection (3), for “given to the trustees or managers of a salary related occupational pension scheme” substitute “in relation to benefits other than money purchase benefits”.”
18 Omit section 101Q.
19 In section 129 (overriding requirements) for “Chapters II, III, IV and V of Part IV” substitute “Chapters 2 and 3 of Part 4, Chapters 1 and 2 of Part 4ZA”.
20 In section 130 (extra-statutory benefits), in paragraph (b), for “Chapter II, IV or V of Part IV” substitute “Chapter 2 of Part 4 or Chapter 1 or 2 Part 4ZA”.
21 In section 153 (power to modify certain provisions), in subsection (1), for “Chapters II, III and IV of Part IV” substitute “Chapters 2 and 3 of Part 4 and Chapter 1 of Part 4ZA”.
22 In section 179 (linked qualifying service), in subsection (1)(a)—
(a) in the opening words, for “Chapter 4 or 5 of Part 4” substitute “Chapter 1 or 2 of Part 4ZA”;
(b) in sub-paragraph (iii)—
(i) for “Chapter 4 of Part 4” substitute “Chapter 1 of Part 4ZA”;
(ii) for “Chapter 5” substitute “Chapter 2”.
23 In section 181 (interpretation), in subsection (1), in paragraph (b) of the definition of “transfer credits”, for “Chapter 5 of Part 4” substitute “Chapter 2 of Part 4ZA”.
Pensions Act 1995 (c. 26)
24 The Pensions Act 1995 is amended as follows.
25 In section 67A (the subsisting rights provisions: interpretation), in subsection (9)(a), for sub-paragraph (ii) substitute—
(ii) Chapter 2 or 3 of Part 4 of the Pension Schemes Act 1993 (certain protection for early leavers) or regulations made under either of those Chapters;
(iia) Chapter 1 or 2 of Part 4ZA of that Act (transfers and contribution refunds) or regulations made under either of those Chapters;”.
26 In section 73 (preferential liabilities on winding up), in subsection (9), for “Chapter 5 of Part 4” substitute “Chapter 2 of Part 4ZA”.
27 In section 73B (sections 73 and 73A: supplementary), in subsection (7), for “Chapter 4 of Part 4” substitute “Chapter 1 of Part 4ZA”.
Learning and Skills Act 2000 (c. 21)
28 In section 135 (pensions: interpretation), in subsection (4), for “section 93(1A)” substitute “section 100D”.
Pensions Act 2004 (c. 35)
29 The Pensions Act 2004 is amended as follows.
30 (1) Section 18 (pension liberation: interpretation) is amended as follows.
(2) In subsection (2)(a)—
(a) after “accrued rights” insert “or an entitlement”;
(b) in sub-paragraph (ii), for “the applicable rules” substitute “the scheme rules”.
(3) In subsection (3)—
(a) for paragraph (a) substitute—
“(a) section 94 of the Pension Schemes Act 1993 (right to cash equivalent under Chapter 1 of Part 4ZA of that Act)”;
(b) in paragraph (b), for “Chapter 5 of Part 4” substitute “Chapter 2 of Part 4ZA”.
(4) In subsection (4)(d), for “the applicable rules” substitute “the scheme rules”.
(5) Omit subsection (5).
31 In section 23 (freezing orders), in subsection (4)(g), for “salary related schemes” substitute “benefits other than money purchase”.
32 In section 24 (consequences of freezing order), in subsection (7), for paragraphs (a) and (b) substitute—
“(a) Chapter 1 of Part 4ZA of the Pension Schemes Act 1993 (transfer rights: general), or
(b) Chapter 2 of that Part (early leavers: cash transfer sums and contribution refunds).”
33 In section 73 (inspection of premises), in subsection (2)(d)—
(a) for “Chapter 4 of Part 4” substitute “Chapter 1 of Part 4ZA”;
(b) for “Chapter 5 of Part 4” substitute “Chapter 2 of Part 4ZA”.
34 In section 135 (restrictions on winding up, discharge of liabilities etc), in subsection (6)(b), for “Chapter 5 of Part 4” substitute “Chapter 2 of Part 4ZA”.
35 In section 138 (payment of scheme benefits), in subsection (3)(b), for “Chapter 5 of Part 4” substitute “Chapter 2 of Part 4ZA”.
36 In section 318 (interpretation), in subsection (3)(a), for sub-paragraph (ii) substitute—
(ii) Chapter 2 or 3 of Part 4 of the Pension Schemes Act 1993 (certain protection for early leavers) or regulations made under either of those Chapters;
(iia) Chapter 1 or 2 of Part 4ZA of that Act (transfers and contribution refunds) or regulations made under either of those Chapters;”.
37 (1) Schedule 7 (pension compensation provisions) is amended as follows.
(2) In paragraph 20(1)(c), for “Chapter 5 of Part 4” substitute “Chapter 2 of Part 4ZA”.
(3) In paragraph 32(1)(b), for “Chapter 5 of Part 4” substitute “Chapter 2 of Part 4ZA”.
Pensions Act 2014 (c. 19)
38 The Pensions Act 2014 is amended as follows.
39 In section 34 (power to prohibit offer of incentives to transfer pension rights), in subsection (7), in the definition of “salary related occupational pension scheme”, for “section 93(1A)” substitute “section 100D”.
40 In Schedule 17 (automatic transfer of pension benefits etc), in paragraph 1—
(a) in sub-paragraph (4)(d) for “applicable rules” substitute “scheme rules”;
(b) for sub-paragraph (6) substitute—
“(6) In sub-paragraph (4)—
(a) the reference to “scheme rules” is, in relation to an occupational pension scheme, to be read in accordance with section 100B of the Pension Schemes Act 1993;
(b) “benefits” means—
(i) money purchase benefits other than money purchase benefits of a prescribed description, or
(ii) benefits of a prescribed description.”
Part 2
Northern Ireland amendments
Pension Schemes (Northern Ireland) Act 1993 (c. 49)
41 The Pension Schemes (Northern Ireland) Act 1993 is amended as follows.
42 (1) Chapters 4 and 5 of Part 4 of the Act become Chapters 1 and 2 of a new Part 4ZA.
(2) Accordingly—
(a) before section 89 (and before the Chapter heading above it) insert—
“Part 4ZA
Transfers and contribution refunds”;
(b) for the Chapter heading above section 89 substitute—
“Chapter 1
Transfer rights: general”;
(c) for the Chapter heading above section 97AA substitute—
“Chapter 2
Early leavers: cash transfer sums and contribution refunds”.
43 In section 52 (payment of state scheme premiums on termination of certified status: supplementary), in subsection (4)(b), for “Chapter 5 of Part IV” substitute “Chapter 2 of Part 4ZA”.
44 In section 69 (form of short service benefit and its alternatives), in subsection (3), for “Chapter IV of this Part” substitute “Chapter 1 of Part 4ZA”.
45 For sections 89 to 90 substitute—
“89 Scope of Chapter 1
(1) This Chapter applies to a member of a pension scheme if all of the following conditions are met.
(2) Condition 1 is that the member has accrued rights to any category of benefits under the scheme rules.
(3) Condition 2 is that no crystallisation event has occurred in relation to the member’s accrued rights to benefits in that category (see subsection (7)).
(4) Condition 3 is that—
(a) the member is no longer accruing rights to benefits in that category (see subsection (8)), and
(b) in the case of benefits that are not flexible benefits, the member stopped accruing those rights at least one year before normal pension age.
(5) But this Chapter does not apply to—
(a) a member of a salary related occupational pension scheme whose pensionable service terminated before 1 January 1986 and in respect of whom prescribed requirements are satisfied;
(b) a member of a personal pension scheme which is comprised in an annuity contract made before 4 January 1988.
(6) In this Chapter a reference to a “category” of benefits is to one of the following three categories—
(a) money purchase benefits;
(b) flexible benefits other than money purchase benefits;
(c) benefits that are not flexible benefits.
(7) For the purposes of Condition 2 a crystallisation event occurs in relation to a member’s accrued rights to benefits in a category when—
(a) payment of a pension in respect of any of the benefits has begun,
(b) in the case of money purchase benefits, sums or assets held for the purpose of providing any of the benefits are designated as available for the payment of drawdown pension (as defined by paragraph 4 of Schedule 28 to the Finance Act 2004), or
(c) in the case of a personal pension scheme, sums or assets held for the purpose of providing any of the benefits are applied for purchasing an annuity or insurance policy.
(8) For the purposes of Condition 3 a member stops accruing rights to a category of benefits when there are no longer arrangements in place for the accrual of rights to benefits in that category for or in respect of the member.
(9) In this section a reference to accrued rights does not include pension credit rights.
(10) Regulations may—
(a) provide for this Chapter not to apply in relation to a person of a prescribed description;
(b) modify the application of this Chapter in relation to a member who has accrued rights to benefits of a prescribed description.
(11) In the following provisions of this Chapter—
(a) a reference to a “member” of a pension scheme is a reference to a member to whom this Chapter applies, and
(b) a reference to a member’s “transferrable rights” are to any rights in relation to a category of benefits by virtue of which this Chapter applies to the member.
89A Right to statement of entitlement: benefits other than money purchase
‘(1) The trustees or managers of a pension scheme must, on the application of any member, provide the member with a statement of entitlement in respect of the member’s transferrable rights in relation to categories of benefits other than money purchase benefits.
(2) In the case of a member with transferrable rights in relation to two categories of benefits other than money purchase benefits, the application may relate to transferrable rights in relation to either or both of those categories.
(3) For the purposes of this Chapter a member’s “statement of entitlement” is a written statement of the amount of the cash equivalent at the guarantee date of the transferrable rights to which the application under subsection (1) relates.
(4) In this Chapter “the guarantee date” means the date by reference to which the value of the cash equivalent is calculated, and must be—
(a) within the prescribed period beginning with the date of the application, and
(b) within the prescribed period ending with the date on which the statement of entitlement is provided to the member.
(5) Regulations may make provision in relation to applications under this section and may, in particular, restrict the making of successive applications.
(6) If the trustees or managers of a pension scheme fail to comply with subsection (1), Article 10 of the Pensions (Northern Ireland) Order 1995 (civil penalties) applies to any trustee or manager who has failed to take all reasonable steps to secure compliance.
“90 Right to cash equivalent
(1) A member of a pension scheme who has received a statement of entitlement under section 89A acquires a right to take the cash equivalent shown in that statement in accordance with this Chapter.
(2) A member of a pension scheme who has transferrable rights in relation to money purchase benefits acquires a right to take their cash equivalent in accordance with this Chapter.”
46 (1) Section 91 (ways of taking right to cash equivalent) is amended as follows.
(2) For subsection (1) substitute—
“(1) A member of a pension scheme who has acquired a right to take a cash equivalent in accordance with this Chapter may only take it by making an application in writing to the trustees or managers of the scheme requiring them to use the cash equivalent in one of the ways specified below.
(1A) In the case of a right acquired under section 90(1), the application must be made—
(a) within the period of 3 months beginning with the guarantee date shown in the relevant statement of entitlement, and
(b) if the cash equivalent relates to benefits that are not flexible benefits, by no later than the date that falls one year before the member attains normal pension age.”
(3) In subsections (2)(a)(i) and (b)(i) and (3)(a)(i) and (b)(i), for “accrued rights” substitute “transferrable rights”.
(4) Omit subsections (7) and (8).
47 (1) Section 92 (further provisions concerning exercise of option under section 91) is amended as follows.
(2) For subsection (1) substitute—
“(1) A member who has acquired a right to take a cash equivalent under section 90(1) or (2) may exercise the option conferred by section 91(1) in relation to different portions of that cash equivalent in different ways, but a member who exercises that option must do so—
(a) in relation to the whole of that cash equivalent, or
(b) if subsection (2) applies, in relation to the whole of the balance mentioned in subsection (3).”
(3) For subsection (4) substitute—
“(4) Where a member of a pension scheme—
(a) is entitled to make an application under section 91(1) in relation to any category of benefits, and
(b) is also entitled to give a transfer notice under section 97F(1) to the trustees or managers of the scheme in relation to benefits in the same category (or would be entitled to do so but for section 97G(2)),
the member may not, if the scheme so provides, make an application under section 91(1) in relation to that category of benefits without also giving a transfer notice under section 97F(1) in relation to that category of benefits.”
48 (1) Section 93 (calculation of cash equivalents) is amended as follows.
(2) After subsection (1) insert—
“(1A) Where a member applies under section 91 to take a cash equivalent that relates to money purchase benefits, the cash equivalent is to be calculated by reference to the date of the application.”
(3) In subsection (2)—
(a) in the opening words, for “except guaranteed cash equivalents (as defined in section 90(1A)” substitute “that relate to money purchase benefits”;
(b) in paragraph (aa), for “, including a guaranteed cash equivalent,” substitute “that relates to any category of benefits”.
(4) In subsection (3), omit paragraph (a).
(5) For subsection (3A) substitute—
“(3A) For the purposes of subsection (3), the “appropriate date”—
(a) in relation to a cash equivalent that relates to benefits other than money purchase benefits, means the guarantee date for the purposes of the relevant statement of entitlement under section 89A, and
(b) in relation to a cash equivalent that relates to money purchase benefits, means the date on which the trustees or managers receive an application from the member under section 91.”
49 For section 94 substitute—
“94 Loss of right to cash equivalent
(1) A member of a pension scheme who acquires the right to take a cash equivalent under section 90(1) loses that right if no application to take the cash equivalent is made within the period specified in section 91(1A) (but this does not prevent the member later acquiring a new right to take a cash equivalent under section 90(1) in relation to the same benefits).
(2) A member of a pension scheme loses the right to take a cash equivalent in accordance with this Chapter if the scheme is wound up.”
50 (1) Section 95 (trustees’ duties after exercise of option) is amended as follows.
(2) For subsection (2) substitute—
“(2) Subject to the following provisions of this section, if the trustees or managers of a scheme receive an application under section 91 they must do what is needed to carry out what the member requires—
(a) in the case of an application that relates to benefits other than money purchase benefits, within 6 months beginning with the guarantee date shown in the relevant statement of entitlement, and
(b) in the case of an application that relates to money purchase benefits, within 6 months beginning with the date of the application.”
(3) In subsection (3)(a) omit “at any time before the expiry of the 12 months beginning with the termination date”.
(4) Omit subsection (3A).
51 After section 96 insert—
“96AA Prohibition on excluding future accruals etc
Except as mentioned in sections 92(4) and 97G(4), a pension scheme may not contain rules that would have the effect of—
(a) preventing a member from exercising a right under this Chapter in relation to a category of benefits without also exercising a right under this Chapter or otherwise to require a transfer payment to be made in respect of another category of benefits, or
(b) preventing a member who exercises a right under this Chapter in relation to a category of benefits from accruing rights to benefits in another category.
96AB Meaning of “scheme rules”: occupational pension schemes
‘(1) In this Chapter references to the scheme rules, in relation to an occupational pension scheme, are references to— For the purposes of subsection (1)—
(a) the rules of the scheme, except so far as overridden by a relevant legislative provision,
(b) the relevant legislative provisions, to the extent that they have effect in relation to the scheme and are not reflected in the rules of the scheme, and
(c) any provision which the rules of the scheme do not contain but which the scheme must contain if it is to conform with the requirements of Chapter 1 of Part 4.
(d) “relevant legislative provision” means any provision contained in any of the following provisions—
(i) Schedule 5 to the Social Security (Northern Ireland) Order 1989;
(ii) this Part or Chapters 2 or 3 of Part 4 or regulations made under this Part or either of those Chapters;
(iii) Part 4A or regulations made under that Part;
(iv) section 106(1);
(v) Part 2 of the Pensions (Northern Ireland) Order 1995 or orders or regulations made or having effect as if made under that Part;
(vi) Article 28 of the Welfare Reform and Pensions (Northern Ireland) Order 1999;
(vii) any provision mentioned in Article 279(2) of the Pensions (Northern Ireland) Order 2005;
(e) a relevant legislative provision is to be taken to override any of the provisions of the scheme if, and only if, it does so by virtue of any of the following provisions—
(i) paragraph 3 of Schedule 5 to the Social Security (Northern Ireland) Order 1989;
(ii) section 125(1);
(iii) Article 114(1) of the Pensions (Northern Ireland) Order 1995;
(iv) Article 28(4) of the Welfare Reform and Pensions (Northern Ireland) Order 1999;
(v) Article 279(1) of the Pensions (Northern Ireland) Order 2005.
96AC Meaning of “normal pension age” in this Chapter
‘(1) In this Chapter “normal pension age”, in relation to a category of benefits under a pension scheme, means—
(a) in a case where the scheme is an occupational pension scheme and those benefits consist only of a guaranteed minimum pension, the earliest age at which the member is entitled to receive the guaranteed minimum pension on retirement from any employment to which the scheme applies,
(b) in a case where the scheme is an occupational pension scheme and the scheme provides for the member to become entitled to receive any of those benefits at a particular age on retirement from any employment to which the scheme applies, the earliest age at which the member becomes entitled to receive any of the benefits, and
(c) in any other case, normal minimum pension age as defined by section 279(1) of the Finance Act 2004.
(2) For the purposes of subsection (1) any scheme rule making special provision as to early retirement on grounds of ill-health or otherwise is to be disregarded.
96AD Interpretation of Chapter
In this Chapter—
“accrued rights”, in relation to a member of a pension scheme, means rights that have accrued to or in respect of the member to benefits under the scheme;
“category”, in relation to benefits, has the meaning given by section 89(6);
“flexible benefit” has the meaning given by section (Meaning of “flexible benefit”) of the Pension Schemes Act 2014;
“guarantee date”, in relation to a member who has received a statement of entitlement, has the meaning given by section 89A;
“member” is to be read in accordance with section 89(11);
“normal pension age” has the meaning given by section 96C;
“pension credit rights”, in relation to a member of a pension scheme, means rights to benefits under the scheme which are attributable (directly or indirectly) to a pension credit;
“salary related occupational pension scheme”: an occupational pension scheme is “salary related” if—
(a) the scheme is not a scheme under which all the benefits that may be provided are money purchase benefits, and
(b) the scheme does not fall within a prescribed class;
“scheme rules”, in relation to an occupational pension scheme, has the meaning given by section 96B;
“statement of entitlement” has the meaning given by section 89A;
“transferrable rights” is to be read in accordance with section 89(11).””
52 (1) In section 97F (power to give transfer notice) is amended as follows.
(2) In subsection (1), for “pension credit benefit” substitute “pension credit rights”.
(3) After subsection (3) insert—
“(3A) An eligible member who has pension credit rights in relation to more than one category of benefits under the scheme may exercise the power to give a transfer notice in relation to the pension credit rights in relation to any one or more of those categories.”
(4) For subsection (4) substitute—
“(4) The cash equivalent for the purposes of subsection (1) shall—
(a) in a case where the pension credit rights relate to a category of benefits other than money purchase benefits, be taken to be the amount shown in the relevant statement under section 97H, and
(b) in a case where the pension credit rights relate to money purchase benefits, be determined by reference to the date the notice under that subsection is given.”
(5) For subsection (6A) substitute—
“(6A) Regulations may—
(a) provide for this Chapter not to apply in prescribed circumstances in relation to a member of a prescribed scheme or schemes of a prescribed description;
(b) modify the application of this Chapter in relation to a member who has accrued rights to benefits of a prescribed description.
(6B) In this Chapter a reference to a “category” of benefits is to one of the following three categories—
(a) money purchase benefits;
(b) flexible benefits other than money purchase benefits;
(c) benefits that are not flexible benefits.”
53 For section 97G (restrictions on power to give transfer notice) substitute—
“97G Restrictions on power to give transfer notice
(1) An eligible member may not give a transfer notice in relation to a category of benefits if a crystallisation event has occurred in relation to any of the member’s pension credit rights to benefits in that category.
(2) An eligible member may give a transfer notice in relation to a category of benefits other than money purchase benefits only if—
(a) the member has been provided with a statement under section 97H in relation to benefits in that category, and
(b) not more than 3 months have passed since the date by reference to which the amount shown in the statement is determined.
(3) An eligible member may not give a transfer notice in relation to benefits other than flexible benefits if there is less than one year to go until the member reaches normal benefit age.
(4) Where an eligible member of a qualifying scheme—
(a) is entitled to give a transfer notice in relation to any category of benefits, and
(b) is also entitled to make an application to the trustees or managers of the scheme under section 91(1) in relation to benefits in the same category (or would be entitled to do so but for section 91(1A)(a)),
the member may not, if the scheme so provides, give a transfer notice in relation to that category of benefits without also making an application under section 91(1) in relation to that category of benefits.
(5) A transfer notice may not be given if a previous transfer notice given by the member to the trustees or managers of the scheme is outstanding.
(6) For the purposes of subsection (1) a crystallisation event occurs in relation to a member’s pension credit rights to benefits in a category when—
(a) payment of a pension in respect of any of the benefits has begun,
(b) in the case of money purchase benefits, sums or assets held for the purpose of providing any of the benefits are designated as available for the payment of drawdown pension (as defined by paragraph 4 of Schedule 28 to the Finance Act 2004), or
(c) in the case of a personal pension scheme, sums or assets held for the purpose of providing any of the benefits are applied for purchasing an annuity or insurance policy.”
54 (1) Section 97H (salary related schemes: statements of entitlement) is amended as follows.
(2) For subsection (1) substitute—
“(1) The trustees or managers of a qualifying scheme must, on the application of an eligible member, provide the member with a written statement of the amount of the cash equivalent of the member’s pension credit rights in relation to categories of benefits other than money purchase benefits.
(1A) In the case of a member with pension credit rights in relation to two categories of benefits other than money purchase benefits, the application may relate to pension credit rights in relation to either or both of those categories.”
(3) In the heading for “Salary related schemes” substitute “Benefits other than money purchase”.
55 (1) Section 97J (time for compliance with transfer notice) is amended as follows.
(2) In subsection (1), for paragraphs (a) and (b) substitute—
“(a) in the case of an application that relates to benefits other than money purchase benefits, within 6 months beginning with the valuation date, and
(b) in the case of an application that relates to money purchase benefits, within 6 months of the date on which the notice is given.”
(3) For subsection (7) substitute—
“(7) In subsection (1)(a), “valuation date” means the date by reference to which the amount shown in the relevant statement under section 97H is determined.”
56 After section 97N insert—
“97NA Prohibition on excluding transfers of some rights without others etc
Except as mentioned in sections 92(4) and 97G(4), a pension scheme may not contain rules that would have the effect of—
(a) preventing a member from exercising a right under this Chapter in relation to a category of benefits without also exercising a right under this Chapter or otherwise to require a transfer payment to be made in respect of another category of benefits, or
(b) preventing a member who exercises a right under this Chapter in relation to a category of benefits from accruing rights to benefits in another category.”
57 (1) Section 97P (interpretation) is amended as follows.
(2) In subsection (1), at the appropriate places insert—
““category”, in relation to benefits, has the meaning given by section 97F(6B);”
““flexible benefit” has the meaning given by section (Meaning of “flexible benefit”) of the Pension Schemes Act 2014;”.
(3) Omit subsection (2).
(4) In subsection (3), for “given to the trustees or managers of a salary related occupational pension scheme” substitute “in relation to benefits other than money purchase benefits”.”
58 Omit section 97Q.
59 In section 125 (overriding requirements) for “Chapters II, III, IV and V of Part IV” substitute “Chapters 2 and 3 of Part 4, Chapters 1 and 2 of Part 4ZA”.
60 In section 126 (extra-statutory benefits), in paragraph (b), for “Chapter II, IV or V of Part IV” substitute “Chapter 2 of Part 4 or Chapter 1 or 2 Part 4ZA”.
61 In section 149 (power to modify certain provisions), in subsection (1), for “Chapters II, III and IV of Part IV” substitute “Chapters 2 and 3 of Part 4 and Chapter 1 of Part 4ZA”.
62 In section 174 (linked qualifying service), in subsection (1)(a)—
(a) in the opening words, for “Chapter 4 or 5 of Part IV” substitute “Chapter 1 or 2 of Part 4ZA”;
(b) in sub-paragraph (iii)—
(i) for “Chapter 4 of Part IV” substitute “Chapter 1 of Part 4ZA”;
(ii) for “Chapter 5” substitute “Chapter 2”.
63 In section 176 (interpretation), in subsection (1), in paragraph (b) of the definition of “transfer credits”, for “Chapter 5 of Part IV” substitute “Chapter 2 of Part 4ZA”.
Pensions (Northern Ireland) Order 1995 (S.I. 1995/3213 (N.I. 22))
64 The Pensions (Northern Ireland) Order 1995 is amended as follows.
65 In Article 67A (the subsisting rights provisions: interpretation), in paragraph (9)(a), for head (ii) substitute—
(ii) Chapter 2 or 3 of Part 4 of the Pension Schemes Act (certain protection for early leavers) or regulations made under either of those Chapters;
(iia) Chapter 1 or 2 of Part 4ZA of that Act (transfers and contribution refunds) or regulations made under either of those Chapters;”.
66 In Article 73 (preferential liabilities on winding up), in paragraph (9), for “Chapter 5 of Part IV” substitute “Chapter 2 of Part 4ZA”.
67 In Article 73B (Article 73 and 73A: supplementary), in paragraph (7), for “Chapter 4 of Part IV” substitute “Chapter 1 of Part 4ZA”.
Pensions (Northern Ireland) Order 2005 (S.I. 2005/255 (N.I. 1))
68 The Pensions (Northern Ireland) Order 2005 is amended as follows.
69 In Article 2 (interpretation), in paragraph (4)(a), for head (ii) substitute—
(ii) Chapter 2 or 3 of Part 4 of the Pension Schemes Act (certain protection for early leavers) or regulations made under either of those Chapters;
(iia) Chapter 1 or 2 of Part 4ZA of that Act (transfers and contribution refunds) or regulations made under either of those Chapters;”.
70 (1) Article 14 (pension liberation: interpretation) is amended as follows.
(2) In paragraph (2)(a)—
(a) after “accrued rights” insert “or an entitlement”;
(b) in head (ii), for “the applicable rules” substitute “the scheme rules”.
(3) In paragraph (3)—
(a) for sub-paragraph (a) substitute—
“(a) section 90 of the Pension Schemes Act (right to cash equivalent under Chapter 1 of Part 4ZA of that Act)”;
(b) in sub-paragraph (b), for “Chapter 5 of Part IV” substitute “Chapter 2 of Part 4ZA”.
(4) In paragraph (4)(d), for “the applicable rules” substitute “the scheme rules”.
(5) Omit paragraph (5).
71 In Article 19 (freezing orders), in paragraph (4)(g), for “salary related schemes” substitute “benefits other than money purchase”.
72 In Article 20 (consequences of freezing order), in paragraph (7), for sub-paragraphs (a) and (b) substitute—
“(a) Chapter 1 of Part 4ZA of the Pension Schemes Act (transfer rights: general), or
(b) Chapter 2 of that Part (early leavers: cash transfer sums and contribution refunds).”
73 In Article 68 (inspection of premises), in paragraph (2)(d)—
(a) for “Chapter 4 of Part IV” substitute “Chapter 1 of Part 4ZA”;
(b) for “Chapter 5 of Part IV” substitute “Chapter 2 of Part 4ZA”.
74 In Article 119 (restrictions on winding up, discharge of liabilities etc.), in paragraph (6)(b), for “Chapter 5 of Part IV” substitute “Chapter 2 of Part 4ZA”.
75 In Article 122 (payment of scheme benefits), in paragraph (3)(b), for “Chapter 5 of Part IV” substitute “Chapter 2 of Part 4ZA”.
76 (1) Schedule 6 (pension compensation provisions) is amended as follows.
(2) In paragraph 20(1)(c), for “Chapter 5 of Part IV” substitute “Chapter 2 of Part 4ZA”.
(3) In paragraph 32(1)(b), for “Chapter 5 of Part IV” substitute “Chapter 2 of Part 4ZA”.”—(Steve Webb.)
This Schedule amends the transfer provisions, providing rights to transfer specific categories of accrued rights to benefit, where two or more categories are held and accrual of the benefits to be transferred has ceased. It also provides rights to transfer flexible benefits up to and beyond normal retirement age.—
Brought up, read the First Time and Second Time and added to the Bill
Amendment made: 49, page 28, line 4 leave out Schedule 2.—(Steve Webb.)
See Member’s explanatory statement for amendment 28
Schedule 3
Other amendments to do with Parts 1 and 2
Amendment made: 50, page 32, line 10, leave out paragraphs 3 to 5.
The paragraphs left out by this amendment are superseded by NC24 and NS1
Amendments made: 51, page 36, line 2, at end insert—
26A In section 13 (improvement notices), in subsection (7)—
(a) omit the “or” at the end of paragraph (d);
(b) after paragraph (e) insert “, or
(f) the Pension Schemes Act 2014.”
See Member’s explanatory statement for amendment 32.
Amendment 52, page 38, line 14, leave out “In section 90 (codes of practice)” and insert—
‘(1) Section 90 (codes of practice) is amended as follows.
(2) .”
See Member’s explanatory statement for amendment 32.
Amendment 53, page 38, line 15, at end insert—
‘(3) In subsection (6), in the definition of “the pensions legislation”—
(a) omit the “or” at the end of paragraph (c);
(b) after paragraph (d) insert—
“(e) Schedule 18 to the Pensions Act 2014, or
“(f) the Pension Schemes Act 2014.”
See Member’s explanatory statement for amendment 32.
Amendment 54, page 39, line 20, at end insert—
34A In section 254 (representative of non-European scheme to be treated as trustee), in subsection (3)—
(a) omit the “or” at the end of paragraph (c);
(b) after paragraph (d) insert “, or
(e) the Pension Schemes Act 2014.”
See Member’s explanatory statement for amendment 32.
Amendment 55, page 39, line 34, at end insert—
36A In section 291 (duty of trustees or managers to act consistently with law of host member state), in subsection (4)—
(a) omit the “or” at the end of paragraph (c);
(b) after paragraph (d) insert “, or
(e) the Pension Schemes Act 2014.”—(Steve Webb)
See Member’s explanatory statement for amendment 32.
Schedule 4
Pensions Guidance
Amendment made: 56, page 43, line 30, leave out “cash balance benefits or other money purchase” and insert “flexible”
This amendment provides for the definition of “pensions guidance” to reflect the new language of “flexible benefits” introduced by amendment NC31.—(Steve Webb.)
Amendment 57, page 43, leave out lines 33 to 36 and insert—
““flexible benefit” has the meaning given by section (Meaning of “flexible benefit”) of the Pension Schemes Act 2014;”
This amendment provides that “flexible benefit” in Part 20A of the Financial Services and Markets Act 2000 will have the same meaning as in the Bill - see NC31.
Amendment 58, page 43, line 38, leave out “150(1) of the Finance Act 2004” and insert “1(5) of the Pension Schemes Act 1993”
This amendment is consequential on amendments 56 and 57.
Amendment 59, page 45, leave out lines 1 and 2
This amendment removes subsection (3) of new section 333D of the Financial Services and Markets Act 2000. It is not needed as a matter of law (silence produces the same result).
Amendment 60, page 45, line 30, at end insert—
“Co-operation and information sharing
333EA Co-operation and information sharing
‘(1) The following must co-operate with one another in matters relating to the giving of pensions guidance—
(a) each designated guidance provider;
(b) the Treasury.
(2) Designated guidance providers and the Treasury may share information for the purposes of subsection (1).”
The new section inserted into the Financial Services and Markets Act 2000 by this amendment requires designated guidance providers and the Treasury to co-operate in delivering pensions guidance and provides that they may share information for this purpose.
Amendment 61, page 46, line 35, at end insert—
“( ) Standards set under this section—
(a) may make different provision for different cases and may, in particular, make different provision in respect of different classes of designated guidance providers or different types of pensions guidance;
(b) may include incidental, supplemental, consequential or transitional provision.”
This amendment provides for the FCA’s power to set standards in new section 333G of the Financial Services and Markets Act 2000 to include the setting of different standards in different cases and regarding different groups of guidance providers and the making of incidental, supplemental, consequential and transitional provision.
Amendment 62, page 47, line 36, after “person” insert “(other than in section 165(11)(d))”
This amendment provides for an amendment to subsection (2) of new section 333H of the Financial Services and Markets Act 2000 such that the connections set out in Schedule 15 to that Act apply.
Amendment 63, page 48, line 19, at end insert—
“(4) If the power conferred by section 333E(3) to revoke a designation is exercised before the power in subsection (1) the reference in subsection (1) to a designated guidance provider is to be read as a reference to a person who, at the time of the failure to comply, was a designated guidance provider.”
This amendment provides for the FCA’s power to make recommendations in new section 333I of the Financial Services and Markets Act 2000 to be effective where, following failure to comply with the standards, the designation of the guidance provider has been revoked by the Treasury under new section 333E(3).
Amendment 64, page 52, line 22, leave out from “guidance” to “whether” in line 24
This amendment is consequential on amendment 65.
Amendment 65, page 52, line 32, at end insert—
“( ) For the purposes of subsection (10)(b) “expenses of designated guidance providers”—
(a) includes expenses incurred by virtue of sections 333G(2), 333I, 333L and 333P, and
(b) where a recommendation or direction has been made by virtue of section 333I(4) or 333M(2), includes expenses of a former designated guidance provider.”
This amendment confirms that the “expenses of designated guidance providers” in subsection (10)(b) of new section 333Q include expenses specified in paragraph (a) and expenses of former guidance providers as specified by paragraph (b).
Amendment 66, page 52, line 37, at end insert—
3A In section 1M (FCA’s general duty to consult), after “section 1B” insert “and its duties under section 333N”.
3B In section 1S (reviews by independent person into discharge of FCA functions), in subsection (3) (excluded functions), after “(4)” insert “or its duties under section 333N(1) and (2)(a)”.”
This amendment provides for amendments to sections 1M and 1S of the Financial Services and Markets Act 2000 in consequence of new section 333N of that Act.
Amendment 67, page 52, line 44, leave out “cash balance benefits or other money purchase” and insert “flexible”
This amendment is consequential on amendments 56 and 57.
Amendment 68, page 53, line 9, leave out “cash balance benefits or other money purchase” and insert “flexible”
This amendment is consequential on amendments 56 and 57.
Amendment 69, page 53, leave out lines 12 to 15 and insert—
““flexible benefit” has the meaning given by section (Meaning of “flexible benefit”) of the Pension Schemes Act 2014;”
This amendment is consequential on amendments 56 and 57.
Amendment 70, page 53, line 23, at end insert—
4A (1) Section 138F (notification of rules) is amended as follows.
(2) The existing text becomes subsection (1).
(3) After that subsection insert—
(2) Subsection (1)(b) does not apply to rules made under or by virtue of section 137FB, 333P or 333Q.””
This amendment provides for an amendment to section 138F of the Financial Services and Markets Act 2000 in consequence of new sections 137FB, 333P and 333Q of that Act.
Amendment 71, page 54, line 17, at end insert—
11A In that Schedule, in paragraph 21 (FCA financial penalty scheme), in sub-paragraph (2) (list of “regulated persons” who may benefit from the scheme)—
(a) omit the “and” at the end of paragraph (c);
(b) at the end of paragraph (d) insert “, and
(e) designated guidance providers.”
This amendment provides for an amendment to paragraph 21 of Schedule 1ZA to the Financial Services and Markets Act 2000 in consequence of new section 333F of that Act.
Amendment 72, page 55, line 44, leave out “cash balance benefits or other money purchase” and insert “flexible”—(Steve Webb.)
This amendment is consequential on amendments 56 and 57.
Title
Amendment made: 1, line 3 at end insert
“and provision designed to give people greater flexibility in accessing benefits and to help them make informed decisions about what to do with benefits”—(Steve Webb.)
Third Reading
Queen’s consent signified.
Steve Webb
I beg to move, That the Bill be now read the Third time.
Together with the Taxation of Pensions Bill, this Bill introduces the latest radical reform of pensions. Its ground-breaking pension reforms were the centrepiece of the Queen’s Speech, and are intended to give people freedom and security in retirement.
The Bill follows the Government’s extensive pensions reform. It is about enabling innovation in the pensions industry better to meet the needs of business and individuals, and about giving people greater flexibility in regard to how and when they access their savings. It will do that in two ways: by encouraging and enabling defined ambition or risk-sharing pension schemes and collective benefits, and by giving individuals new freedom and flexibility in relation to how and when they access their pension savings. It builds on the previous pension reform, including the new state pension and the highly successful implementation of automatic enrolment. Defined ambition legislation is a radical reshaping of pensions legislation to ensure that it remains relevant for future generations. It is intended to reflect, recognise and reinvigorate innovation in consumer-focused product design in shared-risk, or defined ambition, pensions.
The Bill introduces three categories of pension scheme based on the type of promise that the scheme provides for savers during the saving phase about the benefits that will be available to them on retirement. It will also enable schemes in the United Kingdom to offer collective benefits, and to ensure that there is appropriate regulation in regard to such benefits. The crucial point here concerns risk-sharing. The current legislation is based on a binary structure of just money purchase or non-money purchase benefits. While both those types of pension can be the right product for many, is it right that the only future for pensions that our legislation encourages is one that requires either the individual consumer or the employer to take on the full financial risk of such long-term savings? We think not.
Many employers have found the increasing costs of longevity and investment risk too heavy to bear, but if defined contribution schemes are the only alternative, outcomes for savers will be less certain and more volatile than for earlier generations, making it much harder for future generations of savers to plan for later life. That is why the Bill provides for new definitions of private pensions, which include the new defined ambition category and collective benefits.
Mr Love
It would appear that the defined ambition scheme has been created to attract employers who have defined contribution schemes. What evidence is there that there is a demand for defined ambition schemes? Is there not a danger that employers with defined benefit schemes will be encouraged to move to defined ambition schemes?
Steve Webb
Our view is that the shared risk space will suit firms coming from either direction: from DB or DC. I have lost track of the number of times someone has said, “Such and such a measure was the final nail in the coffin of DB.” There must be no more room for any more nails in that coffin. It is clear that, if we do nothing, there will be no DB outside the public sector—sooner or later there will be nothing. The abolition of contracting out may be a further trigger, but if we do nothing we will just have individual DC, so shared risk says that employers who want to do more—employers who are willing to share some of the risk with their employees—should have a space to do that.
We may catch some firms coming out of DB that were going to go out of DB anyway. We may stop them in the middle, rather than going to the opposite extreme, but we may also find employers who offered DC schemes and found that their employees could not afford to retire because the DC benefits were not good enough, or employees who object to the volatility of individual DC and start saying to their bosses, “I want something a bit more predictable and certain. Can you mitigate the risk?” Therefore, my judgment is that some people will come out of DB and some will come out of DC. That does not undermine DB. The writing was on the wall for private sector DB, to be honest.
On the freedom and choice agenda, as we have discussed, Budget 2014 announced radical flexibilities in how and when people access their pension arrangements. The Government undertook a consultation. The response was published in July and draft tax clauses for technical comment were published in August.
This Bill, along with the Taxation of Pensions Bill, will mean that, from April 2015, individuals from the age of 55 will be able to access that pension flexibility if they wish, subject to their marginal rate of income tax, rather than the current 55% tax charge. The Bill will make the required changes to pension legislation. As we have discussed, it includes a guidance guarantee that means everyone with money purchase benefits or cash balance benefits will be offered free, impartial guidance so they are clear on the range of options available to them at retirement. The Bill contains a duty on providers and schemes to ensure that they make people aware of their right to guidance.
The Taxation of Pensions Bill will legislate for the required tax regime changes. The Government will continue to allow members of private sector schemes offering safeguarded benefits—that is, benefits other than money purchase or cash balance benefits—the freedom to transfer to other types of scheme. In the majority of cases where a member has safeguarded benefits, it will continue to be in the best interests of the individual to remain in the scheme.
As we have discussed, there will be two additional safeguards: the requirement to take advice from a financial adviser, and guidance for trustees on using their existing powers to delay transfers and on taking account of scheme funding when deciding transfer values. In addition, the Exchequer will put in place safeguards in general not allowing unfunded public service defined benefit scheme transfers. For funded public service schemes, Ministers will have a power to reduce cash equivalent transfer values.
These are radical reforms that build on the Government’s changes to improve pensions in the UK. We believe that giving people greater choice has to be at the heart of the reforms: greater choice for business on the pensions they offer and greater choice for individuals on how they can access their pension savings. These are important changes to allow the private pensions market to flourish. I commend the Bill to the House.
Stephen Timms
The cost of living crisis underlines the need for people in work who are struggling to set money aside for the future to be able to access pension schemes they can trust to give them good value for money and a decent income in retirement. Therefore, we welcome the proposed establishment of collective defined contribution pension schemes, which my hon. Friends called for earlier this year. Those schemes have the potential to provide a more reliable retirement income than individual defined contribution schemes. For that reason, they are to be welcomed. They operate in other countries: the Netherlands, for example. They are potentially better for individuals than individual defined contribution schemes because they can pool risk across and between generations. Research by the Institute for Public Policy Research at the end of last year concluded that there was “strong public support” for a collective pension, that it was the most popular of the options it tested and that it appealed across different income levels, life stages and ages.
We also support the establishment of shared risk schemes and the rule preventing transfers out of most public service schemes—with some exceptions that the Minister talked about earlier. We support the power to redefine the pension regulator’s powers to appoint or replace trustees and the power that will allow the Secretary of State to make payments into the Remploy pension scheme.
We have not opposed the Bill, and we will not do so this afternoon, although there are parts that, in our view, should have been strengthened. We are also disappointed that the Government have not been willing to make the changes for which we argued in Committee. We welcome the new pension flexibilities that were announced in the Budget, but we are concerned that Ministers are not yet providing adequate safeguards in the Bill to protect the savings of people who have worked hard all their lives from the risk of excessively high charges.
The changes will introduce increased flexibility for savers, and we agree that that is welcome. They will also make the pensions market much more complicated, however, and safeguards need to be put in place to protect savers from being taken advantage of, given the confusion that could arise as the changes bed down. We simply cannot afford to have another pensions mis-selling scandal like the one that was presided over by the last Conservative Government, which did a great deal of damage.
The Bill contains 55 clauses, which were substantially rewritten in Committee, and the fact that the Government have today added 33 new clauses—over half as many as we started out with at the beginning of the afternoon—and made 77 additional new amendments does not inspire confidence that these complex changes in an area of such immense importance have been properly thought through. This looks rather like a case of legislate in haste, repent at leisure. We can only hope that Members in the other place, among whom there is substantial expertise in this area, can make significant improvements. Trying to make these important changes at the same time as enacting the Budget changes is of course making the task more difficult and more risky.
A few minutes ago, towards the end of the last debate, the Minister gave a full answer to my question about regulations, for which I was grateful. His answer was a full one, but it was not particularly satisfactory. He pressed me about my experience of taking Bills through the House. My recollection is that if such a Bill had referred to regulations that were going to be introduced, I would at least have expected to put a note in front of members of the Committee explaining what those regulations were going to do. Ideally, there would be draft regulations to put in front of the Committee. In this case, as far as I can establish, there is no information at all about any of the regulations referred to in the new clauses and amendments. I was disappointed when the Minister said that no such information would be put in front of Members in the other place either.
Steve Webb
I think there is a danger of the right hon. Gentleman overdoing this a bit. A lot of the regulatory framework for the budgetary freedoms involves the Financial Conduct Authority, so we are not talking about statutory instruments or any other stuff that goes through this House. The FCA has consulted and published its principles, and it will be publishing its final statutory guidance. All of that will be entirely available to Members in the other place. So a lot of this stuff is out there already; it has been consulted on and will be published. A lot of the regulations that the right hon. Gentleman is talking about relate to defined ambition and risk-sharing, for which the timetable is much slower.
Stephen Timms
That is helpful, and I am grateful to the right hon. Gentleman, but I was making the point that, in my experience as a Minister, I would normally have expected to be able to provide some documentation about each set of regulations referred to in a clause that I was advocating to the House. There is no such information relating to the significant number of the new clauses and amendments that refer to regulations and that now form part of this Bill. The right hon. Gentleman suggested that that was normal, but I do not think it is. I was recalling my experience from the Welfare Reform Bill, on which I led for the Opposition. There was a problem there, because at the outset no information was provided about regulations being referred to in the Bill. However, by the time we got to the end of the Committee we were reliably getting, before we debated each clause, some information about the regulations being referred to in it. So I urge him, if he can take even more holiday time away from the lawyers, to look at whether he might be able at least to give their lordships some information about each set of regulations being referred to.
In the earlier debate, I mentioned the three tests we have set for the new flexibility, and I am grateful to the Minister for his response to each. My party has commissioned Professor David Blake of the pensions institute at Cass business school to lead a review of how to support a pensions market that works for all, retaining flexibility and choice on how savings are accessed and drawn down, while ensuring that all savers, including those on low and modest incomes, are protected and are able to secure a decent and reliable retirement income. One question he will consider is whether income draw-down products should be subject to a new charge cap, which could offer some safeguards that are not envisaged at the moment.
Widespread concern has been expressed about the crucial guidance provisions. We do not know a great deal yet about how this is all going to work, and it is supposed to be up and running by next April. There is serious worry, which we have debated earlier, that the guidance on offer will not be taken up in practice. We will certainly be looking with great interest at what the FCA says—the Minister has assured us that it will be referring to this—about the second line of defence.
The TUC has made the point that
“half an hour of the best possible advice will not equip people for what could be thirty years of managing their pension pot”.
It has argued for the kind of careful consideration of evidence undertaken by the last Government, which has underpinned the success of auto-enrolment—that successful measure was developed over a period, decided on by the previous Government and taken forward by the current Government and, in particular, the Minister on the Bench today. Everybody would agree that the proper deliberation that underpinned it has been an important element in its success, but we are not seeing the same thing with these changes. I fear that nobody can, as yet, feel confident about what is going to emerge.
The Minister also knows that we have concerns about the governance of collective defined contribution schemes and about the so called “independent governance committees” proposed for defined contribution schemes; and about the restrictions on the National Employment Savings Trust—NEST—which my colleague who normally speaks on these matters has long argued should be removed and which the Minister said in July last year would be removed “as soon as possible “. In fact, they remain in place, and the opportunity to remove them in this Bill has not been taken.
The Bill is worth while, but a worryingly large amount more still needs to be done. Working people must not become the victims of yet another mis-selling scandal—that has happened too often already. The dangers of ill-thought-out and rushed legislation are all too clear, and doing all this at the same time as the Treasury changes makes the risks much worse. We can only hope that Members in the other place will have the information they need and will be able to deliver some of the scrutiny which Members in this House have not, sadly, been able to provide.
Question put and agreed to.
Bill accordingly read the Third time and passed.
Self-Build and Custom Housebuilding bill (Money)
Queen’s recommendation signified.
Resolved,
That, for the purposes of any Act resulting from the Self-build and Custom Housebuilding Bill, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable under any other Act out of money so provided.—(Brandon Lewis.)
Self-Build and Custom Housebuilding bill (Ways and Means)
Resolved,
That, for the purposes of any Act resulting from the Self-build and Custom Housebuilding Bill, it is expedient to authorise the charging of fees under the Act.—(Brandon Lewis.)
Local government (Review of Decisions) Bill: Money
Queen’s Recommendation signified.
Resolved,
That, for the purposes of any Act resulting from the Local Government (Review of Decisions) Bill, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable under any other Act out of money so provided.—(Kris Hopkins.)
Health and Social Care (Safety and Quality) Bill: Money
(9 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (George Freeman)
I beg to move,
That, for the purposes of any Act resulting from the Health and Social Care (Safety and Quality) Bill, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable under any other Act out of money so provided.
I will, if I may, pay tribute to my hon. Friend the Member for Stafford (Jeremy Lefroy) for his tireless work on this Bill, particularly for his championing of the cause of information sharing, which sits right at the heart of the Government’s commitment to transparency in health care.
Question put and agreed to.
Control of Horses: Instruction
(9 years, 5 months ago)
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The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (George Eustice)
I beg to move,
That it be an instruction to the Control of Horses Bill Committee that it has power to make provision in the Bill about the powers of owners or occupiers of any land in England in relation to horses which are on the land without lawful authority.
The Control of Horses Bill sponsored by my hon. Friend the Member for York Outer (Julian Sturdy) was supported by the Government on Second Reading and enjoyed support from across the House. I congratulate him on bringing this Bill forward.
The Bill amends section 7 of the Animals Act 1971 with respect to the process for managing horses present on land without lawful authority and applies to England only. In the case of fly-grazing, horses are often abandoned or deliberately placed on another person’s land without permission to do so. The Bill reduces the time that a landowner or a local authority is required to detain a horse before disposing of it from 14 days to four working days, and also creates alternative ways to dispose of horses, other than through sale at auction.
During the debate, the Government also accepted my hon. Friend’s request for this motion. The instruction is needed because the long title of the Bill provides for dealing with horses in public places only. With this instruction it will be possible for the Bill Committee to consider amendments to the Bill to extend its provision to private land. Should the Committee agree to those amendments, the long title of the Bill would then be adjusted accordingly.
This is an important Bill. It has cross-party support, and I congratulate my hon. Friend on bringing it forward and commend the motion to the House.
Angela Smith (Penistone and Stocksbridge) (Lab)
I join the Minister in congratulating the hon. Member for York Outer (Julian Sturdy) on bringing forward the Bill. The Opposition support this motion. I will not repeat the points that we made on Second Reading about why we are where we are, because we just have to deal with the situation as it is. We are pleased to see the Government correcting their position by including private land in the Bill’s provisions and in the title of the Bill.
We are committed to seeing this Bill go through the legislative process as quickly as possible. In fact, the sooner we can get it on the statute book the better, because it is about not just the welfare standards of horses but the significant resource being absorbed by the Royal Society for the Prevention of Cruelty to Animals and by local authorities in dealing with the issue.
Julian Sturdy (York Outer) (Con)
I thank the Minister and, through him, the Secretary of State for tabling today’s instruction. I will, if I may, speak very briefly in support of the instruction and about the comments that have just been made by the Minister and the shadow Minister.
It is absolutely essential that we crack down on illegal fly-grazing across England. As was stated by the Minister, the shadow Minister, many Members and me on Second Reading, it is important that that happens not just on public land, but on private land. It would be perverse if private farmland were to become an unintended refuge for suffering and abandoned horses, with landowners ill-equipped to alleviate the animals’ suffering. A true refuge would be for the horses to be rescued and re-homed with a loving family or in an animal welfare sanctuary, and that power is proposed under this Bill. I would like the House to be in no doubt of the potential dangers of fly-grazing or the scale of the problem. Since Second Reading last month, abandoned horses have yet again been causing safety issues on Stockton lane in my constituency. It is simply not acceptable for road users and local residents to be put at risk because irresponsible owners have abandoned their horses near the roadside.
Horses require daily care and attention, and today’s instruction will empower private landowners to prevent such neglect, which jeopardises the safety of families travelling on the roads. If we fail to act, it is only a matter of time, sadly, before someone else is seriously injured or killed. I am pleased that there is cross-party support for this motion to allow the Bill to apply to both public and private land, and for the Bill to proceed into Committee and, ultimately, to deliver the powers to end the suffering of abandoned horses and help to prevent any further tragedies.
Question put and agreed to.
Business without Debate
(9 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text
Madam Deputy Speaker (Dame Dawn Primarolo)
With the leave of the House, we shall take motions 8 to 13 together.
Motion made, and Question put forthwith, (Standing Order No. 118(6)),
Electricity
That the draft Electricity and Gas (Energy Companies Obligation) (Amendment) (No. 2) Order 2014, which was laid before this House on 22 July, be approved.
That the draft Electricity and Gas (Energy Company Obligation) Order 2014, which was laid before this House on 24 October, be approved.
Social Security
That the draft Social Security (Contributions) (Limited Liability Partnership) Regulations 2014, which were laid before this House on 13 October, be approved.
That the draft Social Security (Contributions) (Amendment No. 5) Regulations 2014, which were laid before this House on 13 October, be approved.
Health Care and Associated Professions
That the draft Nursing and Midwifery (Amendment) Order 2014, which was laid before this House on 13 October, be approved.
Local Government
That the draft Business Improvement Districts (Property Owners) (England) Regulations 2014, which were laid before this House on 22 October, be approved.—(Damian Hinds.)
Question agreed to.
Localised Health Care in North East Cambridgeshire
(9 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text
Stephen Barclay (North East Cambridgeshire) (Con)
The petition states:
The petition of residents of the North East Cambridgeshire constituency declares that the Petitioners believe that healthcare should be more localised in North East Cambridgeshire; further that residents of North East Cambridgeshire face long travel times and costs when requiring procedures which should be delivered locally; further that the Petitioners believe that treating patients locally brings significant benefits; and further that there is a community campaign entitled “Treat Me Local” calling for healthcare to be more localised in North East Cambridgeshire which has been signed by 1,389 individuals.
The Petitioners therefore request that the House of Commons urges the Government to ensure that the ten pledges of the Treat Me Local campaign in North East Cambridgeshire are fulfilled within twelve months.
And the Petitioners remain, etc.
[P001401]
Breast Cancer
(9 years, 5 months ago)
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Annette Brooke (Mid Dorset and North Poole) (LD)
I am very pleased to have secured this debate, as it permits further discussion on some of the work that my hon. Friend the Member for Winchester (Steve Brine), the hon. Member for Washington and Sunderland West (Mrs Hodgson) and I, as co-chairs of the all-party parliamentary group on breast cancer, have been engaged in over the past four years. We work with all the major breast cancer charities, including Breakthrough Breast Cancer, which provides the secretariat for our group, Breast Cancer Campaign, which is merging with Breakthrough next year, and Breast Cancer Care. We thank them all for their work and support.
Breast cancer is a disease that many of us will know about and have experience of. With nearly 55,000 people diagnosed with the disease in the United Kingdom every year, everyone will know of somebody—a loved one, a friend or even themselves—who has experienced this disease. It is still the most common cancer in the UK, and around a third of all new cancers diagnosed in women are breast cancer.
Over the past few decades, great strides have been made in treatment and care, leading to much improved outcomes. Since the 1980s, breast cancer deaths have fallen by more than a third, and today more people survive breast cancer than ever before. More than eight out of 10 people are living five years or more following their diagnosis. The all-party parliamentary group recently carried out an inquiry into breast cancer in older women. The resulting report is entitled “Age is just a Number”. We discovered that there were many improvements that could be made to ensure earlier diagnosis, better communication, and better treatment and support. We are pleased that many of our recommendations will be implemented and hence overall life chances will be improved further.
Steve Brine (Winchester) (Con)
I congratulate my right hon. Friend, at the end of her time in the House, on bringing the topic of breast cancer to the Floor of the House of Commons in the way that she has. She conducted the inquiry with me and, as she knows, one of the things that I was so struck by is the belief out there that the risks of contracting breast cancer go down as one gets older and passes the screening age, whereas we know and the evidence shows that, on the contrary, they go up.
Annette Brooke
I thank my hon. Friend for the great leadership that he gave in the inquiry. I believe we brought out a great number of myths, which will much improve the approach to primary breast cancer. However, fewer people know about secondary breast cancer.
In October 2010, the United Kingdom had its first secondary breast cancer awareness day. In secondary breast cancer, sometimes known as metastatic, advanced or stage 4 breast cancer, the breast cancer cells have spread to other parts of the body, most commonly the bones, brain, liver or lungs. Secondary breast cancer is incurable and, sadly, 11,600 people die every year as a result of secondary breast cancer—the equivalent of 32 people every day. Many people diagnosed with secondary breast cancer live with the disease for a number of years. In such cases, the care and support that they receive can make a real difference to their quality of life.
I was able to raise the issue of data collection directly with the Prime Minister during Prime Minister’s questions in 2010. At that time there was no reliable data collection on how many people were living with the disease in the UK, meaning that care and support services could not be accurately costed or developed. Subsequently the main breast cancer charities and the three co-chairs of the all-party parliamentary group met the Prime Minister to discuss what was needed. We were very pleased to welcome in 2011 the publication of the Department of Health cancer strategy, “Improving Outcomes: A Strategy for Cancer.” The strategy included the aim of beginning a full collection of statistics on secondary breast cancer from April 2012, yet there still seem to be considerable gaps, as I shall outline later in my speech.
The purpose of data collection is to make sure that the quality of services offered is improved. Although we can undoubtedly find examples of best practice, there are still many concerns about the overall level of service provision in this area.
Steve Brine
I am sorry to interrupt my right hon. Friend’s flow again. One of the things that came out of our time with the Prime Minister on collecting the data on secondary breast cancer was the importance of secondary breast cancer care nurses. I pay tribute to the work of Breast Cancer Care in this respect. Does my right hon. Friend agree that those nurses can make a transformative difference to women and their families who are going through secondary breast cancer, by linking them up to other services in the NHS and providing knowledgeable support to them?
Annette Brooke
Again, I thank my hon. Friend. Over the years we found that the provision of a specialist nurse makes a crucial difference. When someone has a symptom that they are not quite sure about and they think, “I don’t want to bother to go to my GP”, being able to pick up the phone and get expert advice deals with the problem quickly, takes away the worry, and if it is necessary to see a doctor, they can go, confident in the knowledge that they are not just imagining the symptom and that it is important for them to follow it through.
A recent survey by Breast Cancer Care, which was released to mark this year’s secondary breast cancer awareness day on 13 October, reported that 90% of people with a secondary breast cancer diagnosis have experienced pain as a result of the disease in the past month. Half of those described their pain as moderate or severe. For 78% of people, their pain meant that they were unable to undertake normal everyday activities, such as household chores, work, child care, hobbies or socialising. Pain is one of the most common symptoms of secondary breast cancer, but much of it can be controlled and managed through access to palliative care. In fact, guidelines from the National Institute for Health and Care Excellence state that referrals to palliative care should be offered soon after a secondary breast cancer diagnosis. However, the same survey by Breast Cancer Care found that only 41% had been offered a referral to a palliative care team. That means that thousands of people are experiencing pain that could be controlled and managed. I am sure that we can all agree that it is unacceptable that anyone should be expected to live with unnecessary pain.
Another indicator of where the care and treatment for secondary breast cancer is not good enough is the lack of secondary breast cancer clinical nurse specialists. The NICE quality standard for breast cancer highlights that everyone with secondary breast cancer should have access to a clinical nurse specialist. The most recent results of the national cancer patient experience survey also found that access to a named clinical nurse specialist was often associated with having a more positive experience in care. For primary breast cancer—I am pleased that progress has been made in this area—it is much more routine for patients to have a clinical nurse specialist to help to co-ordinate their care and provide the support they need.
Mr Mark Spencer (Sherwood) (Con)
I congratulate my right hon. Friend on not only securing the debate but the work she has done in the House on this topic together with my hon. Friend the Member for Winchester (Steve Brine). Will she recognise that as well as the physical pain, the psychological aspect of this disease is quite dramatic? One way of fighting the psychological impact is to give hope to those victims that their life can be extended for as long as possible. The data that she seeks to collate and collect can give medical advancement and hope to those victims at the same time.
Annette Brooke
I thank my hon. Friend, and yes, it is so important. We have the good news that life expectancy is increasing under these circumstances, but that makes it all the more important to think about the quality of those extra years.
There are far fewer clinical nurse specialists for secondary breast cancer. There is no definitive figure, but estimates from Breast Cancer Care suggest that there may be no more than 20 clinical nurse specialists who have expertise or experience of working with secondary breast cancer. This is despite there being approximately 36,000 people living with a secondary breast cancer diagnosis. Given the results of the cancer patient experience survey, and anecdotal evidence from those living with secondary breast cancer, we can assume that many secondary breast cancer patients are not having as positive an experience in their care as those with a primary diagnosis. Unfortunately, we do not know for certain as the cancer patient experience survey does not include a specific stand-alone question on secondary breast cancer. It is essential that the survey continues, so could it not include a question on secondary breast cancer?
Breast Cancer Care ran a taskforce on secondary breast cancer in 2006. Its final report, published in 2008, highlighted a number of issues, other than those already mentioned, that patients with secondary breast cancer face. Those include multi-disciplinary teams not discussing secondary breast cancer routinely, the information needs of patients not being met, and patients not being assessed for their psychological or social needs following a diagnosis—the point that my hon. Friend has just made. Unfortunately, it seems that little progress has been made in the six years since that report was released.
Underpinning the problems with care and treatment for secondary breast cancer—and key to much of this debate—is the lack of data and information about patients diagnosed and living with the disease. As I have already mentioned, we still do not have an accurate figure for the number of people who have been diagnosed with secondary breast cancer, only an estimate. We do not have enough quantitative evidence about the experiences of secondary breast cancer patients.
I had the opportunity to meet some women at a recent Breast Cancer Care event to mark secondary breast cancer awareness day last month, and they told me that the care they received was often inadequate, and certainly not at the same standard as the care that followed their primary breast cancer diagnosis. Some typical comments from patients with secondary breast cancer include:
“A diagnosis of secondary breast cancer changes your life completely—nothing is ever the same again”;
“When you’re diagnosed with secondary breast cancer you can have no idea of just how far and in how many different ways it’s going to change your life. So many people don’t understand what a secondary diagnosis means”;
“So many people tell me how great I look, or tell me that I can beat it with chemo and surgery. They don’t understand that I am in pain and I can’t be cured”;
“The pain I had, from when I was diagnosed, basically it was excruciating. But the pain had started slowly and I’d always had aching pains in my chest area. To the point that it was so bad that I couldn’t hold a glass in my hand or put a handbag on my shoulder. I couldn’t touch my head, I couldn’t dress myself. I couldn’t sleep. I couldn’t turn on my side. And also I couldn’t breathe properly”;
“One thing that does distress me is the lack of continuity in my care and I think that if I had one person who was with me through it all that would help a lot”;
and
“The strange thing about this whole disease is that they don’t really prepare you at all. It’s almost finding out as you go along”.
I think that those comments highlight how much progress we have made on primary breast cancer, with all the advice and support that is given to patients very early on. I want to use this debate to highlight not only that progress, but the need to address those issues for secondary breast cancer, some of which have been faced with primary breast cancer.
Although the comments I have just read out highlight the human story, they are not enough to help us find the solutions. Without firm data and evidence, it is impossible to understand fully the impact of secondary breast cancer. We do not really know enough about the types of treatment that patients are receiving or how the quality of a patient’s life changes over time. That lack of information makes it virtually impossible for commissioners to be able to plan and commission services properly that meet local needs. That, in turn, makes it much harder for clinical nurse specialists with the right knowledge and skills to be recruited, particularly when NHS budgets are under pressure. The result is that patients continue to miss out on the vital support and care they need.
As I mentioned earlier, the Government have committed to improving the collection of data on secondary breast cancer, making it mandatory for the NHS in England. When my colleagues and I met the Prime Minister, he agreed that adequate data collection was required. Following that meeting, in January 2011, the Department of Health published its national cancer strategy, “Improving Outcomes”, which committed to collecting data on secondary breast cancer for the first time, stating:
“During 2011/12 we will pilot the collection of data on recurrence/metastasis on patients with breast cancer with the aim of undertaking full collection from April 2012.”
Jim Shannon (Strangford) (DUP)
I thank the right hon. Lady for giving way and apologise for not being here for the beginning of her speech; I was at a do down below and could not get here in time. She has just outlined the importance of collecting and then using data to respond to those who have breast cancer. She will also be aware that Breast Cancer Care has campaigned strongly to ensure that data are collected in England. I understand that it hopes to have a similar initiative in Scotland, Wales and, hopefully, Northern Ireland. She refers to the NHS in England. Does she share my opinion that the data should be collected for the whole of the UK so that we can agree a strategy that all four regions of the United Kingdom of Great Britain and Northern Ireland can benefit from?
Annette Brooke
I thank the hon. Gentleman for his intervention. I hope that the Minister has taken that point on board, because it is really important. Although data are being collected, they are not being received by various groups, and the purpose of this debate is to address that.
The pilot was run by the National Cancer Intelligence Network in collaboration with Breast Cancer Care, and it involved 15 breast cancer units across England. The pilot report, published in March 2012, identified 598 patients with recurrent or metastatic breast cancer. Of those, only 53% were recorded as being referred to a clinical nurse specialist, palliative care nurse specialist or other key worker at the time of diagnosis. That is despite the NICE quality standards and the evidence in the cancer patient experience survey of the benefit to patients of a named nurse.
Steve Brine
The pathway—the person who can help to pilot the patient through services—is not only found in the public sector; there are also services in the third sector. Is my right hon. Friend aware of the amazing work of Breast Cancer Haven, which has two centres—and, I hope, a third on the way in our Wessex area next year? It provides a complementary service that helps women to feel human again after they have had surgery and a devastating secondary diagnosis. This is not just about connecting them to services in the NHS; it is also sometimes about the charitable sector.
Annette Brooke
I thank my hon. Friend for reminding us of those very important services. I very much hope that I can visit one of Breast Cancer Haven’s units in due course, because I have not yet done so.
The pilot recommended that all breast cancer units in England submit data on patients with recurrent and metastatic breast cancer using existing data collection mechanisms. However, since the pilot no such data have been published. Since January 2013, it has been mandatory for all new recurrent and metastatic diagnoses to be recorded in England. The third annual report on the strategy confirms that this collection is taking place, but the problem is that the data do not seem to be publicly available.
A recent parliamentary question by the hon. Member for Ealing, Southall (Mr Sharma) about diagnosis of metastatic breast cancer in his constituency was responded to by the Office of National Statistics, which said:
“Detailed information about secondary cancer diagnoses is not routinely recorded on individual cancer registrations sent to ONS for processing and publishing as National Statistics. For these reasons it is not possible to provide figures on secondary breast cancer.”
This information needs to be made publicly available to allow scrutiny of the data and to help highlight areas that require action. It would be helpful if the Minister outlined what plans are in place to start publishing these data and whether the data include routes of referral. If there are no such plans, what is the reason for not making the data publicly available?
Not only have we seen no data published on secondary breast cancer, but there is also evidence to suggest that the data collection is not happening consistently across England. Breast Cancer Care is concerned that this will impact on the quality of the data that could be made available. Whether we will have a clearer picture on the needs of secondary breast cancer patients remains to be seen. Once consistently collected, it is also imperative that data can be accessed by research organisations, including charities, to drive improvements in care. Obviously, it is crucial that there are strong safeguards on privacy, but for numerous other reasons, including uncertainty following the restructuring of the NHS, there is great concern that routinely collected pseudonymised data sets are not consistently being made available for health research.
Breast Cancer Campaign has drawn my attention to some detailed points about data collection. The first relates to the current review of the national cancer peer review programme, which routinely monitors the quality and safety of NHS cancer services. I understand that it collects data on a number of key measures related to secondary breast cancer. There are concerns that it may not continue next year in its current form, or at all. I hope the Minister will comment on that. How will patients be provided with information on the safety and quality of their local cancer services, should the national cancer peer review programme be discontinued?
Secondly, if we are to achieve the Health Secretary’s goal of being among the best in Europe for cancer survival, measures to hold clinical commissioning groups to account for the cancer services they provide are vital. What consideration has the Minister given to the inclusion of indicators on cancer patient access to a clinical nurse specialist and multidisciplinary teams in the CCG outcomes indicator set, and what steps can she take to ensure that CCGs are held to account on their performance against that set? What further discussions is the Minister actually having?
In conclusion, the Government should be congratulated on the important progress they have made on cancer over the past four years. Initiatives such as the cancer drugs fund have made a big difference to patients in improving access to clinically effective drugs and treatments. However, in order to achieve the Government’s stated ambition of being the best place in Europe to survive cancer, more needs to be done. For that to happen, evidence is needed to provide the intelligence and insight required to enable local commissioners and health care professionals to plan effectively to meet their patients’ needs. I hope the Minister will join me in agreeing that it is no longer acceptable that the collection of data on secondary breast cancer does not consistently take place.
This is an important public issue. A petition by Breast Cancer Care calling for secondary breast cancer to be a priority for this Government has to date secured almost 12,000 signatures—a fitting milestone, given that almost the same number are dying from secondary breast cancer every year. Will the Minister commit to making secondary breast cancer a priority for her Department and, once more evidence is highlighted from the data, to working with Breast Cancer Care and other charities to improve the support and care that patients receive?
Only once everyone has the opportunity to access a clinical nurse specialist to support their care, to be referred to palliative care so they are not in unnecessary pain, and to receive the best possible care and treatment to live as good a quality of life as possible with the disease can we truly consider the United Kingdom to be one of the best in Europe for cancer care.
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
May I begin by thanking my right hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke), not just for securing this debate, but, as has been rightly said, for her work throughout her parliamentary career and in this Parliament on this issue, and for the thorough and humane way in which she has introduced the debate? I congratulate her. We are lucky to have a very active all-party group on breast cancer. Unsurprisingly, my hon. Friend the Member for Winchester (Steve Brine) is in his place, as are other Members who are interested in and have engaged with this important subject.
I echo the words of thanks to the charities that operate in this area. I deal with many of them regularly and, like other hon. Members, have taken part in some of their fundraising and awareness-raising activities. They do great work and it is good that we have a regular opportunity to record our thanks to them.
As my right hon. Friend the Member for Mid Dorset and North Poole mentioned, the Government want to lead the world in tackling cancer, but we know that we are not there yet. As she said, the Government’s cancer outcomes strategy, which is backed by more than £750 million, set the ambition to save an additional 5,000 lives a year from cancer by 2014-15. That of course includes breast cancer.
One study alone has shown that we could save 2,000 additional lives each year from breast cancer if we matched the best European survival rates. That is quite thought-provoking in itself, but we are starting to close that gap. The NHS is treating more people for cancer than ever, and we are helping more people than ever to survive. Sometimes when people hear of large numbers being referred, they perhaps think that that is a sign of failure. However, we know that referral, particularly early referral, is so important, so large numbers being referred is in many ways a sign of success, because we are intervening and getting them into services more quickly. We also know that there is a long way to go.
Steve Brine
May I thank the Minister for thanking the three big breast cancer charities? Breakthrough, with support from the others, provides the secretariat for our all-party group. She will be aware of the work of CoppaFeel and its “Rethink Cancer” campaign. Treatment and survival are obviously critical—today’s debate is about that—but prevention is clearly better than cure. Will she take this opportunity to endorse CoppaFeel’s work in educating young women, and men, to spot the signs and symptoms of cancer early so that we can prevent primary breast cancers from developing in the first place? She will know that Kris, who runs CoppaFeel—she has a terminal diagnosis—is passionate about this, and has done so much to put it on the agenda for young women in this country.
Jane Ellison
I certainly pay tribute to all those who are trying to drive awareness of this issue. There are a number of very important campaigns. Prevention is so important; for example, it was good that it was right at the heart of the recent NHS “Five Year Forward View”. There is a lot more to do, and I have recently had discussions with some of the breast cancer charities about how we use their reach and undoubted public credibility, which is enormous, to raise awareness more about some of the things that people can do on the prevention front, as well as about their important work on care and drugs. I join my hon. Friend in paying tribute to those campaigners.
The NHS is treating more people with cancer than ever, as I have said. Survival rates for breast cancer are improving, with more than 85% of women with breast cancer in England and Wales now living for more than five years. The work that all the charities have done in that regard is really important. They have all made significant contributions, but we know that more needs to be done, and that is the focus of this debate. We need to catch breast cancers earlier, and to avoid the risk of secondary breast cancers. We also need to improve the detection and treatment of secondary breast cancer, as my right hon. Friend has highlighted.
My right hon. Friend spoke very movingly about pain and its management. I am sure that we all agree that our NHS doctors and nurses do everything that they can to alleviate pain. In fact, it was good to see from the 2014 cancer patient experience survey that only 1% of patients reported that they did not think that hospital staff did everything they could to control their pain. Indeed, 86% of patients—the highest level in the four surveys so far—reported that staff did everything they could to control their pain. She is right to say that referral to specialist palliative care services can provide more by way of effective pain relief. The NHS must do what it can to ensure that women with secondary breast cancer have access to the right services. She is also right to highlight the room for improvement on that.
On the patient experience for women with secondary breast cancer, the results of the 2014 cancer patient experience survey show improvements in many areas, with 89% of all patients reporting that their care was either excellent or very good. As my right hon. Friend said, there are two specific references to secondary breast cancer in the NICE quality standard. The first states that people who develop it should
“have their treatment and care discussed by the multidisciplinary team”,
and the second states that people with recurrent or advanced breast cancer
“have access to a ‘key worker’, who is a clinical nurse specialist whose role is to provide continuity of care and support”—
she mentioned that—
“offer referral to psychological services if required and liaise with other healthcare professionals, including the GP and specialist palliative care services.”
NICE clinical guidelines represent best practice, and we expect commissioners and clinicians to take them into account when making decisions, including on the provision of cancer nurse specialists. On the whole, breast cancer patients reported a more positive experience than many other cancer patients, and 93% were given the name of a clinical nurse specialist. My right hon. Friend is right to highlight the fact that we are not doing as well for patients with secondary cancer or a recurrence of cancer—those patients reported a worse experience and were less likely to have a clinical nurse specialist. NHS England is working with NHS Improving Quality, Macmillan Cancer Support and strategic clinical networks to improve the cancer patient experience and spread good practice across hospitals providing cancer care. That includes support from a clinical nurse specialist for those with secondary breast cancer.
Jim Shannon
The Minister is good in debates such as this and we always appreciate her response. One thing that is not always mentioned is the work done by pharmaceutical companies and their investigations to find and perfect new drugs to combat cancer. Current TV programmes often show people saying, “We’re almost there” when speaking about a cure for cancer—well, we are halfway there anyway. Together with pharmaceutical companies, universities such as Queen’s university in Belfast do fantastic work to find new drugs to address cancer and many other things. Sometimes that point is missed in debates such as this, so perhaps this is an occasion to get that on the record.
Jane Ellison
I pay tribute to the hon. Gentleman who is always present in health debates and makes an important contribution. If he were to secure a debate on research and clinical trials, I would be delighted to respond. He is right to say that that topic is sometimes a bit unsung, and it is enormously hope-giving for people to hear what is in the pipeline. He is right to highlight that issue, and perhaps we could explore it in a bit more detail on another occasion.
I alluded earlier to work that is taking place to bring everybody up to the best standard. That includes pairing highly rated cancer trusts with those that have potential to improve, regional events for commissioners to consider how patient experience survey results inform commissioning decisions, and the publication of guidance on using survey data to drive improvement. The survey is used in very hands-on ways, and in previous debates I have been impressed at the extent to which data are used right at the front line to say, “This is what really good looks like”, or to highlight where services can be improved by reference to those who are doing things well.
The need to improve is recognised by the NHS. In his forward to the 2014 survey report, Sean Duffy, NHS England’s national clinical director for cancer, recognised the importance of clinical nurse specialists and the need to be particularly sensitive to the needs of patients with a recurrence of cancer. We all recognise the picture that my right hon. Friend painted of people telling others of their diagnosis and what they say and the enormity of the news they are trying to convey not really being understood. Sean Duffy also highlighted the need for sensitivity when the cancer has not responded to treatment as had been hoped.
I understand that NHS England has no plans to discontinue the cancer patient experience survey. I have drawn on it a number of times when responding to debates, and it has been extremely valuable to front-line clinicians for understanding where excellence is being practised. I am keen and have stressed to NHS England on a number of occasions how much Members of the House appreciate the survey and feel that it informs our debates and the knowledge of our constituents.
The survey is overseen by the cancer patient experience advisory group, chaired by Neil Churchill, NHS England’s director of patient experience. Suggestions for amendments or additions to the survey can be addressed to that group. I will obviously draw this debate to the attention of NHS England, and the all-party group on breast cancer will continue to engage with it on ways that the survey could be improved or amended.
My right hon. Friend mentioned the need to improve detection and treatment of people with secondary breast cancer. We need to have good data about those affected. As she said, in the 2011 cancer outcomes strategy we committed to pilot the collection of data about metastatic disease, which had previously not been recorded. In March 2012, a report on the pilot data collection project was published. The pilot programme included data from 15 units and enabled the National Cancer Intelligence Network to identify deficits in the information recorded for those patients. Lessons learned from the pilot have now been applied to a country-wide programme. Since April 2012, all breast units have been required to submit information on all patients diagnosed with a new recurrence or with metastatic disease through the cancer waiting times process.
Analysis of the cancer waiting times data, based on referrals to hospital between 1 April 2012 and March 2013, shows that 7,176 patients were diagnosed or treated for recurrent breast cancer in England. However, we know we need to improve the quality of the data to ensure that we are getting the full picture. There are significant discrepancies between trusts and the analysis will need to be updated with more recent cancer waiting times data to ensure that the figures are robust. The NCIN, Macmillan and the Public Health England knowledge and intelligence teams are working collaboratively on a system to detect patients with recurrent breast cancer by looking at treatment patterns. Results from that collaborative work should be available in 2015. I know it is a source of frustration that they have not been available to date, but that work is at least ongoing. I will pursue that point further with Public Health England after the debate. We have regular meetings. I will of course raise the issue and ensure we keep the House up to date.
On the national peer review programme, I would like to assure my right hon. Friend that NHS England is currently reviewing the national cancer peer review programme with a view to considering how its success might be extended into other new areas of specialised commissioning. Regardless of the outcome of the review, cancer peer review will continue to play a critical part in any broader peer review programme the NHS might introduce. Further details will be published shortly as part of the wider review into specialist commissioning.
The clinical commissioning group outcomes indicator set is not designed for use as an accountability tool. For that, NHS England uses the CCG assurance delivery dashboard—I apologise for the jargon, which, unfortunately, is a feature of these debates—to hold CCGs to account. “Everyone Counts: Planning for Patients 2014/15-2018/19” was used by NHS England to identify the relevant indicators for reporting in the CCG dashboard. In addition, as new data have come on line throughout 2013-14, as well as feedback received on the indicators that are currently being used, NHS England has reviewed whether there is potential to make improvements in 2014-15. The cancer indicators used in the CCG assurance dashboard are based on cancer waiting times. NHS England is continually looking to improve the delivery dashboard. I know the all-party group will continue to engage with that process, as will the charity that supports it and the other charities.
As well as improving patient experience, we want to ensure that women are informed about the risks of metastatic disease so it can be diagnosed early. NHS England breast cancer clinical reference group is determined to ensure that everything possible is done to reduce the risk of secondary breast cancer. It is preparing a service specification for the provision of breast cancer services in England. NHS England knows that the information currently given to patients on the risk of secondary breast cancer is variable and frequently inadequate. That was brought to life for all of us in the Chamber by the deeply moving extracts from the comments of sufferers that were read out by my right hon. Friend. I do not think that any of us could have been unaffected by them. The clinical reference group’s service specification will require that all patients should have an end of primary treatment consultation, which will include advice on signs and symptoms that might indicate secondary breast cancer. That information needs to be delivered together with an holistic needs assessment as part of a recovery package. The evidence that this has been done will have to be recorded in the records of every breast cancer patient.
Touching briefly on research, the National Institute for Health Research is enabling patients to take part in trials of new treatments for metastatic breast cancer through its clinical research network.
As we all know, early diagnosis is key. Alongside the work to increase awareness, the Government have committed £450 million to achieve earlier diagnosis and the associated improved cancer survival rates. On breast cancer specifically, in February and March, we ran a Be Clear on Cancer campaign to increase awareness of breast cancer in women over 70. The proportion of women spontaneously mentioning breast cancer rose significantly, as did confidence in people’s knowledge of signs and symptoms of breast cancer. The campaign was well recognised, with many agreeing that the advertising would prompt them to talk to somebody close to them about the symptoms to watch out for. As well as increasing awareness, the campaign appears to have resulted in a large increase in referrals to secondary care in the target age group. The analysis, although only interim, suggests a significant increase in the number of women over 70 self-referring for breast screening. We are encouraged by that.
In addition, Public Health England is funding the biggest randomised control trial in the world and extending the NHS breast screening programme to women in the 47 to 49 age group and the 71 to 73 age group. As the trial is studying the effects of screening on breast cancer mortality rates over time, the results will not be known until the early 2020s, but it is an important and extensive study.
To conclude, I thank my right hon. Friend once again for bringing this debate to the House, the manner in which she introduced it and her important work on this subject throughout her parliamentary career, and I thank my other hon. Friends who have supported her and who also take a great interest in this subject. She is right to point out that fundamentally there is a message hope: so great is our progress that we can now compare of where we want to be with secondary breast cancer with where we increasingly are with breast cancer. However, she also rightly reminds us that more progress needs to be made.
I shall draw this debate to the attention of the national clinical director, Sean Duffy, and make him aware of the concern expressed in the House on this subject. I reassure my right hon. Friend of the Government’s commitment to reducing the incidence of secondary breast cancer and to improving outcomes for everyone diagnosed with this terrible disease. I offer a message of hope and improvement to all of them.
Question put and agreed to.
Westminster Hall
(9 years, 5 months ago)
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Fracking
(9 years, 5 months ago)
Westminster HallRead Full debate Read Hansard Text
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Norman Baker (Lewes) (LD)
I am pleased to be able to introduce this debate on behalf of my constituents and, indeed, those nationally who are interested in the issue. The aims of energy policy are probably uncontroversial. They are to secure security of supply, and ideally indigenous supply, in order not to be held hostage by other countries in due course; to help to meet our climate change targets; and to use the energy supply to create jobs, to help the economy and, ideally, to keep prices down. The issue is whether the Government’s policy on fracking achieves those objectives. I am not sure that it does, and I therefore suggest to the Minister that we may be backing the wrong horse or at least putting too much money on the wrong horse, as I will now show.
On the security of supply, the Chancellor of the Exchequer has said that there is “huge potential” from fracking and the Treasury has said that the potential is “too big to ignore”, but that seems to be at odds with the recent report from the UK Energy Research Centre, which received some coverage earlier this month. Professor Jim Watson, UKERC research director, said:
“It is very frustrating to keep hearing that shale gas is going to solve our energy problems—there’s no evidence for that whatsoever...it’s hype… Shale gas has been completely oversold. Where ministers got this rhetoric from I have absolutely no idea. It’s very misleading for the public.”
Professor Mike Bradshaw, his colleague at the UKERC, said:
“Only one thing is virtually certain—in Europe shale gas is not going to be a game-changer.”
There appears to be a variance between what Ministers have said and what the UKERC experts say.
Research by the British Geological Survey, which assessed the shale gas potential of the Weald basin, which the Minister will understand I am particularly interested in as it covers the South Downs national park and elements of my constituency, concluded that shale formations in the basin could contain between 2.2 billion and 8.5 billion barrels of oil, rather than gas, with a mid-case estimate of 4.4 billion, which would be equivalent to close to a decade of UK consumption. That may explain why the Chancellor and others think that fracking has huge potential. However, the BGS went on to say that the research found that many of the Weald shale samples contained more clay than the most prolific US fields.
Data from the US, where it is easy to extract oil and gas, suggest that, at best, only 5% of the oil may be extracted from shale. A university professor says that
“we might estimate that 1 per cent of the Weald oil resource might be recoverable.”
He calculated that that equated to 50 million barrels or two months of UK consumption and said:
“From a national perspective, this seems to be a rather small prize.”
There is significant doubt about whether the reserves of potentially usable shale gas and shale oil will be as extensive as the Government has maintained.
I now want to look at the potential in relation to climate change and the argument that shale gas is a bridge to the future and cleaner than coal. Again, that is in doubt. First, it is worth pointing out that, in the south-east of England, we are talking about oil rather than gas in many respects. That factor has not, perhaps, permeated through to the public at large. The BGS completed an estimate in May 2014. Although it is estimated that large quantities of shale oil are present, no significant gas resource is recognised using the current geological model because the shale is not thought to have reached the geological maturity required to generate gas. Therefore, we are talking about oil extraction rather than gas extraction as far as areas round my constituency are concerned. That is an entirely different proposition in terms of climate change.
In the “World Energy Outlook 2012”, the International Energy Agency concluded:
“No more than one-third of…reserves of fossil fuels can be consumed prior to 2050 if the world is to achieve the 2° C goal”.
And Mark Carney warned recently that the vast majority of fossil fuel reserves are “unburnable”.
Duncan Hames (Chippenham) (LD)
I congratulate my right hon. Friend on securing this important debate. He has just put his finger on it. Are not the displacement arguments meaningless in the absence of a global deal on limiting carbon emissions? Coal that is not burned in power stations here will still end up being burned elsewhere.
Norman Baker
My hon. Friend makes a very important point. We have to look at the global use of fossil fuels, which is the point that I am coming on to. It would be completely irresponsible for the world to use the fossil fuels that exist in total. Therefore, we have to move towards alternatives, rather than simply switching one fossil fuel for another. Some shale gas advocates have argued that it will reduce emissions, because shale gas will replace coal. That relates to the point that my hon. Friend makes. However, the Committee on Climate Change states that coal should be off the system entirely by the early 2020s. My hon. Friend will know that at our party conference this year, we committed to ensuring that that happened. The best industry estimates are that shale gas will not be online until the 2020s, by which time there should really be no coal to replace.
David Mowat (Warrington South) (Con)
On the displacement point, the right hon. Gentleman says that coal will be off the system by 2020. That may be the objective in this country; unfortunately, it is not the objectively globally. Coal use increased globally eight times more in absolute terms than renewables last year, and there is a very strong displacement argument vis-à-vis gas and coal.
Norman Baker
I entirely accept that the geological conditions are different in different countries. There may be a stronger argument elsewhere for shale gas, for the very reasons that the hon. Gentleman has given, but I suggest to him that in the UK context, that argument does not stack up, for the reasons that we have given. Also, this UK Government and the previous Government have given a strong lead internationally on tackling climate change. We have a very good record on that, and what we do is very important in sending a signal to other countries. We should not underestimate that.
Caroline Lucas (Brighton, Pavilion) (Green)
The right hon. Gentleman is making a very powerful case. Does he agree that the research from the Tyndall centre is very useful in this respect? It says that UK shale gas development is “quantitatively and unambiguously incompatible” with the UK’s commitment to working towards remaining below 2° C of warming.
Norman Baker
If we end up with a massive shale gas industry, which is what some parts of the Government have suggested may be the case, we are building in reliance on fossil fuels to a large degree for an indefinite period. If, however, the shale gas reserves are not realisable, as I believe they may not be, we will spend a lot of money and time on something that does not produce much at all. Either way, it does not make sense.
Albert Owen (Ynys Môn) (Lab)
I am following the right hon. Gentleman’s argument with interest. Does he not have to agree that most householders in the United Kingdom have gas appliances in their properties, that we will need gas for some time and that if we do not look at our natural reserves, either in the North sea or on land—even down south where he is—we will have to rely on imported gas for many years to come?
Norman Baker
Undoubtedly, we are largely dependent on gas. I would argue that natural gas is preferable to coal. However, I am not sure that that is the case with shale gas, for the reasons that I will come to, one of which is methane leakage. US studies have shown that up to 9% of methane can escape into the atmosphere, and over a 20-year timeline, methane can be 86 times more powerful, greenhouse gas-wise, than carbon. Therefore, there is a real danger that far from being something that aids us in reducing carbon emissions, shale gas, if not controlled properly, could be as bad as coal. The type of gas and how it is extracted are very important in ensuring that our carbon emissions or greenhouse gas emissions are as low as possible. There is growing evidence that methane emissions can be very high. I ask the Minister to address that issue and tell me what the Department of Energy and Climate Change is doing to ensure that the regulatory regime is robust enough and does not simply rely on what the industry says but uses independent analysis to establish the levels of methane leakage.
The Minister may want to comment on the drilling that has taken place at Preese Hall in Lancashire—PH1. I understand that the site is to be abandoned and grassed over because of the leakage problem at the Cuadrilla site, owing to the well casing issue. If he would like to comment on that, I would be grateful, because it seems to suggest that the regulation on well casings is not as thorough as it might be.
There is also an issue about jobs and the economy. The Minister has rightly drawn attention to the jobs that may result from fracking, but jobs would come from any energy investment, so the question is what sort of energy investment we want. Of course we want jobs to be created, but at what cost? There will be costs as a consequence of pursuing fracking.
Graham Stringer (Blackley and Broughton) (Lab)
I am following the right hon. Gentleman’s argument about jobs. Does he accept that as well as being an energy source, fracked gas is a feedstock for our chemical industry, which is currently vulnerable to the United States chemical industry because of the high costs of energy in this country and the lack of direct feeds into the industry?
Norman Baker
I agree that any energy policy needs to take into account all relevant factors. Taking all relevant factors into account, however, I would not pursue the Government’s current fracking policy. I was referring to a number of downsides that need to be addressed. The Countryside Alliance has produced a brief in the past couple of days, which states that
“the development of a shale gas industry in the UK would be very challenging for a number of reasons, which include: constraints of population density; the current regulatory environment; existing land use at proposed sites; lack of associated infrastructure…and environmental concerns.”
The Countryside Alliance goes on to say that
“there are potential threats to the countryside, including: implications for land used for development; potential threats to other land users; pressure on local infrastructure; increased demand for water resources; waste management problems; increased light, noise and emission pollution; and increased risk to the local ecosystem and communities, such as habitat fragmentation, threats to local wildlife and contamination of water systems.”
That suggests that the Countryside Alliance is not entirely happy with the Government’s fracking proposals. In the brief, the alliance recommends the introduction of buffer zones between shale developments and local communities. Perhaps the Minister can tell us the Government’s policy on that. I think that it is fair to say that the alliance is nervous about fracking, although to be fair and accurate, it has not ruled it out. The National Farmers Union, which is concerned about the implications of fracking for agriculture, is in a similar position.
Concerns have been expressed about the Infrastructure Bill, which permits
“passing any substance through, or putting any substance into, deep-level land”
and gives
“the right to leave deep-level land in a different condition from the condition it was in before an exercise of the right of use (including by leaving any infrastructure or substance in the land).”
I do not believe that the inclusion in the Infrastructure Bill of such a wide sweep of permissions constitutes a world-class regulatory regime. Perhaps the Minister would comment on that.
Mr Mike Weir (Angus) (SNP)
I want to go back to the point made by the hon. Member for Blackley and Broughton (Graham Stringer) about the chemical industry. He suggested that shale gas would produce cheaper energy, but does that not depend on the structure in the United States? There is no evidence that shale gas in the UK will be extracted at a cost as low as that in the United States.
Norman Baker
That is certainly true. The geology is different, and land use management is different in this country. We do not have the vast open spaces that exist in the US—I believe that Lord Howell referred to the “desolate” north-east, which I do not think is an appropriate description of our country—so of course the situation is entirely different. As we found with genetically modified crops, we have to have multi use of our land, rather than the mono use that is possible in vast areas of the United States. The hon. Gentleman is quite right to make that point.
Other objections have been made by, for example, the Royal Society for the Protection of Birds, which states that 99 protected areas, including 24 RSPB reserves, have already been licensed under previous licensing rounds. It argues that excluding a range of protected areas from shale gas exploration would rule out only 12% of the area that is up for grabs in the 14th licensing round. To give credit to the Minister and his colleagues, they have given a clear signal that they do not want fracking in national parks, and I am grateful for that, not least because that affects my constituency. If he could respond to the RSPB point about protected areas, that would be very helpful.
There is also a concern about water resources. The point has been made, quite rightly, that 27% of catchments in England and Wales only have enough water for additional abstraction 30% of the time. My water company tells me that there is less water per head of population in my constituency than in Sudan. The idea of vast amounts of water use for fracking concerns me.
Robert Jenrick (Newark) (Con)
On the question of the RSPB, is the right hon. Gentleman aware that fracking—not shale fracking, but fracking for oil and gas—has been going on since 1963 in Nottinghamshire, just over the border from my constituency, and in the Beckingham Marshes, which is an RSPB-protected area? The RSPB has never raised a single complaint against activity there.
Norman Baker
I have to confess that I am not aware of that particular issue. The RSPB does not include that in its brief, but that is, no doubt, a relevant point, which the hon. Gentleman has put on the record.
Albert Owen
The right hon. Gentleman mentioned his concern about drilling per se, and about deep drilling in particular. Of course, geothermal is just that; it involves drilling deep into rock. Are he and his party against that, or is the debate only about shale gas? It is rather confusing simply to have “Fracking” as the title of the debate.
Norman Baker
To be clear, I am not speaking on behalf of my party; I am speaking on behalf of my constituents. I am not against exploring for geothermal, but I think that the same concerns apply, and they need to be properly considered and factored in. I would not want environmental standards to be compromised by anything that takes place in energy production, and geothermal would have to meet stringent standards.
The Chair of the Select Committee on Environment, Food and Rural Affairs, the hon. Member for Thirsk and Malton (Miss McIntosh), has said that there are too many unknowns when it comes to potential damage to the environment. The National Trust has said:
“There are very real dangers for the environment in going all out for fracking…Our position on fracking is clear—if fracking were proposed today on our land we would say no.”
There are, allegedly, potential health implications. I am not an expert on health matters, and therefore I simply wish to report what has been said and leave it to others to judge whether they are convinced. It is, however, right to put on record the fact that concerns have been expressed. The Lancet, no less, which is rigorous in ensuring that anything in its publication is of a high standard, recently published an article by Michael Hill, an expert adviser to the European Commission on the best available techniques for the management of waste rock, in which he stated:
“Although the UK Government has indeed stated that it accepts the Royal Society and Royal Academy of Engineering Working Group’s recommendations on shale gas extraction, the reality is that only one of these recommendations has been implemented in full; one out of ten in 2 years.”
Will the Minister confirm whether that is the case and, if it is, when the other recommendations will be implemented? Mr Hill stated:
“Other recommendations have been ignored or the opposite has been put in place.”
He went on, rather worryingly, to say:
“Recent studies from the USA have suggested an increased risk of adverse health events (such as congenital heart defects and low Apgar scores) in individuals living close to natural gas development (within a radius of 10 miles). These preliminary findings need to be replicated and explored further in large prospective studies; it may be irresponsible to consider any further fracking in the UK (exploratory or otherwise) until these prospective studies have been completed and the health impacts of fracking have been determined.”
I make no comment, and I have no view, on whether fracking causes serious health issues. However, it seems to me that that question needs to be addressed, and it would be helpful if the Minister would say something about the matter.
I draw attention to an article in The Independent on 30 October, which states that, according to scientists:
“Dangerously high levels of cancer-causing chemicals have been discovered in the air around ‘fracking’ sites in the United States…Levels of benzene, formaldehyde and hydrogen sulphide were many times above the US’s air pollution limits and were detected within residential areas near to fracking wells drilled across five different states, the researchers said. Some levels of benzene—a known carcinogen—were more than 30 times the concentrations that would be found in the air at a petrol station when filling a car with fuel, they said.”
That is a US study, and everything depends on the regulatory regime. If the Minister can convince hon. Members that regulation in this country is much tighter than it is in the US, he may allay those concerns. However, given the remarks that have been made about the Infrastructure Bill, we remain to be convinced that the regulation is as strict as the Minister may claim.
David Morris (Morecambe and Lunesdale) (Con)
Does my right hon. Friend agree that, even though fracking is relatively new in this country, the House has had a debate that shows that we will have the world’s safest regulation on fracking? The experience in America happened over a period of decades when regulation was not as tight.
Norman Baker
I agree that regulation in the US has not been particularly tight, as far as I can tell. I agree that Ministers have committed themselves to a strict regulatory regime, which is good. I question whether the rhetoric bears truth to the reality, because the Infrastructure Bill does not seem to reflect the high level of regulation that I would like to see.
David Mowat
I am listening carefully to what the right hon. Gentleman says. For the avoidance of doubt, will he tell the Chamber whether it is his position that fracking has caused cancer in the United States?
Norman Baker
No, I did not say that. I was very careful to say that I was reporting something from The Lancet and referring to an article from The Independent. I expressly said that I do not have a view on whether what is claimed in the articles is the case, but those matters should be taken into account, and they need to be addressed in order to reassure the public. That is what I said, and I repeat it now.
Lilian Greenwood (Nottingham South) (Lab)
The right hon. Gentleman has made a number of interesting points. Does his contribution, and the debate so far, simply reflect the high level of public scepticism and concern about fracking, whether we are talking about the health implications or environmental concerns, many of which are clearly genuine and legitimate? To ensure public support, the Government should introduce robust regulation and monitoring before they proceed with the measure.
Norman Baker
I agree with that entirely helpful contribution. On 12 August, The Daily Telegraph, which is of course a paper that we can always believe, reported:
“Support for fracking in the UK has fallen, with less than a quarter of the public now in favour of extracting shale gas to meet the country’s energy needs, according to…government polling.”
So support for fracking among the public at large appears to be lessening. At the very least, the Government has a job to convince the public that fracking is the right option. There is also nervousness among MPs, including among Conservative MPs, with seats where fracking may occur. I refer to my parliamentary neighbour, the right hon. Member for Arundel and South Downs (Nick Herbert), who is dealing with the proposals for the West Sussex village of Wisborough Green. He warned:
“Rural West Sussex cannot become a carelessly industrialised landscape.”
There is genuine concern that the countryside may end up being pockmarked as a consequence of fracking.
I referred earlier to Lord Howell, the Chancellor’s father-in-law, who said that fracking should be confined to “desolate” parts of north-east England. He also said, and I think he may be right about this:
“Every time ministers open their mouths to claim that fracking must start everywhere around Britain, and not just in carefully selected and remote…areas, they lose thousands of Tory votes.”
Will the Minister confirm the policy on the geographical spread of fracking?
In this House we are all concerned about energy bills and the cost of living. The Chancellor has said that there is
“a real chance to get cheaper energy for Britain.”
The Prime Minister himself has said that fracking has “real potential” to drive down energy bills, but Lord Browne, the chairman of the UK’s leading shale gas company, Cuadrilla, has said that fracking will not reduce gas prices. Will the Minister say what evidence there is that gas prices will come down as a consequence of fracking? The companies do not appear to think that gas prices will come down.
There is then the question of what else we might do if we do not have fracking, or if we have less fracking than the Government would like. An alternative energy strategy is available that would provide security, aid efforts to reduce climate change and produce jobs: further investment in renewables. I ask the Minister to back that horse. I hope that the climate change argument speaks for itself, but with regard to the security of energy supplies, renewables are all ours. There is an indigenous supply of renewables, which is endless by nature. We have immense potential for wind, solar, hydro, wave and tidal power in this country.
The Foreign Secretary recently said:
“Renewable energy sources will be critical to reducing our vulnerability to energy supply shocks”.
Those are wise words, and I am delighted that since 2010 the coalition Government has secured the investment of £29 billion in renewable energy sources, which is more than double the amount secured by the last Labour Government. Electricity from renewables has more than doubled since 2010, and we are now seeing the price of solar cut by two thirds. The Government is doing a great number of good things for renewable energy, and I argue that the potential to do even more is not quite limitless, and not quite renewable, but there is certainly potential to do a great deal more than we have so far achieved.
Investing in green energy creates green jobs, and I am delighted that the Secretary of State for Energy and Climate Change has given the go-ahead for a wind farm off the Sussex coast that will create some 100 jobs at Newhaven in my constituency. Those who rubbish renewables, particularly our UK Independence party friends, are busy destroying British jobs through their approach to such matters. We must ensure that the mood music coming from Parliament and the Government supports renewable energy and does not bring into question the Government’s future commitment.
Albert Owen
As someone who is pro-nuclear and pro-renewable, I see no contradiction in their both contributing to a low-carbon energy policy. Is the right hon. Gentleman saying that he is against nuclear? Although he is not speaking on behalf of his party, we have seen a few U-turns from the Liberal Democrats on that issue.
Norman Baker
I have not mentioned nuclear in this debate, as far as I am aware.
Norman Baker
If the hon. Gentleman is asking my opinion on nuclear, I will tell him that I am highly sceptical about the economics of nuclear power, but that is a separate debate.
I will conclude my speech to give plenty of time for other hon. Members to contribute. I advise the Minister to stop backing the wrong horse and back renewables. Shale has been “overhyped”—the word used by the UK Energy Research Centre. Shale could be damaging, rather than helpful, to our country. Energy security, climate change and jobs are helped by investing more money in renewables, instead of the concentration we have seen on fracking.
Mr James Gray (in the Chair)
Order. A glance around the Chamber will demonstrate to all colleagues that this is an important and popular debate. I have the authority to limit the duration of speeches, but I do not believe it is right to use that authority. Perhaps hon. Ladies and Gentlemen will use their good will and discretion to limit their speeches to about five or six minutes, if that is agreeable.
Mr Iain McKenzie (Inverclyde) (Lab)
It is a pleasure to serve under your chairmanship again, Mr Gray. I will take your direction, because I realise that many hon. Members wish to engage. I congratulate the right hon. Member for Lewes (Norman Baker) on securing the debate.
It is important that we discuss how to reduce our reliance on imported energy to meet our future needs, as well as how to meet our commitments to reduce CO2 emissions. It is true that Europe relies on energy imports, and in Britain the bill is high—I am told it is in the region of £12 billion a year. Progress on reducing carbon emissions remains slow, and only last week we discovered that, at the current rate, the UK will miss its target on reducing air pollution by 20 years. It is essential that we look to cleaner and more diverse energy production and to more sustainable ways of powering the country.
Those in favour of fracking say that the UK is ripe for a fracking revolution. They say that fracking will be vital to providing energy security while helping to develop a domestic energy industry that will lead to more jobs and investment in local communities across the country. No doubt such beliefs have paved the way for the Government’s tax breaks for the shale gas industry, making Britain the world’s most pro-fracking country, but at what cost to our green energy commitments? It would be unrealistic to say that gas will not play a part in the UK’s future energy mix, but the fracking-at-any-cost approach ignores many problems, and it must be addressed.
The jury is still out on the safety of fracking. The lack of consensus reflects the fact that the process is perceived to be fraught with difficulties and, as such, is an operation that fails to command public trust. “Proceed with caution” seems to be sensible advice. Little has been done to allay the fears that fracking could contaminate water supplies or endanger properties. The public fear that fracking will have far-reaching implications for the environment. Why have the Government chosen to ignore environmental concerns, rather than address them and provide the safeguards for which communities and the public are asking?
Kate Green (Stretford and Urmston) (Lab)
I congratulate the right hon. Member for Lewes (Norman Baker) on securing the debate, and I apologise for missing the beginning of it. Does my hon. Friend the Member for Inverclyde (Mr McKenzie) agree that local people are not only concerned about the process’s environmental impact? From our experience in the north-west, there is damage to local amenities, policing and transport. Vehicles arriving at fracking sites also cause problems. There is a need to plan very carefully not just for the processing input but for the whole context and locality in which fracking takes place.
Mr McKenzie
My hon. Friend makes the very good point that the implications of fracking go beyond just the environmental, and she has laid out some of other aspects.
Fracking will do little to help Britain to reduce its carbon dioxide emissions. Research from BP earlier this year suggested that, even with the increasing use of shale gas as an energy source in the future, we can still expect greenhouse gas emissions to increase by about 29% during the next two decades. Given our already poor record on emissions, it would be a mistake to prioritise the use of an energy source that will do little to help us to meet those commitments.
Most importantly, shale gas will not last for ever. We should consider diversification and a mix of energy production, as well as investing in renewables, an energy source that will not simply disappear. Instead, it will provide jobs and investment in local communities for generations to come, helping us to build a truly environmentally friendly energy policy. The potential in the sector is great, but benefits from the fracking industry mean that it could be neglected. If that is the case, the UK would be left trailing behind others in creating sustainable energy for the future.
Talk of renewables often conjures up images of endless rows of wind turbines, which are themselves questionable in terms of energy efficiency, and which ruin previously picturesque parts of our countryside. Such imagery merely reflects the lack of imagination on the subject that is being shown by both the UK and the Scottish Government. Renewable energy can be so much more than that imagery suggests, and it is vital that our environmental policies reflect that.
For example, the west coast of Scotland has more coastline than the entirety of France, and it receives some of the world’s strongest tides. It is ripe with opportunities to help Britain to become a leader in green energy. Tidal energy could provide an estimated 20% of our energy needs, and it is immensely short-sighted not to take advantage of it.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
My hon. Friend makes a very good point. I am sure he is aware of the crisis that is now affecting marine renewables in the UK, with Pelamis Wave Power, which has a turbine in my constituency, going into administration, and with difficulties affecting other tidal power firms. Would it not be much better if the Government put resources, subsidy, effort and drive into ensuring that we do not lose our lead in marine renewables, rather than put so many eggs into the basket of fracking?
Mr James Gray (in the Chair)
Order. The hon. Member for Inverclyde (Mr McKenzie) should respond in the strict context of fracking, and he should perhaps do so relatively briefly.
Mr McKenzie
Absolutely, Mr Gray—my hon. Friend makes a very good point about the importance of pushing ahead with our renewable energy sources, including putting more research and development resources into the marine renewables sector.
If there is one thing that we are not short of in the west of Scotland, it is rain, which could open the way for many hydro projects if only there were the same enthusiasm for them as there is for fracking. As I have said, tidal projects could provide employment, and not just in the energy sector. Such projects would require maintenance by engineers using ships, which could have a knock-on effect on our shipbuilding industry.
The energy provided by tidal and hydro will not disappear overnight, whereas shale gas will come and go. There would be additional benefits from developing such energy sources. Proper management of water by hydro projects could mitigate some of the adverse effects of climate change—in my constituency of Inverclyde, problems with water management are partly responsible for the flooding we have experienced—but increased investment in green energy is unlikely if fracking remains the favoured, and indeed the only, cornerstone of our energy policy.
Many other Members wish to speak, so I will finish by saying that, rather than continuing to focus only on fracking, let us fully utilise the potential of renewables. They remain a small part of the energy mix here and worldwide, but renewable energy sources such as tidal, hydro and wind will help to make us a leader in reducing carbon emissions.
David Mowat (Warrington South) (Con)
It is a pleasure to speak in the debate and I congratulate the right hon. Member for Lewes (Norman Baker) on securing it. I agreed with the first part of his speech, when he said that energy policy has three components—low cost, security of supply and decarbonisation—but we perhaps parted company afterwards.
There is no contradiction in supporting renewables and supporting fracking. In this country, renewables represent one tenth of the energy we get from coal and oil. I would like renewables to grow faster, but part of reducing carbon—I will say more about this later in my remarks—is the displacement of coal, which is very polluting, by gas. In the United States of America, there has been a massive reduction in carbon due to the shale revolution.
People have said that we should not bet the whole farm, or the whole world, on shale, and I agree. Nobody is saying that shale is a panacea to fix everything. However, we should evaluate the potential of shale in a safe, constructive and thoughtful manner. That is all I am saying.
People sometimes ask, “Should we frack or not frack? Should the world go down this route?” The world has already started down that route, and it is worth pausing to consider what has happened in the USA during the past 10 years. Yes, part of the picture is that gas prices have fallen from $10—roughly speaking, that is still the price in the UK—to something like $3 or $4, or by a factor of about a third. The consequence of that is lower domestic prices, less fuel poverty and a much revitalised manufacturing industry, as well as lower costs of feedstock for use in the petrochemicals industry, which has seen a renaissance in the USA.
We may not want a part in any of that—in Lewes, it may not matter, but it matters on Teesside, where marginal chemicals investment decisions are being made on whether to put the next production unit or piece of kit on the eastern seaboard of the USA or in our country. It also matters in what I have heard described as the “desolate north-west”, where a large number of jobs depend on energy-intensive industry. About 900,000 people in our country work for industries that rely on relatively cheap energy. For us to say that that does not matter, or that we should ignore it, strikes me as arrogant, wrong and disappointing.
I have heard it said, including today, that fracking will not reduce the price of gas in Europe. That argument is a reasonable one. We have a European gas system and get most of our gas from Europe—in fact, from Russia—and not than from the UK, although we are getting some from the UK. It is true that fracking will not automatically reduce cost but, generally, when there is more of something, the price comes down.
Julian Sturdy (York Outer) (Con)
My hon. Friend was probably coming on to the point I want to make. Is it not the case that oil prices are currently falling as a result of the worry in the middle east about competition from the US in the form of shale gas?
David Mowat
My next sentence would have been that oil prices have fallen by about a third in the past three or four months, because the USA, which was a large global market for oil, is no longer importing oil. The result is huge in terms of geopolitics and the position of countries such as Saudi Arabia. Of course, that cost reduction would happen with gas, too.
It is not only the cost of the material that matters, but the economic activity that comes with exploiting it. Such activity is not a displacement of renewables. Aberdeen and the areas around it have the four parliamentary constituencies with the lowest unemployment rates in the UK—the rates are lower even than those in the south-east of England and London. That record has been built on the back of the North sea oil industry, and some of that activity will happen if shale reaches its true potential.
People have said that that potential may not be there. I believe I heard the right hon. Member for Lewes say that the reserves may not all be recoverable. That is true. The assumption is that 10% of the technically available reserves will be recoverable. If so, that means 50 years of supply in the UK. It may not be that 10% is recoverable—it may be 1%—but let us find out, because a load of MPs in a room talking about it will not allow us to understand whether the true figure is 1%, 10% or 15%.
I mentioned our energy security and gas imports. They mostly come from Norway, but increasingly come from Qatar. The first contract between Centrica and Gazprom has been signed, starting now, so gas is also starting to come from Russia. The gas situation has changed in the past 15 years. Previously, we were a gas exporter, but no longer.
It is also true that we have security of supply problems in terms of keeping the lights on in this country. During the past decade or two, we have failed to replace power stations. We are turning off our coal-powered stations—we are the only country in Europe doing that at scale. The consequence is that the capacity margin here for next year is thought to be 2%. We are not building any kind of power stations. That needs to change. The Minister might well talk about that in his remarks.
Any student of the subject who does not believe that nuclear power globally is part of the decarbonisation solution does not have a thoughtful response to offer. Last year and the year before, 87% of the world’s energy came from fossil fuels. Of that, by far the majority came from coal and oil. If we could replace that coal and oil with gas—that is a big aspiration and it will not be done overnight—it would be equivalent in decarbonisation to the world increasing by nine times existing global renewables.
Duncan Hames
Does the hon. Gentleman accept that coal will not be displaced by gas if coal is burned elsewhere—those carbon emissions still enter the atmosphere?
Mr James Gray (in the Chair)
Order. With an eye on the clock, I call David Mowat to respond.
David Mowat
I will wrap up fairly quickly, Mr Gray. I clearly accept what the hon. Gentleman says—we have seen that happen in respect of the United States. That coal came to Europe because Europe failed to put in place an emissions trading system—it was principally scuppered by the Germans. As a consequence, it was cheap coal to burn. We have seen an upsurge in coal in Europe and more widely in the world, which is a big problem for those who take an interest in climate change. To pretend that emissions trading is not part of the solution is wrong.
To conclude, none of what I have said is an argument for being cavalier with local issues, whether they relate to transport or local planning. The local planning rules that apply to wind farms must also apply to fracking. There is fracking in my constituency. It is behind some large leylandii and, as I understand it, is causing objections from no one, but the situation in other places is more sensitive. I am not advocating fracking in the wrong place. I advocate proceeding in a responsible way to evaluate the potential of the technology and using it if it works.
Caroline Lucas (Brighton, Pavilion) (Green)
I congratulate, as others have, the right hon. Member for Lewes (Norman Baker) on securing this important debate. I was going to intervene on the hon. Member for Warrington South (David Mowat) before you, Mr Gray, reminded us of the time limits, but I point out to him that Sir David King, the former chief scientist and former champion of nuclear power, has just performed a U-turn on the issue. The hon. Gentleman was being so scathing about those who do not believe that nuclear has a part in the energy mix, but we are in increasingly good company. I also point out to him that when he lauds what is happening in the US, he should bear in mind that the net cash flow from the US shale has been negative year after year. Some of the biggest names in investment in US shale are leaving. At an average US shale gas well, production can drop by 60% in 12 months. The Americans are having to build well after well. The UK is a much smaller country; we simply cannot do what the US is doing.
In the short moments I have, I will focus on two things in particular: I will say a few words about regulation, but I will mostly talk about the climate change arguments. On regulation, we have a Government who will keep trying to persuade us that they will put in place the robust regulatory framework we need to make fracking safe, yet at other times they put on a different hat and tell us how much they are proud of their deregulatory zeal. I do not think I am the only person suggesting that those two impetuses are contradictory. My fear is that the deregulatory zeal will win out.
We also have a Government who are starving such organisations as the Environment Agency of resources. That is precisely the agency that needs to be there to ensure that fracking is as safe as it can be. I echo the concerns and queries of the right hon. Member for Lewes on well integrity at Preese Hall and Balcombe. Can the Minister categorically reassure us that there have been no well integrity failures at Preese Hall or Balcombe? I tabled a written question on that, and it was transferred to the Department for Work and Pensions. I was disappointed that the Minister’s Department chose not to answer it. I am hoping, given that we have a joined-up Government, that he can answer that question shortly.
Even if we had a perfect, generously resourced system of standards, regulation and monitoring, which we do not, the question whether UK shale gas development can be sustainable must ultimately rest on whether it is compatible with securing a safe and habitable climate for current and future generations. The bottom line is that building a whole new fossil fuel industry is the last thing that the UK should be doing if we are serious about securing that safe and habitable climate for our children and grandchildren.
The argument that shale gas is lower carbon than coal only stacks up if minimum methane emissions can be guaranteed. Even if that were possible, the argument that shale gas can be a substitute for coal ignores the crucial issues of time scales, overall carbon budgets and the displacement effects that the hon. Member for Chippenham (Duncan Hames) has been talking about. Shale gas is still a high-carbon fossil fuel, even if it is a bit better than some coal. The crucial thing is that we have at our disposal numerous other ways to ensure that coal is off the system by the early 2020s at the latest. Other Members have given some examples of that. We do not need shale gas.
Those arguing that shale gas is compatible with the UK’s climate objectives ignore a pivotal issue, despite its being identified in the report from the Department of Energy and Climate Change’s then chief scientist. He said:
“If a country brings any additional fossil fuel reserve into production, then in the absence of strong climate policies, we believe it is likely that this production would increase cumulative emissions in the long run. This increase would work against global efforts on climate change.”
Essentially, the argument is about unburnable carbon. As other Members have said, reports and analysis from the Intergovernmental Panel on Climate Change, the Carbon Tracker Initiative, the International Energy Agency and even Mark Carney, the Governor of the Bank of England, all show that we cannot afford to burn the vast majority of existing fossil fuel reserves if we are to avoid the worst impacts of climate change. In the context of cuts and austerity, using public money on tax breaks and relentless public relations initiatives to help fracking firms find yet more oil and gas is inexcusable.
An effective response to climate change requires a complete shift to carbon-neutral energy systems within a generation in all the major economies, including Britain. We know how to do that. We have the technology and engineering capacity to do it and we can afford to do it. What we need is the political will, because we cannot do it while making ourselves more, not less, dependent on any kind of fossil fuel. This is how the UK’s former top energy and climate diplomat, John Ashton, put it:
“You can be in favour of fixing the climate. Or you can be in favour of exploiting shale gas. But you can’t be in favour of both at the same time.”
Just last week, the UK announced its welcome contribution to the green climate fund, which was set up to help developing countries cope with the devastating impacts of climate change that many already face. The Secretary of State for Energy and Climate Change was right to emphasise the need to help poorer countries to develop using clean renewable technologies and to highlight the green climate fund as a crucial part of the jigsaw of getting a global climate agreement in Paris next year. It is incoherent, irresponsible and deeply unhelpful for the Government at the same time to be doing everything they can to build a new dirty fracking industry in the UK. The only safe and responsible thing to do with shale gas is to leave it in the ground.
Eric Ollerenshaw (Lancaster and Fleetwood) (Con)
It is great to follow the hon. Member for Brighton, Pavilion (Caroline Lucas) and my hon. Friend the Member for Warrington South (David Mowat), because my view sits somewhere between Brighton and Warrington in this great war of experts, which has not helped our discussions.
If I have only got a few minutes, I will focus specifically on the situation in my constituency, where 23% of the land is open to licensing to test and explore fracking sites for shale gas. My hon. Friend made a cohesive speech and talked about there being no bonanza. Unfortunately, to many people in my constituency, it sounds as though people in London are saying that there is a bonanza. There has been talk about £366 billion of recovery gas under the Bowland shale, which crosses my constituency. As he said, there has been talk of us having the revolution that has happened in America, but when we enter into the argument and say, “Can we possibly have a share of that bonanza?”, we hear, “The costs of developing this are quite high and you don’t understand.” What is it to be? Are there vast profits to be made from this or not?
The sheer fact that has taken a great deal of time to land is that England is not the USA. Whether someone thinks that that is a good or bad thing is entirely up to them. I think that its development might be a good thing, because I have faith in our regulatory systems and their accountability. Those systems are a measure far above the USA and can provide security to people. The biggest area is that local landowners and residents do not receive any return from any possible development of shale. In fact, the Government’s Infrastructure Bill removes the age-old right for someone to have a say on who drills under their land and their house. That is a heavy-handed manoeuvre, which reinforces the view in my part of the world that the Government are bowing down too easily to international oil and gas companies and their financial interests.
There are international companies and American examples, experts are legion, and fundamental rights are being taken away. Is it any wonder that conspiracy theorists are having a field day across the north-west? The only response is that fracking is in the national interest in terms of energy needs and that the areas to be fracked will get a financial return after all. A Government press release states:
“Companies have pledged…to provide community benefits in areas where shale is commercially extracted.”
The north-west has seen company pledges for community benefits from offshore wind farms, but we are yet to see any money, because the companies decide who they give it to and what they will give it for.
We are told that £100,000 and 1% of revenues for every production site—estimated at between £1 million to £7 million a year—will apparently be given to communities near wells, but a number of issues then arise. Who is the community? Is it those on top of fracking sites or the local government ward or parish where fracking takes place? How will the money be distributed? Will that be done by household or through the local council? Can it be spent on anything or will the companies decide? Who guarantees that companies will pay up following takeovers and so on? Nothing in this is statutory. The Government have also promised that, on top of the 1% of revenues, local councils will now get 100% of business rates, which is a late addition to the financial promises.
All that is welcome, but it is confusing and last-minute when for months we in Lancashire have attempted to argue on a cross-party basis that such promises miss the point. There is no definition of “community”. There is no statutory guarantee. There is no guarantee that a future Secretary of State for Communities and Local Government will not take the financial rewards into account when deciding on central grants, so that nothing extra will be gained from fracking.
Julian Sturdy
My hon. Friend makes a powerful point. The potential benefits of fracking may prove transformative, but they will only ever be achieved with local community support and the necessary safeguards. Community benefits play a key role in that. Communities need to know exactly what their rights are, but they do not at the moment.
Eric Ollerenshaw
For once, I agree with a Member from Yorkshire. My hon. Friend makes a real point. I pay tribute to my hon. Friends the Members for Wyre and Preston North (Mr Wallace) and for Fylde (Mark Menzies), with whom I have been working to argue for some form of sovereign wealth fund for Lancashire, into which the funds will be paid. It would have representatives from local authorities, so it would not be part of the local authority grant system and would represent something extra in return for fracking. As the hon. Member for Edinburgh North and Leith (Mark Lazarowicz) said, the reserves will not last for ever, but the fund would represent something that we can say we got in return. It is great to hear the Chancellor and the Minister recently make positive noises about such a wealth fund and INEOS talk about a 4% share of revenues, rather than just 1%. In addition, basing the new national college for onshore oil and gas in Blackpool is a positive move that demonstrates the possibility of long-term jobs to benefit the most-affected areas.
In conclusion, we need to know the scale of investment into the fund—if it happens—the area covered by the fund and the statutory underpinning that will accompany the fund. Only then can we hope to get back the majority political consensus across Lancashire that we had a few years ago.
Graham Stringer (Blackley and Broughton) (Lab)
I will be brief, Mr Gray, because the hon. Member for Warrington South (David Mowat) said most of what I wanted to say.
I agree with the hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw) that it is vital that local communities, however defined, benefit from fracking. It would have been easier to guarantee that benefit under the old rates system, but that no longer exists, so something else needs to be put in place from which the Treasury cannot pinch money.
The hon. Member for Warrington South put well the real debate here, which is about a cautious approach to fracking, but one that recognises that the gas under our feet could represent a huge bonanza for our industry. It might not be, but nobody knows, which is why experiments to find out what is there and whether it is retrievable in a way that is not hazardous to local communities are important. That is the real debate, but it needs to be distinguished from the unreal debate, which comes from those who pretend that the debate is about health and safety, the environment and protection when they are actually, as the hon. Member for Brighton, Pavilion (Caroline Lucas) said, completely and totally opposed to fracking on what I consider to be bogus grounds.
The hon. Lady uses as a basis for opposing fracking the fact that we will not meet our emissions targets. So what? We are hitting our emissions targets—[Interruption.] Well, I will explain it to the hon. Lady, because she is in a fantasy world. In hitting our emissions targets, we are responsible for more carbon dioxide going into the atmosphere than we were before, because of embedded carbon coming in through industrial manufactured goods from China and elsewhere. The hon. Lady’s policy does not help the climate or reduce carbon dioxide. Her policy is about deindustrialisation, which is responsible for increasing the costs of industrial goods in this country by 9%, putting people out of work, and for increasing the cost of domestic energy, depending on how it is counted—by and large, it is not counted properly—by between £50 and £120 a year. The hon. Lady is concerned about carbon dioxide entering the atmosphere, but that is increasing because we are effectively subsidising imports from China and India.
David Mowat
The point about embedded carbon is not mentioned enough in such discussions, so it is worth noting that, this year, emissions per head in China exceeded those of the UK, which is an interesting statistic.
Mr James Gray (in the Chair)
In the context of fracking in the United Kingdom.
Graham Stringer
It is very interesting in the context of fracking, Mr Gray.
We need to consider whether we can benefit from shale gas in a sensible and rational way. As hon. Members have said, prices will not necessarily decrease, owing to how the European market works. We will put our gas into that market and it will become diluted and the price will not shift much. However, we should see a benefit from taxation, and we certainly should see a benefit from the congeners of methane within shale gas that will be used by firms such as INEOS as a feedstock. Otherwise, we must be told how our chemical industry can compete with not only the Chinese and their strange accounting system, but the Americans, who have reduced the costs of energy and have cheap sources of feedstocks for their chemicals industry. There will be no such industry in this country if we do not do something about that.
My final point is about renewables. I am strongly in favour of moving into renewables, which can provide security of supply, but we are doing it at the wrong time, which is counter-productive. We need to put huge amounts of money into research, primarily into how to store electricity, because the renewables we have at the moment are not helping our economy. They are damaging our economy. I am not against renewables, but I am in favour of putting a great deal of money into research into better renewables, rather than into the renewables that we currently have.
Mark Menzies (Fylde) (Con)
I noted your earlier comments about the time, Mr Gray, so I will make my speech brief.
My constituency has lived with shale gas and fracking for the past five years. Indeed, three of the sites that have been drilled in Lancashire are in my constituency, and the two that are seeking planning permission from Lancashire county council are also in my constituency. The well at Preese Hall, which has been mentioned today, is also in Fylde.
I will keep my comments to regulation and some of the work that has happened during this Parliament. In a debate earlier in this Parliament, I called for the establishment of a body that could oversee the operation and regulation of shale gas in this country, and from that the Office of Unconventional Gas and Oil emerged. At the time, I hoped that that body would be able to interrogate the regulations, look at the work of the regulators and set about putting a process in place that delivered public confidence in relation to the regulation of oil and gas onshore activity.
I am disappointed with where we are, several years on, because the public perception is still very much that the regulatory function is not up to speed with the challenges of onshore oil and gas activity, whether shale or other unconventional oil and gas methods. That provides the Minister with an opportunity to look at the current work of the Office of Unconventional Gas and Oil, to turn a skeleton organisation into something that is far better resourced, far more robust and able to fulfil its six founding criteria, one of which was to enable development, protect the environment and safeguard the public. On that point in particular, I do not think that the work has been done with regard to the public perception argument or the regulatory oversight argument.
There is an opportunity to create an independent panel of experts—not another regulatory body or function—to consider the work of the regulators, interrogate the regulations that are in place from an independent perspective and ensure that the Health and Safety Executive, the Environment Agency, the Department of Energy and Climate Change, county councils and mineral rights authorities are working and have no gaps in their work. The people who sit on this body, which has to be funded by the Government, should be independent from the Government, and the application process to join such a body must be fair, open and transparent. At the moment, the perception of many people out there is that, although the regulatory function may be technically robust from an industry perspective, there are gaps. Only by creating a new panel of experts, as I have outlined, with some speed will we have an opportunity to try to address that matter.
Specifically in relation to Preese Hall and environmental monitoring, I believe that Lancashire county council suggested that the Environment Agency take on a minimum five-year process to conduct monitoring at Preese Hall, only to be told that, as a mineral rights authority, it did not have the power to enforce that decision. The Environment Agency appeared reluctant to take on the environmental monitoring facility and left it to Cuadrilla. I am not casting any aspersions on Cuadrilla’s integrity or the independence of its monitoring, but the public need to know that any monitoring is being done by an independent body, not by a company involved in the process. That is where the Environment Agency needs to step up to the mark. There has to be an obligation on it to provide all such environmental monitoring. To ask the company or companies involved to fulfil that role or task is unacceptable and does nothing to help public confidence; indeed, it is undermining the robustness of the regulations we are putting in place in the view of those people in favour of shale gas.
I have a final request for the Minister. If the Government have to put in additional resource and people into the environment and the regulatory process to advise local authorities on details of planning applications, for example, we must be prepared to do that, because if we do not Members of Parliament such as myself will find it difficult to support this process going forward. We will not allow anything to take place in our constituencies where regulation is not robust and inspections are not independent and are not unannounced, because anything short of that will really start to test the good will of MPs such as me and my hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw).
Mr Mike Weir (Angus) (SNP)
I am pleased to speak under your chairmanship, Mr Gray, and I congratulate the right hon. Member for Lewes (Norman Baker) on securing this important debate.
I should make it clear at the outset that I do not support fracking, for all the reasons set out by others, which I will not repeat. Even in Denton, Texas, the home of fracking, in a recent referendum people voted to end it. Other states in the USA are turning against it because of environmental concerns. We should take note of these. If, even in the wide open spaces of the American west, there are concerns about the impact of fracking, how much more should there be in the densely populated UK?
A large area of central Scotland, stretching through to my constituency in Angus, has been identified as having potential for shale gas extraction. I shall confine my remarks to particular problems relating to the powers involved. Much of the power in respect of such developments lies with the Westminster Government rather than the Scottish Parliament. Westminster has the power to grant licences under the Petroleum Act 1998 to search for and develop shale gas, whereas local authorities and the Scottish Parliament have power in respect of planning matters, which clearly gives them some powers to restrict fracking.
I asked the Minister at the last DECC questions to confirm that the UK Government do not intend, whether through the Infrastructure Bill or otherwise, to change the planning powers in respect of fracking. I did so because I have become increasingly concerned about what exactly the interaction is between the powers under the Petroleum Act and those under the Planning Acts. This is very important, because the UK Government seem determined to have fracking and, with the changes made by the Infrastructure Bill, they are removing the right of landowners to object to fracking under their properties. It was also reported this week that the UK Government were funding the British Geological Survey to make investigative boreholes to demonstrate the viability of fracking. Will the Minister confirm that?
Mark Lazarowicz
Does the hon. Gentleman agree that one way of dealing with the confusion between UK and Scottish Government responsibilities would be for the responsibilities under the Petroleum Act to be devolved to the Scottish Parliament—hopefully, under the Smith commission proposals due shortly?
Mr Weir
The hon. Gentleman anticipates what I was going to say.
As well as giving the right to grant licences to persons seeking to explore for shale oil, section 7 of the 1998 Act provides:
“Subject to the provisions of this section, the Mines (Working Facilities and Support) Act 1966 shall apply (in England and Wales and Scotland) for the purpose of enabling a person holding a licence under this Part of this Act to acquire such ancillary rights as may be required for the exercise of the rights granted by the licence.”
The 1966 Act includes a right to
“enter upon land and to sink boreholes in the land for the purpose of searching for and getting petroleum”—
the definition of petroleum in the Act includes gas—and to use the land for specific purposes, such as erecting buildings, laying pipes, and so on, and provides for ancillary rights. The 1966 Act covers such rights, including lowering the surface, conveyance of gas or oil and a right to occupy the surface of the property, among other things. These are quite extensive rights that a licence holder would have and, rightly, these ancillary rights need to be set out by a court if agreement cannot be reached by the landowner.
My problem with all this is that I am not at all clear about planning in relation to fracking. If someone has, say, a lease from the UK Government to seek shale gas in a specific part of Angus, would they be entitled to go on to ground to do so, even if the landowner objected to it? Would these rights override planning permission or would they still need planning permission from the local authority and, if so, where does the landowner stand in all this? Is his only right the right to object to the planning permission? It seems to me that planning could only, in any event, cover the area on which the infrastructure for boring was placed, as it would be difficult to be sure about where drilling was being done, or how far into adjoining land it would go, until the operation was under way.
I would welcome the Minister’s providing some clarity about this. It seems to me that, even if the clauses in the Infrastructure Bill are defeated, the adjoining landowner would still be in a very weak position in relation to those wishing to frack, since they could at best delay development under their property, not stop it. There is a specific concern relating to Scotland, because this would override parts of Scottish land law, which is in fact devolved. There are already things in Scottish land law to do with minerals, including working with them, which would contradict some of this.
The Scottish Government have powers over planning in Scotland and have taken a much more cautious approach to the issue than the UK Government. They have called in the application from Dart Energy in Falkirk, have introduced changes in planning guidelines for unconventional oil and gas, and have—the right hon. Member for Lewes might be interested in this—introduced a concept of buffer zones in this regard. These measures have been welcomed by Friends of the Earth, among others. Hon. Members might be interested to hear that they have also convened an expert scientific panel to review the scientific evidence on fracking.
All powers relating to fracking, and indeed to everything else, should of course be moved from Westminster to the Scottish Parliament. I indicated to the hon. Member for Edinburgh North and Leith (Mark Lazarowicz) that all powers to do with fracking should certainly go to the Scottish Government. Later this week the Smith commission might surprise us and include powers over fracking in its remit. It would be right and proper for all such aspects to go to Scotland, where the Government of Scotland should reflect the views of the communities in Scotland where fracking may take place.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mr Gray.
I congratulate the right hon. Member for Lewes (Norman Baker) on securing the debate, which I think is his first since leaving the Government. I am not surprised, having read parts of his website, that he has chosen fracking as the subject of his first such debate, because the tone and content of what he said in his speech are not inconsistent with letters I have seen that he has written to his constituents about the issue, including when he was presumably supportive of Government policy through collective responsibility, which I am sure he now feels relieved to be free from.
I am conscious that a lot of questions were directed at the Minister by the contributors to the debate, so I will endeavour to be brief to give him time to respond. He is interrogating his notes so that he can respond to a range of detailed questions.
The right hon. Member for Lewes succinctly ran through almost all people’s concerns, objections and issues over a long period. Some of his quotes were slightly selective, including his characterisation of the position of the UKERC, which takes the sensible and rational position that, potentially, unconventional gas has a role to play in the energy mix. It is right to warn, however, of the dangers of the way in which shale gas has been hyped and—I completely agree with this—oversold. The argument that it is a silver bullet to solve all our energy problems simply does not stack up. Frankly, some of the comments made by the Chancellor at his party conference a couple of years ago set the tone for discussion of the subject, which has meant that we have had a polarised debate, despite those of us who have sought to introduce a greater degree of analysis.
A lot of points have been made during this debate. My hon. Friend the Member for Nottingham South (Lilian Greenwood) talked about the public concern about a process that is not new, but has created a high degree of controversy, in part because of experience in the United States, which is different from the UK in terms of the rights of the landowners, the structure of the gas network and market and therefore the impact on industrial and consumer prices, and the regulation. A lot of the concerns expressed in this debate and others have been the result of limited or nonexistent regulation in the early parts of the exploration for shale gas in the US, but we are in a different position in the UK, and we should be.
In my view, shale and other unconventional gas and geothermal should happen only in a context of robust regulation and comprehensive inspection. The point made by the hon. Member for Fylde (Mark Menzies) was a good one—that bodies should have the resources to monitor regulation effectively. It is no good having a regulatory regime that ticks all the boxes and satisfies people without confidence that that regulation is being monitored. That applies to the Scottish Government, who made cuts to the budget of SEPA, the Scottish Environment Protection Agency, which is responsible in Scotland, as well as to the Environment Agency. That might not be an issue in the early stages, but if things ever get to any significant scale, it will become one, because those bodies will not have the resources to be able to monitor the regulation effectively.
Two and a half years ago, I set out a number of regulatory objectives that I thought needed to be met while a moratorium was in place. Some were met and some not. When the Infrastructure Bill comes to the Commons, I am sure we will have a debate about such objectives, but the important point to bear in mind is the public acceptability test, which might well go beyond what some deem to be strictly necessary to regulating an activity, given the analogous activity offshore. If we are ever to be in a position in which we can explore the issues, we have to ensure that the public acceptability test can be met. We will never satisfy those who have an absolutist and ideological objection to any fossil fuels at all—
Tom Greatrex
No, I will not, because I am short on time.
Some people, including speakers in the debate, make the point that they are absolutely opposed to the use of any fossil fuels, or at least that their use should be minimised in our mix. Many others, however, are concerned about a range of different issues that have been highlighted today. It is crucial that such legitimate and local environmental concerns are addressed, that the wider regulatory points are properly robust and that we are in a position in which we can explore whether there is anything in shale gas for our energy mix in the future.
None of us in the room can tell the public or anyone how much shale gas can be recovered; we do not know, and we will not know until exploration happens, and exploration will happen only with greater public consent. We should be approaching the debate in that framework and not as though shale gas was a silver bullet for all our energy problems, the path to untold riches and a solution to all our problems at once. I very much doubt whether it ever will be those things, but perhaps it can make a contribution. For those reasons, we need to deal with matters in a cautious manner, which is the right approach to take in dealing with fracking and the potential resource of unconventional gas for the future.
The Minister for Business and Enterprise (Matthew Hancock)
It is a pleasure to serve under your chairmanship, Mr Gray. I will respond to as many points as I can in what has been a largely reasonable and reasoned debate. In particular, the short contribution of the Opposition spokesman, the hon. Member for Rutherglen and Hamilton West (Tom Greatrex), was commendable for its—
Matthew Hancock
For its brevity, but also for its tone, which is similar to the Government’s tone—it is incumbent on the Government to explore the potential of that geological asset deep beneath the ground. The potential described by the geologists is great, but the question of how much can be extracted is as yet unanswered. It is necessary to find out that answer, but we have to do so reasonably, carefully and safely. I therefore take on board many of the points made by many hon. Members about regulation. We are working to continue strengthening what is already a strong and robust regulatory system.
My right hon. Friend the Member for Lewes (Norman Baker) started with the triumvirate of goals that sit atop energy policy: to ensure security of supply, to reduce carbon emissions and to encourage jobs and growth. Any Energy Minister presented with a potential opportunity to deal with all three together will of course want to investigate further. That is the potential behind exploring for shale gas.
First, the benefits of shale gas to energy security are clear and obvious. As a country, we are lucky that for 50 years we have been able to extract oil and gas from underneath the North sea. Just as there was a debate about whether to do that 50 years ago, there is now a debate about whether to extract resources from deep beneath the land. The answer with North sea oil was right: yes, we should explore, and we should do so within a strong and robust regulatory framework. That was what we did. The answer of 50 years ago is the same today with shale gas: yes, we should explore, and we should do so within a robust and clear regulatory structure. Shale gas could help our energy security, so that we may reduce our reliance on overseas energy supplies, which sometimes come from countries that are not friendly towards us.
Secondly, there is undoubted and clear evidence from the United States that, by replacing coal, gas can reduce carbon emissions. Gas has half coal’s carbon emissions per unit of energy. The debate about coal will continue, but being able to replace coal is nevertheless important.
Thirdly, if there is a clear supply of gas, that will encourage and support jobs and growth, because of the direct benefits that my hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw) spoke about so powerfully. As he argued, there is a need for fair distribution of the resources from under the ground. The proposal for a sovereign wealth fund is an attractive one, and I look forward to working with him and others on the details of the design of that fund, to make sure that the allocation of those resources is fair. After all, if the exploration succeeds, there will be a substantial return.
There are questions about how that return is allocated: how much of it goes to the local population, how much to local authorities and how much to the national taxpayer? Who controls a sovereign wealth fund? How much goes to local communities and in what form? How much goes into paying for the exploration and production, which have costs? How much of it goes into paying for regulators? The point made by the hon. Member for Rutherglen and Hamilton West is important: if production gets going in a big way, the regulator will of course have to expand in scale. We are lucky, in that we are exploring for something of high value, so there will be revenue that in future can be used to provide exactly the sort of regulatory scale he talked about.
The contribution that my hon. Friend the Member for Lancaster and Fleetwood has already made to the debate on this issue is a strong one. We can see that in our discussion of the sovereign wealth fund. I pay tribute to my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard), who has made that case strongly as well, as has my hon. Friend the Member for Fylde (Mark Menzies).
Several Members asked about the strength of the regulatory regime. It is undoubtedly stronger than the regime in the United States. Indeed, the environmental impact assessment for the Cuadrilla planning proposal that is outstanding in Lancashire ran to 4,500 pages. It is quite hard to argue that there is not enough detail in that.
Many hon. Members talked about public opinion. Polling from August was read out; that polling says that around a quarter of people support fracking. The same polling showed that about a quarter of people oppose it, and the vast majority of people are in the middle. That shows the importance of having an informed debate. To inform that debate, we have published a number of studies, including from the Royal Society, with incredible detail and length, and shorter resources by the Department and the Office of Unconventional Oil and Gas, such as “Shale gas made simple”, which bring out the salient details in a clear, short form for lay readers.
Tessa Munt (Wells) (LD)
I am sorry that I was not able to speak in the main debate. The Minister has mentioned public confidence. If we look at, for example, the well examination schemes, they are not really fit for purpose. They are self-regulated by the operators. Where there are guidelines as opposed to regulations people will not have confidence. It is not a terribly difficult step for the Government to make regulations instead of guidelines and an inspection regime instead of self-regulation.
Matthew Hancock
The regulatory approach is not one of self-regulation. There is clear statute and there are clear statutory guidelines that oversee the process. Statutory guidelines are in themselves a form of regulation.
Several hon. Members mentioned the leakage of fluids and methane from different wells that have been drilled so far. At Preese Hall, the well did not fail and the Health and Safety Executive has made it clear that it is satisfied with the steps taken by the operator to deal with the small pressure that was detected.
I pay tribute to the clear mind that the hon. Member for Brighton, Pavilion (Caroline Lucas) has on this issue, although I happen to disagree with her position, because I do not think that the best place for shale gas is underground. She said that she was disappointed that her parliamentary question went to the DWP. That happened because it was a question for the Health and Safety Executive, and the DWP is responsible for the HSE. She also referred to a point made by the former chief scientist. He said that shale gas was a problem in the absence of a climate change policy. Well, we have a climate change policy.
That brings me to a point raised by many Members, namely that exploring for shale gas—cautiously and carefully—is entirely consistent with building renewables and with having safe and secure domestic supplies. I bow to no one in my support for renewables. We have doubled the amount of energy coming from renewables—last year, 13% of our electricity came from them. The amount of investment in renewables—my right hon. Friend the Member for Lewes referred to that—demonstrates our support for them very clearly.
Caroline Lucas
Does the Minister not recognise that the issue that really matters is how much fossil fuel is being burned and cannot be how much more renewable energy is being created if those renewables do not replace fossil fuels? My argument with him is that at the same time as creating some renewables—for which he gets some credit, although there are not nearly enough—he is anticipating a whole new fossil fuel industry. That is incompatible—the scientists say that it is—with the kind of targets we currently have on climate change.
Matthew Hancock
I am afraid that a sweeping statement like, “The scientists say this or that,” undermines the hon. Lady’s case and shows that it is not based on a rigorous analysis of the facts.
I will make a couple more points in the three minutes I have left. My hon. Friend the Member for Warrington South (David Mowat) made a clear and balanced argument, and really put his finger on the issue: until we explore, we do not know how big the opportunity is. I sometimes felt that some Members did not know whether their problem was that there was not enough shale gas or that there was too much. Instead, the question we have to answer is how much shale gas can reasonably be brought out of the ground at a commercial rate under a strong regulatory regime. We need to explore because of the support that will give for jobs for the chemical industry, which many hon. Members mentioned, and because of the direct benefit for those involved.
My hon. Friend the Member for Fylde specifically mentioned both independent monitoring, which is important, and the independent panel of experts that he has called for. That is an interesting idea and I will look at it. I am constantly on the lookout for ways to reassure people that the exploration will be carefully monitored and will be done safely. For instance, my first decision in this job was to strengthen the planning guidance on national parks, which has dealt with many of the problems that my right hon. Friend the Member for Lewes is worried about.
The hon. Member for Blackley and Broughton (Graham Stringer) asked whether the gas can be retrieved in a way that is sensible and rational. The Opposition Front-Bench spokesman’s argument was about whether we can have robust and effective regulation, and he asked for reason and analysis in the debate on this issue. That is exactly the approach we should take and is the Government’s approach.
I firmly believe that the more well-founded, well-researched scientific analysis that is put in the public domain, the more we will be able to reassure people that shale gas represents an opportunity that it is incumbent upon us as a country to look at and explore and that that exploration can be done safely. It has to be done within a strong regulatory structure, but will none the less provide an opportunity for jobs, energy security and economic benefit and, in the short term, will tackle climate change by removing other dirtier fuels from the system, within the context of a balanced energy mix. I therefore look forward to working with all hon. Members to make sure that we get this matter right, so that we can take the advantages of the exploration, which are clear, but do so in a way that mitigates some of the risks that are undoubtedly there as well.
Bede Griffiths Charitable Trust and Southern India
(9 years, 5 months ago)
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Bob Stewart (Beckenham) (Con)
It is a pleasure, Mr Gray, to serve under your chairmanship. It is good to see you again for the second time this morning—we had breakfast together.
On the evening of 15 December 2005, a young man called Tim attended a Christmas party in the City of London. Tim had recently left Chigwell school in Essex and was doing work experience before going to university. He was a decent, popular and intelligent boy at school, and he clearly had a great future ahead of him. At the end of the evening, he left the party, happy and sober, to travel from Liverpool street station to his parents’ home in Goodmayes. At the station, he took a late train home.
The next day, I was having lunch at the Army and Navy club with Dr Tony Pruss, an old school friend and also Tim’s father. Tony, his brother Adrian and I had all been pupils at Chigwell school and were reminiscing over lunch about the old days, as friends do. After lunch, just as we were leaving the club together, Tony received a mobile phone call from Mary, his wife. She was frantically worried because Tim had not returned home the night before. He would normally contact her to say where he was, but Mary had heard nothing.
Tony was instantly concerned and with good reason. Shortly thereafter, Tony and Mary were told that Tim’s body had been found alongside the railway track at Shenfield station. The world fell around Tony and Mary Pruss. Like any loving parents, they simply could not believe what had happened, but tragically it was the truth.
A few weeks later, I attended the inquest into Tim’s death in support of my friends, Tony and Mary Pruss. The coroner heard evidence that Tim had been hit by a train coming into the station having walked off the platform for some reason. Nobody knew why, but it might have been to excuse himself because, at the time, no lavatory facilities were open at the station. Tim was certainly not inebriated or drugged. The coroner heard evidence that Tim’s death must have been instantaneous—thank goodness. His death was deemed to have been a dreadful accident.
The death of Tim Pruss hit Chigwell school hard. As I have said, Tim had been hugely popular and a great character when he was there. The school was established by Archbishop Harsnett of York in 1629 and was very much a Christian foundation, and to this day takes its heritage very seriously. It has and continues to have contacts with missionary activities abroad and, at this time, particularly in an area of southern India called Tamil Nadu. There it supports the Bede Griffiths Charitable Trust’s work among the local people. Indeed, the school often sends out parties of students to visit, to learn and to try to help people less fortunate than themselves.
Tim Pruss had told his parents that he would like to go to Tamil Nadu but, as is the way with the young, he just did not go. However, Tony and Mary Pruss remembered that Tim had wanted to go there and it gave them the idea, too. They decided to look at the work of the Bede Griffiths Charitable Trust in Tamil Nadu and flew there. Once in India, they realised that they could help. They decided to use the money they had set aside for Tim’ education and inheritance to good effect. Shortly thereafter, the Tim Pruss Memorial school was established as a part of the Bede Griffiths Charitable Trust.
Bede Griffiths, the Benedictine monk after whom the charity was named, was born in 1906. He studied English literature and philosophy at Oxford and graduated in 1929. By 1932, he was a Benedictine monk and he ministered in England and Scotland until the early 1950s. He then joined a well-established Benedictine community in south India at Shantivanam in Tamil Nadu state. It was not long before people of all religions in the area came to regard him as a very special person and one whose views were well worth hearing. His Shantivanam ashram—a sort of cross between a monastery, centre of learning and community centre—became renowned principally because of Bede Griffiths. Although he died in 1993, his thoughts live on in his books and writings.
In this country, the Bede Griffiths Charitable Trust was established in 2004. To avoid confusion, may I point out that there is also a Bede Griffiths trust in the United States, but they are not linked in any way? The Bede Griffiths Charitable Trust has the specific task of helping to fund worthwhile projects in and around Shantivanam. The main aim of its projects is to help some of the most deprived people who live there.
Bede Griffiths Charitable Trust projects focus on education and training, with particular support for children, women and the elderly. For example, last year the trust did considerable work in Tamil Nadu state. The biggest project was the Tim Pruss Memorial school, but there were a few other equally worthy activities, such as providing educational expenses for children; provision of milk and rice for the poorest people, and of food and clothing for the elderly; and the running costs of a kindergarten, a tuition centre, a community centre and a home for the elderly. In 2013, the trust received more than £37,000 from donations and charitable events. The majority of that money—£23,000—went to the Tim Pruss Memorial school.
Early each year, the trust managers in India submit an application to the trustees for grants for their financial year commencing in April. Applications are normally accompanied by a financial statement of the project’s income and expenditure in the previous year and, of course, audited accounts. The trustees, some of whom are not far from me at the moment in the Gallery, visit Tamil Nadu at their own expense once a year on average, and the project managers show them where the money they have raised and donated has been spent. In addition, evidence is gathered by regular updates from the relevant project managers. The work of the charity is undertaken entirely by volunteers, with the result that there are very few overheads and that 98% of the income raised goes directly to supporting activities in Tamil Nadu.
The Tim Pruss Memorial school is at Inungur, which is a remote area where pupils have great difficulty in getting to a Government school. They are taught in English and are well funded by Bede Griffiths Charitable Trust grants, as well as by a small number of contributions from individual donors.
The school has 275 pupils aged between three and 11 years old. It provides an English-based education under the leadership of the headmaster, Mr Senthil Kumar. Obviously, the biggest costs are staff salaries, which come to close to £23,000 per annum. Parents make a small contribution where they can. The school has been operating since 2007 and has expanded one building at a time. After an initial grant of £7,000 in 2008, a junior school building was erected, and by 2009 it was officially named as the Tim Pruss Memorial school. In 2012, Tim’s brother, Michael Pruss, who is also an old Chigwellian, raised a further £10,000 by running a marathon in Long Beach, California. He is something to do with the film industry, and quite powerful in it. The money he raised was used to build a new hall. Of course, Tim’s parents, Mary and Tony, have played a key role in all the developments.
One of the founding trust members was the Rev. Dr Chris Collingwood, then Chigwell school chaplain. It was he who invited older pupils and parents on an annual school trip to experience life in the Indian subcontinent, particularly after the 2004 Boxing day tsunami. During those visits, pupils saw the work of the trust in some of the projects in the local community and around Shantivanam. Chigwell school continues to support the trust and send annual trips to Tamil Nadu. The students learn a lot during such visits. To start with, they get to understand a little of India and its geography, climate and people. They also experience life in the Christian monastic community at the Shantivanam ashram, where they stay. They are encouraged to join in at least some of the chapel services, and to attend some of the talks that are led by the priests and lay brothers who live at the ashram. Most of all, they see the positive effects of social projects in poor rural areas.
In 2013, those on the Chigwell school trip completely redecorated the older part of the old people’s home, an old house that had become drab and dirty. The students brought paint with them and, under the supervision of a qualified surveyor, completed the decoration within a day. Eighteen students, six parents or former pupils, a school governor and two trustees went on a self-financed trip to Tamil Nadu. A multi-purpose hall for meetings and school meals in the Tim Pruss Memorial school has been built with more than £14,000 raised by fundraising and donations. Additional money has been allocated by the trust to cover the running costs of a tuition centre, two kindergartens, a home for the elderly and two centres training adults in typing, computing and tailoring.
The home for elderly people established by the trust has 17 residents, of whom one is a Muslim and one a Christian—the remaining 15 are Hindu. Fourteen of the residents are from local villages but three are from further away. The home is an old house with a new block providing accommodation behind it. The £13,000 to build the new block came from one donation from a Chigwell school family. Since then, the Bede Griffiths Charitable Trust has helped towards the running costs of the home by contributing £1,000 a year. Residents live in twin single-sex rooms in the new block but come together in the old house for meals and social events. A warden and a part-time assistant run the home.
Recently, a gift of more than £1,500 enabled a brick-built home to be constructed following a fire that destroyed a single-parent family’s home, which had been constructed from wood and leaves. Altogether, around 15 homes have been built following trust donations. However, Chigwell is not the only school involved in fundraising for the trust. The Prince’s Mead school in Winchester, whose head teacher is Ms Penelope Kirk, has also been a terrific donor. It supported the school when it was just one small building, prior to 2007, and continues to do so. I should declare my interest in the Bede Griffiths Charitable Trust: recently, because of my friendship with Dr and Mrs Tony Pruss, as well as my links to Chigwell school, I was asked to be involved and am now a patron.
I should like to say how fitting and appropriate it is that my hon. Friend the Member for Bexleyheath and Crayford (Mr Evennett), who is the pairing Whip and a very good friend, is replying to the debate. By chance, his son Tom, who also attended Chigwell school, was a good friend of Tim Pruss’s brother, Michael, whom I mentioned on account of his raising a lot of money for the Tim Pruss Memorial school. In a way, this is rather a family occasion all round.
The charity is clearly exceedingly well run by its trustees, who are Adrian Rance, the chairman, Mark Bradbury, the secretary, Greville Norman, the treasurer, Tony and Mary Pruss, Helen Dixon, who is in the Gallery, Elizabeth Tysoe, Pippa Mistry-Norman—also at Chigwell—and David Gower, second master at Chigwell school. I hope the debate will raise the profile of the Bede Griffiths Charitable Trust. I commend the trust to the House and ask the Department for International Development and the Foreign Office to note the excellent, well supervised work being done by that great charity.
The Lord Commissioner of Her Majesty’s Treasury (Mr David Evennett)
I congratulate my constituency neighbour, my hon. Friend the Member for Beckenham (Bob Stewart), on securing this important and timely debate. I commend him on his excellent, thoughtful speech, and apologise for the absence of my right hon. Friend the Minister of State, Department for International Development, who is appearing at the Select Committee on International Development this morning. I have been asked to respond as the DFID Whip, and am delighted to do so on behalf of the Government.
I offer my condolences to Tim’s family on what was a tragic loss for them and his many friends. I know Chigwell school, as my hon. Friend mentioned, because my sons Mark and Tom both went there, and I went to the neighbouring grammar school, Buckhurst Hill county high school for boys, which was next door but is now sadly no more.
We have today learned an awful lot about the Bede Griffiths Charitable Trust and its work, and the problems of southern India. We have also heard about Tony and Mary Pruss’s dedication. I commend them for their endeavours in memory of their son, and for their huge contribution to helping the less fortunate in Tamil Nadu state. The trust does vital work there. We have heard about its important provision for the poorest people, those who are suffering, the elderly and the young; and about its support for local community facilities. The Tim Pruss Memorial school in Inungur is helping 275 pupils in a remote area of the country who would otherwise have had great difficulty in going to a Government school. Those are positive, constructive approaches to assist a part of the world with considerable disadvantages.
As my hon. Friend the Member for Beckenham knows, the Government have made a commitment to international development, and I am proud that Great Britain was the first G7 country to reach the target of 0.7% of national income for aid spending. Not only do the Government play their part in helping a variety of causes globally, but the great British public also do their bit to support those aims. One need only think of the extraordinary response to the Philippines appeal after Typhoon Haiyan last year, or the millions donated to help tackle Ebola in west Africa in the past few weeks. We as a country can be proud of the contribution that our people are making in voluntary donations.
One can also see that compassion and dedication clearly in the sheer number of fantastic civil society organisations in this country, such as the Bede Griffiths Charitable Trust, that make a difference in the developing world. Working with civil society organisations forms an integral part of DFID’s approach to reducing poverty, promoting wealth creation, achieving the millennium development goals, tackling climate change and dealing with conflict.
Civil society can play an important role in reaching poor and marginalised people and communities in places that the Government and private sectors have not been able to reach. They do so through their ability to build relationships, trust and legitimacy, their grass-roots knowledge of needs in developing countries and their responsiveness. It is a crucial part of creating the open societies required for tackling poverty and its underlying causes and creating economic growth and development. Many smaller and medium-sized groups such as the Bede Griffiths Charitable Trust are more out of sight and perhaps receive less fanfare, but they do powerful work on the ground, which is why debates in the Commons to highlight them are important. The good work being done needs to be recognised and publicised. My hon. Friend has done a marvellous job in doing so today.
There are many organisations running projects that no one else thought of doing. In fact, it is often smaller grass-roots organisations that can make connections on the ground and help to change how people act for the better. Of course Government support is vital, which is why the UK Government support smaller civil society organisations through DFID’s global poverty action fund, which provides grants to charities across the UK to help them fight poverty in the world’s poorest countries. For example, the charity Women and Children First UK is helping reduce maternal and newborn mortality in Mumbai.
Such schemes have achieved great results, supporting some fantastic organisations, which is why UK Aid Direct was launched, a new £150 million funding scheme to support small and medium-sized national and international civil society organisations in reducing poverty over the next five years. As a successor to the global poverty action fund, UK Aid Direct will build on the success and momentum created by that fund. It will also bring more flexibility and allow the work with civil society to respond to opportunities as they arise. The scheme highlights DFID’s ongoing commitment to the role of civil society in poverty reduction and recognises the important contributions made by small and medium-sized civil society organisations.
Applications for the first £30 million funding round for UK Aid Direct closed today. In the first funding round, projects will focus on finishing the job on the health millennium development goals, and particularly on sexual and reproductive health and rights. It is a particularly important focus for development at this time, as the MDGs for reducing child mortality, improving maternal health and combating HIV/AIDS and other diseases are off-track. DFID is looking for innovative, ambitious projects whose proposals will demonstrably have a tangible impact on our efforts to achieve the off-track MDGs.
Bob Stewart
On that point, it would be lovely if DFID would consider a grant to the Bede Griffiths Charitable Trust if possible. It is an extremely well run charity, and it undoubtedly offers value for money. I just make that point.
Mr Evennett
I note my hon. Friend’s plea. I know that my officials have listened to it, and I will respond in a moment.
The poorest areas civil society programme works with Indian civil society organisations in the seven poorest states and helps socially excluded groups claim their rights. The programme has led some impressive initiatives, such as the campaign for complete abolition of the inhuman practice of manual scavenging, a caste-based practice in which human excreta are cleaned manually by individuals from the Dalit and Muslim communities in India, who face untouchability and social exclusion.
Faith-based organisations such as the Bede Griffiths Charitable Trust play an important part in reducing poverty in developing countries. Religion unquestionably plays a role within civil society, and we can use that to help advance the development agenda. Faith is often part of individual or group identity, which gives faith groups considerable legitimacy; they are often seen as more embedded in the local community than some development actors. Faith groups inspire confidence and trust. Indeed, they are often the first groups to which the poor turn in times of need and crisis, and to which they give in times of plenty. Faith communities can be motivated by different ethical values and beliefs from most secular organisations, including a sense of service, selflessness, generosity, mindfulness and compassion. They are often less transient than many secular civil society organisations and can mobilise many adherents and significant financial resources. Faith groups make a significant contribution to poverty reduction.
I now have an answer to my hon. Friend’s question. We are happy to provide information to him, so that the trust can get in touch after the debate. I cannot promise any more than that, but we in the Department are always willing to consider any opportunity.
Faith groups are a key development partner. They empower poor people so that their voices are heard. They can subject Governments to critical scrutiny and bring distinct and valuable perspectives to policy formulation processes. To strengthen our relationship with faith groups, the UK Government have launched the faith partnership principles paper, and we are working with faith groups to ensure that those principles are put into practice. The paper sets out the principles—transparency, mutual respect and understanding—that will guide our relationship with faith groups, as well as plans to build a common understanding of faith and development, document the impact of faith groups through systematic research and discuss areas of difference in a constructive way without threatening wider collaboration. DFID’s work with faith groups over the last 10 years has benefited many millions of men, women, boys and girls. My hon. Friend referred particularly to the generosity, commitment and hard work of Tim’s family, the trust and others with counterparts in India.
India has grown rapidly in the last decade and is now one of the world’s major economies, but remains home to one third of the world’s poor. In recent years, India has rapidly increased its spending on health, education and other development issues. In recognition of India’s changing place in the world, the Secretary of State for International Development announced in a statement to Parliament in November 2012 that we have agreed with the Government of India to move to a new type of development relationship. After 2015, our partnership will focus on sharing skills and expertise, making private-sector investments that will help the poorest people and generate returns, and strengthening partnership on global development issues such as food security and climate change.
UK aid is delivering results in India; for example, it is reaching out to 3.6 million pregnant women and to children under five through nutrition programmes, and will give roughly 2 million people access to improved sanitation by 2015. This Government are assisting civil society organisations of all shapes and sizes in playing a critical role in fighting poverty, and we will continue to do so. The world has made unprecedented progress in the fight against poverty in the last two decades.
In this debate, with a great deal of interest, we have learned all about the Pruss family and their commitment, the Tim Pruss memorial school and the Bede Griffiths Charitable Trust. I am pleased to acknowledge the trust’s commitment to making a difference, and the time and effort given by Dr and Mrs Pruss and all those involved in this important charity. I hope that we have been able to put on record the work that has been done; my hon. Friend the Member for Beckenham has done a superb job in doing that. After this debate, we in the Department will certainly consider in what ways we might assist, but the most important thing is to congratulate the trust and all involved in it, and to support it in continuing the good work that it has done so far.
Personal Independence Payments
(9 years, 5 months ago)
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Yasmin Qureshi (Bolton South East) (Lab)
It is a pleasure, Mr Crausby, to serve under your chairmanship this afternoon. I am grateful to have been granted this debate on the processing of personal independence payments. As in the constituencies of many of my colleagues, concern about the time taken to process PIP payments has been significant in my constituency. Several cases that have been brought to my attention are both shocking and heart-wrenching. I am here today to represent constituents who have come to me in despair for their stories to be heard. I know that many right hon. and hon. Members throughout the country have constituents in similar situations. I thank the organisations that have contacted me recently to tell me about their work and some of the challenges faced by the people they help. They include Macmillan Cancer Support, Scope, Mencap, the Muscular Dystrophy Campaign and Parkinson’s UK.
I believe there is strong support in this country for a social security system that helps people to get by when they fall on hard times, and that provides dignity and a decent standard of living for those who are unable to work because of sickness or disability. Before being elected, the Prime Minister said:
“The test of a good society is you look after the elderly, the frail, the vulnerable, the poorest in our society. And that test is even more important in difficult times, when difficult decisions have to be taken, than it is in better times”
yet, four and a half years on, life for disabled people is harder than ever. They have been among the worst affected by the Government’s decisions.
As the House has heard, the delays in personal independence payments are a serious problem, not only for my constituents in Bolton South East, but for people throughout the country. They are desperate people. Many of them have worked and paid into the system for years, but have been struck by disability or illness and forced to wait months for help from the Department for Work and Pensions.
PIP is a non-means-tested benefit available to people suffering ill health or with a disability. It is intended to help those who receive it so that they can cover the additional costs that will inevitably arise from their condition, whether they are working or not. It is important to remind the House that life costs more for those who are disabled. There may be additional costs for special food, medicines, equipment, extra heating and lighting costs for those who need to stay at home longer, and transport costs for those who are less mobile. Such extra costs are not luxuries. They are essential to a life of dignity, and any civilised society should make it a priority to see that people who need such help get it without fuss.
Jessica Morden (Newport East) (Lab)
A constituent of mine who has cancer and lost the use of her legs was one of the 720 people in Newport East with an outstanding claim. She was paid in October. The payment was approved in August, but it took until October to pay her, with no backdating. Does my hon. Friend agree that the Minister should address that point, because it is outrageous that we should leave people that long with no backdating?
Yasmin Qureshi
I entirely agree with my hon. Friend. The crux of the problem is delay, not only in the assessment programme, but in giving the money. I will speak about a constituent in a similar situation to that of her constituent.
A recent Scope research paper shows that the costs add up to an extra £550 a month. Some costs cannot be avoided, but disabled people too often continue to pay over the odds for everyday items and services. The Government must guarantee that the value of PIP keeps up with disabled people’s extra costs. For example, placing a triple lock on PIP, as the Government have done on pensions, would ensure that its value is maintained and build the financial resilience of disabled people. PIP is the financial lifeline that disabled people rely on to help to meet those costs. Instead, its processing has brought distress and hardship to some of the most vulnerable people. Sadly, the Government have completely failed to remember the human impact. Behind the bureaucratic language and spreadsheets are enormous backlogs of ordinary people in need who are being let down and mistreated. I will give a few examples, which I am sure will be familiar to colleagues and their constituencies.
Mr and Mrs Booth came to my advice surgery in March. Mr Booth had had a stroke in August 2013. He was paralysed on his right side. He had been waiting for an Atos assessment since September 2013. PIP is a passport to other benefits and his wife could not apply for carer’s allowance until he received PIP. Mr Booth told me that he was being summoned to court the following week, and that he faced having his home repossessed because he could not repay his mortgage as a result of not being able to access benefits. He was receiving only statutory sick pay, and his future was hinging on the Atos assessment.
I wrote to the Secretary of State on 3 March and highlighted Mr Booth’s case. A week later, the judge adjourned the repossession order for two months to allow the situation with Atos to be resolved. By the time Mr and Mrs Booth revisited me at my surgery in July, Mr Booth had had his assessment in May, but they were still waiting. They had contacted DWP twice. It had assured them that the matter would be dealt with soon. Clearly that was not the case. I contacted the right hon. Member for Hemel Hempstead (Mike Penning), then Minister of State, Department for Work and Pensions, urging him to look into the case as a matter of urgency. I received a response at the end of July, which addressed some of the issues I had highlighted. The letter stated:
“I am sorry for the time it has taken to process Mr Booth’s PIP claim of 12th September 2013. There was an initial delay in forwarding it to Atos, the assessment provider, because we needed to validate the claim and this was not completed until 17th October. The delay in arranging for this to be done is regrettable. Unfortunately, experience so far has highlighted that in many cases, the assessment process has been taking longer than expected. We are continuing to monitor this closely and we are working with the assessment providers to try and reduce the time they are taking to complete their part of the processes.”
That was unfortunate and regrettable for Mr Booth. He was given a back payment of £4,694.37 for the 10 months he had waited, but it came too late for him. His home was repossessed and he and his wife had been made homeless by the negligent delay.
A second constituent, Ms Sylvia Syddall, contacted my office on behalf of her husband who had suffered a heart attack and three subsequent strokes. She had made a claim to cover the additional costs to support her husband. Atos first informed Ms Syddall that her claim had been received four months after the initial application was made to the DWP, and 16 months from the present day. Several administration errors followed, and Atos insisted on a medical assessment, despite being given much medical evidence stating that Mr Syddall was severely ill and had been hospitalised for a prolonged period, and was unable to feed and wash himself. However, the delay continued for weeks. Atos kept insisting that it would do a medical assessment despite there being so much staff medical evidence staring it in the face and telling it exactly what was wrong with him. Sadly, Ms Syddall’s husband passed away without his PIP payment ever being processed and completed. His wife had been paying for the additional costs herself and sadly, she did not even have enough funds to pay for his funeral. Sixteen months on, Ms Syddall is without her husband, without having received any payments. It is a particularly troubling case, demonstrating the consequences of the deeply flawed process that we seem to have at the moment and how such delays are hurting the most vulnerable.
Let me give a third example. Mr Darius Pope is a young disabled constituent, confined to a wheelchair after a road accident. He suffers depression. He is now suffering at the hands of Atos and from over six months of the DWP chaos. Will the Minister tell me what I, as an MP, should say to a constituent such as Mr Pope, who is faced with such considerable stress and anxiety from the processing of his personal independence payment application that he tells me he would take his own life if it were possible for him to walk out of his wheelchair? This constituent has contemplated suicide. The additional costs of living are so burdensome that he has to borrow money from his parents, which is not a great situation—that relationship has become increasingly strained.
Those are just a few of the appalling cases from constituents who have allowed me to share their stories, but there are many others. As I have said, I have no doubt that such stories are replicated throughout the country. When I posted about this debate on social media, I was inundated with stories from across the country.
The concerns do not just come from my constituents or colleagues. In a report published on 27 February 2014, the National Audit Office said that the “poor” early operational performance had led to long delays and uncertainty for PIP claimants. It said that the Department had failed to allow sufficient time to test the new system and that unexpected delays in the assessment process had led to a large backlog of claims. The NAO recommended that the DWP set out a clear plan for informing claimants about the likely delays they would experience while plans to improve performance took effect. I ask this question now and will ask it again later: will the Minister today confirm what progress has been made?
Jessica Morden
Back in April, in a similar debate on personal independence payments in Wales, the then Minister admitted that there were delays in all parts of the process, including at the DWP end. Does my hon. Friend believe it is important to hear from the Minister today how much of that delay in Wales is Capita and how much is the DWP, and what he and the DWP are doing to speed up the process at the DWP end, which he is responsible for?
Yasmin Qureshi
I entirely agree with my hon. Friend, and I hope the Minister has heard what she says—she echoes a concern that others have about the delays.
The tragic part of the situation is that everybody says, “Yes, there are delays,”—we have been hearing that since last year—yet when the pilot project was rolled out, why was it not rolled out on a smaller scale? Why were proper resourcing and staffing not given to the new system of assessment? Surely people must have known that when a new project is rolled out, there will be teething problems. The purpose of pilot projects is to see what happens, so why not do the pilot projects on a small scale? Why not make sure that the resources are there to deal with all the eventualities and problems? Why carry it out on such a massive scale that we end up with those backlogs? The backlogs are still there. It may be a naive solution, but why does the Department not employ more people who can process applications? Why does it not tell Atos to speed up its assessment process? I cannot believe that in the 21st century, in the country that we live in, such things cannot be expedited. For months and months we have been hearing the same story—“Yes, there are delays, yes, there are delays”—but there are solutions, and it seems as if nobody in the Department of Work and Pensions or other Ministries is bothering to listen or trying to deal with the solutions. It is almost as if lip service is being paid by everybody—they say, “Yes, there are delays; we are dealing with it,” but nothing has been done.
The Work and Pensions Committee and the Public Accounts Committee have described services to PIP claimants and the length of time people must wait for decisions on PIP claims as unacceptable. The Chair of the Public Accounts Committee rightly said:
“The implementation of Personal Independence Payment has been nothing short of a fiasco.”
I am pleased that the Minister recently acknowledged that the situation is not satisfactory and is working collaboratively with the assessment providers to improve performance and reduce the backlog of claims, but I would still like to ask him this: why should sick people have to pay the price for his maladministration?
Data released by the Department show that, of the 529,400 cases registered for the personal independence payment between April 2013 and the end of July this year, just over 206,000 have been cleared—either awarded, declined or withdrawn. However, the figures do not reveal how long those individuals had been waiting in that 16-month period when PIP was first introduced. Why are the Government not disclosing data on waiting times?
Before the summer, the Secretary of State reassured the House that, by autumn 2014, no PIP claimant would have to wait more than six months, and that, by the end of the year, no one would be waiting for more than 16 weeks. However, I was disappointed that the Department is working towards reducing its waiting times to 16 weeks to assessment rather than to payment, as first implied by the Secretary of State. Based on that time frame, the absolute earliest that a claimant could expect to receive a decision would be after 18 to 20 weeks, which is not acceptable.
In any case, autumn has passed, but I still have cases of constituents who have been waiting for more than six months. The end of the year is fast approaching. Will the Minister tell the House why he was not able to meet the autumn target for the constituents of Bolton South East, and how he intends to achieve the end-of-year target?
The situation is not getting any better; it is getting worse. People are facing major delays with both Atos and Capita to secure face-to-face meetings, and it is taking far too long for Atos and Capita to report after assessments. The longer those problems persist, the more long-term the impact. What is the Minister doing to ensure that his Department’s contractors provide an acceptable service to claimants?
Fightback is a local charity in my constituency that helps a considerable number of constituents. It reported to me that its helpline has been inundated with disabled people phoning for advice. It has received almost 50 calls on PIP delays in a day. Many are facing extreme delays of well over six months.
If the Department has revised its assumption, will the Minister set out the end-to-end process of PIP claims and how much time each part of the process takes? Does he agree that it is right and proper to ensure that disabled people, including those affected by cancer, receive financial support as quickly as possible, and that 11 weeks to payment, as suggested by Macmillan, is a more acceptable time to wait?
What struck me as unusual when carrying out the research for today’s debate is the reason why the Government have not published for more than a year the average length of time it takes to process PIP claims for normal and special rules as part of their quarterly statistics. In the interests of transparency, will the Department publish clearance and waiting times to demonstrate that claimants are waiting no longer than 16 weeks to assessment, in line with the current aspiration? Considering that the benefit has been in place for a year, why is it taking so long to provide a rounded and representative picture of PIP performance, improvement activity and claimants’ experience?
Earlier, I explained that my constituents Mr Pope and Mr and Mrs Booth had fallen into burdensome debt because of the additional costs of disability. A Scope report shows that they are not alone. I do not know whether the Minister is aware that statistics reveal that the disabled are twice as likely to have unsecured debt such as payday loans and credit card debt, and debt such as logbook loans. Such debt often totals more than half their household income. Even the Government’s research has shown that the disabled are over-represented among high-cost borrowers: 18% of disabled people use that type of credit, compared with 5% of non-disabled people. That prompts the question: why is a group that is already vulnerable to financial pressure being “looked after” by legal loan sharks and doorstep lenders, not the Government?
As we know, debt does not just make day-to-day living harder for Mr Pope and others. It is impossible for people to plan for the future when they cannot be sure whether they can keep a roof over their head. Debt narrows their horizons. A disabled person’s debt problems are only compounded by the additional difficulties they will have in finding work that is suitable for them.
I hope the Minister uses this opportunity to answer the questions I have asked and to explain what he and his Department are doing to make the system easier for claimants. We have heard in the past acknowledgement from him and others that the delay is unacceptable and more must be done to address it, but what specific actions have been put in place to do that?
The essence of the debate is common human decency and treating people with dignity and respect. Certainly in the case of PIP, many hundreds of thousands of people in our country have failed to be protected by the Government. I look forward to hearing the Minister’s response with concrete information on what they have done so far and concrete proposals on what they will do to deal with the backlog.
Alison Seabeck (Plymouth, Moor View) (Lab)
I should start by explaining why I am lisping. I have just had major dental treatment. I apologise, but it is really uncomfortable.
I congratulate my hon. Friend the Member for Bolton South East (Yasmin Qureshi) on obtaining the debate. Such a debate could take place almost daily, because every MP will have a considerable number of constituents who have been deeply affected by the process that they are having to go through. I have a long list of constituents who have faced significant delays or who have been told that they must travel to places such as Portsmouth, which is three and a half hours from Plymouth, for assessments. Others turned up for assessments in Tavistock, which is nearer—20 miles away—only to be told on arrival that the assessment had been cancelled but somehow there had been a failure to inform them. The individual I am thinking of applied in January and, before the abortive visit to Tavistock, was told that his file had been lost. All these individuals are extremely anxious and vulnerable. If we add those having difficulty with the employment and support allowance system, the number rises again.
Let me just mention Mrs P. She does not want to be named. She is vulnerable and, like many of my constituents, is anxious about her name being in the public domain. I have in many of these cases already written to the Department for Work and Pensions. Mrs P applied many months ago. She has had, and continues to have, major cancer operations on her lung, liver and bowel. She had to postpone the last assessment because of a lung operation. Atos has confirmed that cancer sufferers cannot escape assessment unless terminally ill. This lady is extremely ill. We chased the assessment, and it happened. She is waiting for the DWP to produce a decision and was told that that could take up to 26 weeks. In some cases, we are now looking at almost a year from applying to receiving a decision, and as we have already heard, some people do not live long enough to hear the outcome. That is utterly unacceptable.
I shall focus today on one particular group—people with muscular dystrophy. I am a member of the all-party group on muscular dystrophy, and a number of constituents have approached me at different times with issues specific to this disease. Most people in this Chamber will know that the term “muscular dystrophy” describes about 60 mostly genetic conditions. The Muscular Dystrophy Campaign has highlighted to me a number of individual cases, including a lady who had her assessment in the summer of 2013 and was told only this month that she had been lost in the system.
The Muscular Dystrophy Campaign was told at a meeting with the DWP that the delays at Atos were attributable in part to under-staffing issues. It would be interesting to hear from the Minister whether that position has changed or improved to deal with some of the backlog.
Jessica Morden
I certainly had a constituent who, when they complained about delays, was told by staff that they could not do anything about it because there were not enough staff on and to contact her MP if she wanted any action at all. Is it not sad that people waiting in this situation should have to contact their MP, rather than just receiving the payments that they are due?
Alison Seabeck
My hon. Friend is absolutely right. As was pointed out earlier, rolling out a scheme on this scale without having piloted it has contributed to some of the misery that is being caused around the country.
The MD Campaign has also raised the case of a 16-year-old with Emery-Dreifuss muscular dystrophy and a serious heart condition who simply failed to get through on the telephone. She tried and tried, and it caused her and her grandparents, with whom she lives, major concern. Just accessing the system can be unbelievably difficult for people.
For this group, the 20-metre rule is one of the most controversial elements. It replaced the 50-metre rule. Many of those with MD-related conditions can, on a good day, make 20 metres, but, because the disease is progressive, they can quite quickly not be able to walk 20 metres, even with sticks. The evidence from people with muscular dystrophy is that the wider discomfort issue is not considered by those who make the assessments. An individual may well be able to walk 100 metres, but 80 of those metres are absolute agony. No reference is made to that; no consideration seems to be given to it. Equally, there are issues about the surface on which they are walking. They may well be able to do 20 metres on the flat, but if they are asked to do 20 metres uphill or on an uneven surface, it becomes impossible. I just do not think that the regulations and guidance as currently set out protect individuals in those circumstances.
Worryingly, discussions with people with muscle-wasting conditions post-assessment have led the MD Campaign to have serious concerns about the lack of knowledge of this type of progressive condition among the assessors. For example, one lady with a long-term and progressive neuromuscular condition was told that she “may get better”. Sadly, she will not. The degree of ignorance in that case was worrying. There are also examples of gross insensitivity, which I am sure the MD Campaign would be willing to pass on to the Minister if he wanted to hear them. For example, one person was congratulated when they fell over. I find that insensitive to the nth degree.
I would be grateful if the Minister explained why some assessment centres are inaccessible, because there are a number of examples of people being invited for interview and then discovering that the interviews take place on the first floor of the building, up a flight of stairs. That might be a sort of secret test—an attempt to catch people out—or simply very bad planning, but perhaps the Minister will be good enough to look at access to the various centres.
I fully understand the need to ensure that only those entitled to support receive it, and most of my constituents accept that principle. However, the process is still failing too many people. The Government clearly underestimated the size and complexity of the problem, and the contract was let without care being taken to ensure that the company carrying out the assessments actually had people with the right skill and understanding to deal with some very rare conditions and vulnerable people.
The Government may not be disclosing data on waiting times, but in closing I ask whether the Minister can tell us what percentage of claimants have seen their files recorded as having been lost since PIP was introduced. Can he explain why the 15th largest city in England, Plymouth, with an ageing and disabled demographic, has no adequate facility for assessment and people have to go as far as Portsmouth?
Jim Shannon (Strangford) (DUP)
I appreciate the opportunity to say a few words. I congratulate the hon. Member for Bolton South East (Yasmin Qureshi) on securing the debate for us all to participate in. I am pleased to follow the hon. Member for Plymouth, Moor View (Alison Seabeck), who delivered her speech eloquently despite her current impediment, and we thank her for that.
Personal independence payments are of great importance to me and my office. One member of my staff now deals with nothing else besides benefit claims, which includes claims for disability living allowance, employment and support allowance, income support and the whole raft of benefit claims. I suspect that that situation is replicated in hon. Members’ offices across the United Kingdom. Many of us have a staff member who is tasked with dealing with such matters every day, because of all those difficulties. In the few minutes that I have, I hope to illustrate the situation through the experience of my office.
We understand the reasons for the changes, and the Government have set out their stall when it comes to reducing benefits through universal payments to ensure that changes will be made. We are aware of cases of people receiving payments when it is questionable whether they qualify for them, and we understand that that issue must be tackled. However, the people whom I will speak about today are those who clearly should have the payment and are feeling the difficulties of the new system.
In the same way as DLA did, PIP helps towards some of the extra costs that arise from long-term ill-health conditions or disability, and it is based on how a person’s condition affects them rather on the condition that they have. Every time someone comes to me about the benefit, I always say that it is about the help that they need, not entirely about their illness. It is about the help that they need in the house, how the illness affects them and whether they need people to come in and help them. When they get their head around that, they understand the importance of explaining their condition and highlighting the symptoms or problems associated with it. Every person is different, and they are affected in different ways. The previous system fell down many times, and the new PIP system unfortunately has the potential to do likewise.
The individual assessment for PIP is much stricter than the assessment for DLA, but the aims are the same: to ensure that people with health needs or disabilities can lead an independent life, while getting some extra help along the way. The stricter measures are intended to ensure that the system cannot be abused, in view of the budget constraints we all face across the United Kingdom. The changes from DLA to PIP will involve a face-to-face consultation with an independent health professional as well as regular reviews to ensure that an individual gets the right support. I welcome the face-to-face consultation, because I hope that it will better enable assessors to determine an individual’s circumstances. I often wonder, “Have they ever met these people? Do they understand their circumstances? Do they know what it is like to be unable to move about in your own home, to have restricted movement or to be dependent on someone else to help you?” The face-to-face consultations have the potential to lead to improvement.
To receive PIP, an individual will be assessed against reliability criteria to test whether they can carry out certain activities safely, to an acceptable standard, repeatedly and in a reasonable period. I can relate so well to the words of the hon. Member for Plymouth, Moor View. Someone may be able to walk 60 yards, but they will be in pain. Most of the people who come to me about DLA are in pain with their first step, but they endure the first 20 or 30 yards and then they have to stop. We need to have a system that adequately takes that into account. I hope that under the new system of PIP, it will be easier to ascertain and understand the problems that people are experiencing and resolve them urgently. We are having this debate because, quite honestly, the issues are not being resolved urgently; indeed, the opposite is true.
As PIP is being rolled out, some strange delays are occurring and some of the most vulnerable are not receiving any help. I want to highlight some of the delays that are affecting my constituents. First, they are anxious about their health. They become anxious about their PIP, and then they become anxious about all the other benefits that swing off that. Perhaps the Minister could give me some indication of how we can hurry or quicken the system. As a result of all the anxiety and concern that they experience, people’s health often deteriorates. They sit in an in-between world between today and tomorrow, almost hanging in space, hoping for their claims to be processed. All the time, it affects them greatly.
In February this year, only one in six people who had made a claim for PIP had received a decision. As the hon. Member for Bolton South East mentioned, the National Audit Office stated that poor early operational performance had led to long delays and uncertainty for PIP claimants. The right hon. Member for Barking (Margaret Hodge), the Chair of the Public Accounts Committee, said that the implementation of PIP had been
“nothing short of a fiasco”.
That reflects the opinion of many of us.
We are not here to give the Minister a hard time, but we are here to highlight the shortcomings in the process. Many of us feel that the process is not built in such a way as to take on board the difficulties that we see our constituents facing. I am here to express those, as other hon. Members have done and others will do. Out of the 220,300 disabled people who applied for PIP during the period from 8 April 2013 to 31 December 2013, only 34,200 have received news of their claim. That is totally unacceptable, and it must be addressed.
One of the statistics associated with first-time PIP claims—those who are moving from DLA to PIP—is truly worrying. For those people, there is around an 85% chance that a final decision has not yet been made, so they are sitting in limbo waiting for everything to be sorted out. Because PIP is not counted as income, those who are eligible for PIP may also find that they are eligible for ESA, income support, jobseeker’s allowance, pension credit or housing benefit. There is a real challenge there, because housing benefit and tax credits are great benefits when they go right, but when they go wrong, they are a nightmare. Delays in PIP may mean that because someone’s income changes—they have to notify Her Majesty’s Revenue and Customs of that—their housing benefit and rent payments are put on hold and their tax credits go up the creek, and they find themselves becoming increasingly anxious and concerned.
Alison Seabeck
As usual, the hon. Gentleman is giving a thoughtful speech on a serious subject. Are his constituents, like mine, having to find their way to food banks simply to feed their families in an attempt to fill those gaps?
Jim Shannon
In Newtownards, where my main constituency office is based, the food bank would say that the greatest number of referrals are of people who are on benefits, and delays in benefits compound that problem. We are all genuinely grateful to have food banks, and they have become a way of life. I have it on good authority that most of the referrals in my constituency are through my office, and I see lots of people coming into my office who are referred to food banks. We thank the Lord for the food banks and for the good work that they do, but the hon. Lady is absolutely right that food bank use is one consequence of the problems with PIP.
It was estimated that changes to mobility benefits could eventually lead to as many as 428,000 claimants losing their entitlements. Those changes have included the reduction of the requirement for claimants to be able to walk 50 metres right down to 20 metres, as the hon. Member for Plymouth, Moor View has mentioned. Unlike DLA, PIP will not have a lifetime award option. I am aware that under DLA there was the right to review a lifetime decision and that sometimes happened, but many people on lifetime awards were not reviewed, and it is a very random check to do at other times. I am concerned that there will no longer be the option to make a lifetime award. Let us be honest; if somebody has muscular dystrophy, unfortunately, they are not getting better. They are going to get worse. If somebody has severe chronic joint pain, they will not get any better. Their prognosis is for the worse. The prognosis for many such people is restricted mobility for the rest of their lives. That is not what they want, but it is what they are stuck with. Will the Minister, in his response, give us some indication of what he thinks about that?
I want to ask the Minister about a further issue on which I am keen to get some feedback. How many terminally ill people apply for the award—I do not have the figures, but I am asking this question to put it on the record—and how long does it take for their claims to be processed? I am aware of only two people over the years—this was under the DLA system, not PIP—whose applications were not processed quickly enough, so they passed on from this world. I am keen to hear what the Minister has to say about that.
Waiting times are not reserved for England alone—Capita Business Services Ltd is responsible for Northern Ireland, central England and Wales. Charities in Northern Ireland, such as Disability Action, have complained about the longer waiting times for assessment. Charities and my constituents are telling me that there are problems, so clearly we have to address them.
The move to PIP seems to be logical. Physically meeting a person along with a health professional is a great idea, but it is time-consuming and the waiting times make the process long and complicated. All new schemes must be put into action and tweaked to ensure they run efficiently and properly. That must happen with PIP to guarantee a smooth transition from DLA. All of us speaking today think that the delays are unacceptable and that changes must be made to the system. I hope that today’s debate will give us the opportunity to hear a positive statement from the Minister. The Government must ensure that the system is tweaked as soon as possible to bring assessment waiting times down.
I understand the reasons for the move to PIP, but I can also see the problems for the people waiting to be assessed. Elements of the system clearly need to be fixed, such as waiting times and the appeals process, which at the moment is overwhelming. I have constituents who have waited for 10 or 11 months for an appeal. That is unacceptable—it is almost a year between the start and the end of the process—but I am sure that other hon. Members have constituents who have waited longer. To say that problems are inevitable because the system is new only explains some of the issues, and it is no consolation to those who lose out. The Government must address these issues urgently. The waiting times are not fair, and improvements must be made now.
Sheila Gilmore (Edinburgh East) (Lab)
I apologise for not being here at the outset, Mr Crausby. I was keen to be here, but as a member of the Select Committee on Work and Pensions, I also wanted to hear the statement on universal credit to find out whether there was anything new in it.
I find it surprising that, on the one hand, the Secretary of State takes great pride in having a safe and slow roll-out of universal credit—for the past two years, we have been told that it must be safe and slow, and consequently only 17,000 people are on it after all that time; perhaps that is the right way to do things, but it seems astonishingly slow—but on the other, the Department has presided over the roll-out of personal independence payments and, for the past year and a half, has turned the initial applicants into guinea pigs for a system that was not properly piloted or tested.
At the outset, the Select Committee was concerned that the Department’s ambitions and the speed with which it implemented the change were unrealistic. There are unresolved tensions between its desire to give people a longer and more thorough assessment than the much-criticised employment and support allowance assessments and its desire to get through a large number of people. I suspect that some of the problems encountered are due to exactly those tensions.
As a result—perhaps this is hearsay, but the Minister may have something to say about it—the number of face-to-face assessments has already been rolled back. At one point, about 85% to 90% of new applicants were given face-to-face assessments; I understand that it has fallen to 75%. That may be a good or bad thing, but it shows a lack of pre-planning. This really matters to a lot of people. Most new applicants—I will come to the reassessments in a minute—have no money to cover the particular need for which they are applying. Although the payment is backdated for successful applicants, the longer they wait, the harder it is for them.
It is important to realise how important this issue is. Although the Department has overcome its initial problems even with what are regarded as terminally ill cases, a lot of people have serious conditions that do not fit under the special rules provisions but nevertheless leave people in a difficult position. I have a constituent with motor neurone disease who was in exactly that position. Sadly, his condition developed quickly. He went from being a normal, fit, healthy young man in his late 20s to needing help to get places in only a few months.
Alison Seabeck
My hon. Friend speaks with a great deal of experience and knowledge. On her point about the time it takes to get a decision, like her, I have a constituent whose condition deteriorated over a long period. Although our constituents may have just scraped through to one side of the fence when the assessment was made, their conditions were much worse by the time the decision was made, and they should therefore have been assessed differently.
Sheila Gilmore
People in that situation find it very hard to deal with that problem.
Jim Shannon
That is a very interesting point. Under the old DLA system, going back two or three years, there was an enablement provision. If a person’s condition got worse, that could be taken into consideration in their application and the appeal process, but now it cannot. Does the hon. Lady feel that the Minister should respond to that point?
Sheila Gilmore
That is a very interesting point, and I hope the Minister will give us some details on it.
The other group who seem to suffer less from long delays are those who are undergoing reassessment. If a person asks for a reassessment because their circumstances have deteriorated, previously they would have reported that change to receive DLA, but now they must make an application for personal independence payment. They will receive DLA even if there is a long delay, but if they are entitled to a higher rate of DLA, it will not be backdated under the new system. They do not have no money during that period to help them with the needs that their disability or illness brings, but they do not benefit from the increase. If it takes six, seven or eight months for their DLA reassessment to become PIP and they are eligible for a higher reward, it will not be backdated, even if their condition has clearly deteriorated —and they would not have made the application if it had not.
If the process were working smoothly and quickly, that might not matter. Perhaps at the outset it was thought that there would be no need for backdating because the process would be quick. People would be reassessed and would get the new benefit or not, but at least they would not be waiting for months with a much worse condition. If the claiming process is to be this long permanently—I certainly hope not; the Minister can tell us if it is—perhaps he should look again at that.
I am concerned about another aspect of the way that PIP is processed: there seems to be a substantial variation across regions. I hope that the Minister is at least looking at that issue and monitoring it. I find it hard to understand why, among new claims—but not those relating to special circumstances, i.e. terminal cases—the award rate varies so much; it is as low as 25% in Ealing Southall, but it is 63% in Kilmarnock and Loudon. Perhaps Kilmarnock and Loudon residents are substantially less well, and more disabled, than those of Ealing Southall, but the disparity seems substantial.
The published statistics, the most recent of which bring us to, I think, September, show quite wide variation both in the number and proportion of cases that have reached clearance—meaning a decision, whether positive or adverse, for the claimant—and in award rates. That variation may be explicable, and not a matter for concern, but it would be helpful to know that the Department is monitoring those things and will report on them in due course. The rates will never be identical; areas differ, and there are some where endemic ill health has been a serious problem. That is why the number of people in receipt of employment and support allowance and DLA has been higher in some areas than others; I do not have a particular problem with that.
The question is why an award rate should vary so much and be so low in some places. Presumably people apply only if they have an illness or condition. They will read the forms. Unless it is suggested that in some areas an awful lot of people with no real prospect of success apply, and that that explains the low award rate, the variation seems somewhat baffling. The number of applications varies considerably, as one would expect. One of the examples I gave was Ealing Southall, where the award rate is 25%. There were 660 normal registrations there, not made under special rules. In Kilmarnock and Loudon there were 980 registrations, and in Knowsley there were 1,780 registrations, with a 52% award rate.
Our questions are not only about the length of time being taken, although that is the major issue that most of us have had to deal with. They are also about other aspects of the way the new benefit works: how it compares with the previous situation, which people perhaps do not receive an award, and what the circumstances are. Owing to the length of time being taken, it is still quite early to know how many people are successful on appeal, and to judge the efficacy of the assessment process. From my experience with constituents, it appears that the assessment process, when they get to it, evokes fewer complaints than before, although someone recently came to tell me that their assessment took only 20 minutes, after which they received an adverse decision. That person had been profoundly deaf for some considerable time, so I was slightly baffled.
I hope that in the rush to solve the problem of longer assessment periods and to speed the process up we shall not lose some of the possible advantages of the new system—a more thorough assessment process that would obviously be better for people in the longer term.
Kate Green (Stretford and Urmston) (Lab)
It is a pleasure to serve under your chairmanship, Mr Crausby, in this welcome debate. I congratulate my hon. Friend the Member for Bolton South East (Yasmin Qureshi) on securing it, and extend my thanks to all the hon. Members who spoke this afternoon, particularly for the constituency experiences that they highlighted.
It is clear that there continue to be substantial problems with the personal independence payment, yet it is an important benefit for disabled people and for disability equality. It addresses the additional costs that living with a disability entails. We have heard today of continuing delays and problems with access to the benefit, and of poor service, as described by my hon. Friend the Member for Plymouth, Moor View (Alison Seabeck). The cost to the public purse is also rising, so there are several causes for concern, and we look forward to hearing the Minister address those. Interestingly, all those who spoke this afternoon commented on the fact that the benefit was brought in without piloting or experimentation. Early on, MPs and Members of the House of Lords, and organisations such as Citizens Advice, suggested that it would be a good idea to pilot the benefit from the outset. However, Ministers refused to do so.
Of the problems and difficulties that disabled people are experiencing with the benefit, it is the delays in getting an assessment and a decision that are of the most immediate concern. The latest statistics from the Department for Work and Pensions, which go up to September, showed that 529,000 people applied for PIP between April 2013 and July 2014, but just 206,000 had received decisions by that time. That leaves 323,000 waiting in the queue, including 540 in my constituency, many of whom have contacted me to report the distress and problems that that has caused them; other hon. Members taking part in the debate have also had such experiences.
In February, the National Audit Office reported that the DWP had expected decisions to take 74 days, but that the average time for a decision was 107 days. Some delays have been considerably longer, as we have heard. I have constituents who have waited the best part of a year for an assessment for PIP. My hon. Friend the Member for Bolton South East, among other hon. Members, gave several examples of delays that her constituents have experienced. Colleagues also spoke of horrific experiences that resulted from delays. The hon. Member for Strangford (Jim Shannon) was right to highlight how delays compound disabled people’s health problems and anxieties and sometimes contribute to a worsening of the condition. We should be very concerned about that.
I have been told of the deeply distressing case of a 51-year-old woman in south London who applied for PIP in September 2013 and was still awaiting an assessment after a year. She had a brain tumour removed in May 2014, and covering the cost of weekly travel to her hospital appointments meant that she had to cut down on food. She simply could not afford non-essentials such as buying clothes. Other claimants who have waited months for a decision have had to borrow from friends and family, as my hon. Friend the Member for Bolton South East pointed out, or use food banks, as my hon. Friend the Member for Plymouth, Moor View, said.
Generally, we would expect the personal independence payment to be backdated in the event of an award being made, although I was interested in the experience of my hon. Friend the Member for Newport East (Jessica Morden), who suggested that that might not always happen. However, in the meantime, when delays are very long, disabled people are being left without financial support to help cushion some of their additional costs—the cost of equipment, transport to appointments, special diets or additional heating bills. That is happening at a time when many face a reduction in income—and perhaps not just their own, but that of their partner, who may be forced to give up work or reduce their hours to provide care.
What is more, people may also be prevented from accessing other support to which a PIP award may be a passport, such as blue badges and disability premiums on means-tested benefits and working tax credits; carers’ entitlement to carer’s allowance might also be affected. Although the PIP award may eventually be backdated, claims to such passported benefits might not. In other words, claimants might never recover that lost period of entitlement. The Multiple Sclerosis Society reports that some claimants in PIP reassessment areas who were previously in receipt of DLA and who have since reported an increase in needs may lose nearly £3,500 due to delays, as their payments are not backdated. That situation was also highlighted by my hon. Friend the Member for Edinburgh East (Sheila Gilmore).
I acknowledge that both the present Minister and his predecessor, the right hon. Member for Hemel Hempstead (Mike Penning), are concerned about the delays. The previous Minister initiated a number of steps to address delays both in the activities of the assessors and in the Department for Work and Pensions, but it has been interesting to hear today that there are still claims of staff shortages among the health care professionals who are carrying out the assessments, and I hope that the Minister can update us on that situation. In a written answer on 7 July, the previous Minister told me that, as a result of the steps he was taking:
“By the autumn, we expect no one to be waiting for an assessment for longer than 26 weeks and by the end of the year, we expect no one will be waiting longer than 16 weeks.”—[Official Report, 7 July 2014; Vol. 584, c. 109W.]
The present Minister has committed to honouring that promise, although he might like to acknowledge that it represents a rather less ambitious target than the 12 weeks for a decision that we were originally promised.
We remain in the dark about exactly what progress is being made. Macmillan Cancer Support has suggested that it would be helpful if waiting times could be made entirely transparent and publicly advertised. In a written answer on 17 November, however, the Minister told me:
“Departmental statisticians are continuing to develop measures around clearance and waiting times”.
I hope the Minister will be able to update us on performance as regards addressing delays, and will tell us when official statistics will become available.
The right hon. Member for Hemel Hempstead also took steps to address delays in dealing in special-rules cases for terminally ill claimants, which was welcome. From what we have heard this afternoon, I regret that the problems with such cases do not seem to have been wholly resolved. Problems remain, for example, with the rigid application of the six-month prognosis rule, which was highlighted by my hon. Friend the Member for Edinburgh East and the Motor Neurone Disease Association, which has suggested that, although it is possible in some circumstances for the DWP to take account of an overall diagnosis, that is not always happening. I would be grateful if the Minister commented on that.
We have heard about some assessors’ lack of knowledge about, for example, muscular dystrophy. There appears to be a particular and very disturbing anomaly in relation to existing DLA recipients who become terminally ill. If they wish to request an increase in benefits due to their terminal illness, they have to make a claim for PIP. When such claimants make a change of circumstances request, the DWP makes an enhanced award under the care component 28 days after the form is submitted and not, as is the case for DLA claimants and new PIP claimants, from the day of the form’s submission, which means that that very particular group of claimants is being denied 28 days at the enhanced care rate that new claimants who have not previously been in receipt of DLA would receive. The Minister may be aware that I wrote to the Secretary of State for Work and Pensions about that a couple of weeks ago, for it seems to us that the way in which the regulations have been drafted has created an apparently unfair anomaly. Will the Minister undertake to look at that matter? It surely cannot be right that people already in receipt of DLA who become terminally ill should be denied immediate access to a higher award of PIP, if appropriate.
The delays are not only causing great hardship for individuals; they are also piling up costs for the public purse. In 2010, the Government suggested that PIP would have 600,000 fewer claimants than DLA by 2018, leading to a £3 billion cut in departmental expenditure, including a £780 million spending reduction by April 2015, but in February 2014, Amyas Morse, head of the National Audit Office, noting that early operational problems had delayed the programme’s roll-out, said:
“Because it may take some time to resolve the delays, the Department has increased the risk that the programme will not deliver value for money in the longer term.”
Those costs continue to mount. The NAO estimates that £127 million per annum is spent on assessment costs, and in total it will cost £2.9 billion to clear all new claims and migrating cases.
Meanwhile, the Office for Budget Responsibility has noted that the number of claimants who have secured awards is higher than the Department anticipated, and there is uncertainty about whether the pattern will change and the numbers will reduce in future. Additionally, some claimants are receiving compensation for the delays they have experienced, which has further increased costs.
Sheila Gilmore
In the original consultation paper in 2010, one of the justifications for throwing all these things up in the air and putting many disabled and ill people through a great deal of anxiety was that too many people were getting the benefit and that PIP would be different. Some 50% of DLA claims were unsuccessful, but in some cases the award rates for PIP appear to be well in excess of 50%. That may be very good for the applicants, but it suggests that the whole thing was premised on a lack of proper research. The change has made many people extremely stressed and anxious over the past few years.
Kate Green
My hon. Friend puts her finger on the issue. We may be seeing some sort of cohort effect, because the cases that went through early may have been more likely to have attracted awards, or higher awards. It may be that initial departmental assumptions were simply wrong or over-optimistic about the savings that could be achieved. It may be that the situation will become even worse, because delays in processing claims and making decisions must be suppressing expenditure on the benefit. If, as the Minister intends, those delays are reduced and, hopefully, eventually eliminated, we will see the costs of the benefit increase. Whether the Government’s ambitions to reduce costs will be achieved is very uncertain. As my hon. Friend rightly says, the real problem for disabled people in that context is the huge uncertainty and anxiety. Disabled people are very uncertain about whether they will be awarded the benefit, which creates great anxiety and alarm.
I have mentioned that there appear to be additional costs for the Department due to the payment of compensation for delays. My constituent, Mr W, received £100 compensation for delays that he had suffered, yet when I asked the Minister how much such compensation payments are costing the Government overall, he told me in a written answer on 23 October that the Department does not record such information. What we do know is that spending on DLA and PIP is set to be £1.4 billion more than projected in this financial year. What is his assessment of the continuing trend in the figures? What impact will that have on the Government’s overall welfare cap? Obviously, any significant increase in expenditure will put that cap at risk.
Given the way in which we have seen costs rise, it is surprising that, in a written answer on 14 July, the Minister’s predecessor told me that the Government remain on course
“to make savings against earlier forecasts of £2.8 billion by 2017-18.”—[Official Report, 14 July 2014; Vol. 584, c. 587W.]
Given all the circumstances that we have heard about in this debate, will the Minister again confirm that expectation and tell us what the Government will do if they do not get spending back on track?
Overall, it is clear that the system is working far from smoothly. The picture for the future remains uncertain, and things remain well off course. In June, the DWP confirmed that it expected 752,000 PIP decisions in this financial year; the latest statistics show that about 37,500 decisions a month were made in the most recent months available, and about 30,000 to 40,000 claims a month were made. At that rate, it seems that the DWP will be unable to clear the backlog of 323,000 cases still awaiting a decision, yet bizarrely, the DWP apparently continues to add more areas where existing DLA claimants are being transferred to PIP, including, in the past couple of weeks, my area of Greater Manchester.
In the circumstances, adding yet more pressure to the system seems inexplicable. Claimants will be deeply worried that the Government are pressing ahead while the programme is manifestly still subject to extreme delay. It does not make sense, it is not fair and it is causing deep uncertainty and hardship to thousands of claimants. I am glad that this debate gives us time for the Minister to respond fully to the concerns that colleagues have raised, and I look forward to hearing what he has to say.
The Minister for Disabled People (Mr Mark Harper)
It is a great pleasure to serve under your chairmanship, Mr Crausby. I congratulate the hon. Member for Bolton South East (Yasmin Qureshi) on securing the debate and on allowing other Members to raise their concerns. She started her contribution with some general points. I will touch on them only briefly, as I want to deal with the specific cases that she mentioned and the specific points raised by other Members.
The hon. Lady made a point about judging the Government on their overall approach. I can confirm that we spend £50 billion on disability benefits. The latest unemployment statistics show that our “Disability Confident” campaign has been successful in that more than 250,000 more disabled people are in work, increasing the employment rate for disabled people. Overall, we are supporting disabled people to get back into work and participate successfully in society. However, I will not dwell on that, as I know hon. Members want to focus on the details of personal independence payments.
The hon. Lady mentioned some specific cases, which I will deal with in the order she raised them. She raised the Booth case with my predecessor on 7 July. We had made a backdated decision on that case just before she wrote to us. One point arose out of that case that I wanted to mention, because it was also raised by another hon. Member—I forget whom. The hon. Lady mentioned that the person in the case was out of work. It is worth putting on record that the personal independence payment is designed, as many hon. Members said, to deal with the extra costs of being disabled. It is not an out-of-work benefit. Those who are unable to work owing to their disability or health condition should claim either jobseeker’s allowance or employment and support allowance. Just to be clear, those are income-related benefits; PIP is not. Some hon. Members in previous debates have elided the two, although I am sure she has not done so.
Sheila Gilmore
Obviously, the Minister is right about the distinction between the two benefits, but many people do not get out-of-work benefits because they have a working partner or because they have run out of contributory out-of-work benefits. The extra costs of their illness or disability still apply, so the household income decreases considerably over that period. That must be borne in mind.
Mr Harper
I accept the hon. Lady’s point. I mentioned it because some hon. Members have raised cases in which there have been two issues: a decrease in income because someone has been out of work, and extra costs. I am simply making the point that, in those cases, it is reasonable to expect PIP to cover the extra costs, but it is not a benefit designed to deal with the fact that someone is not working.
The hon. Member for Bolton South East wrote to us about the Booth case, but I do not think she has written to us on the Pope case at this point, so I do not have the specific details. If she wants me to consider it, I am happy for her to drop me details after the debate. The third case, about which she has written to the Department, is the Syddall case. I put on record my apologies for the delays in that case. When someone has a terminal illness, which was not the case or was not known about in this instance, we obviously prioritise their claim. As the hon. Member for Stretford and Urmston (Kate Green) mentioned, my predecessor put in place those changes to the process, and we are currently dealing with cases involving people with a terminal illness in about the expected time period of 10 days. In cases such as the one raised by the hon. Member for Bolton South East, when the person does not know that they have a terminal illness and dies while awaiting a decision, we deal with the claim based on the evidence we have. Any arrears of benefit, if applicable, are paid to the estate. A decision has now been made in that specific case. It will be communicated to the family shortly, and I will write to her shortly after that to give her the full details. I hope that is helpful.
Yasmin Qureshi
I thank the Minister for the letter that is on its way to my constituents and me regarding the position on Mr and Mrs Syddall. There is a fast-track procedure for people who are terminally unwell. Is it possible to extend that fast-track procedure for people who may not be terminally unwell, but who are obviously disabled and in need of benefit, such as those who have had a stroke? Perhaps the concept of a special fast-track procedure could be extended to slightly different categories of case.
Mr Harper
I will come to that in a minute, because I will discuss the point made by the hon. Member for Edinburgh East (Sheila Gilmore) about paper-based reviews, meaning assessments made based on the paperwork without having to call someone in.
The general point arising out of the specific cases raised by the hon. Member for Bolton South East and other Members is on delays. I have been frank that delays are not acceptable since I made my first appearance at questions; when I gave my evidence at length to the Work and Pensions Committee, on which the hon. Member for Edinburgh East serves; and during the summer when I dealt with Members’ correspondence. The top priority when the Prime Minister asked me to do this job was to get the delays dealt with. That is my priority. I have been spending a considerable amount of time with my officials and meeting with both assessment providers to put it right. A new team of officials have taken over the work and are driving improved performance. We are working with the assessment providers and working with the oldest cases to improve it.
The hon. Lady asked for specifics. Between them, the two assessment providers have doubled the number of health professionals working through recruitment and training, and have increased the number of assessment centres—I will cover specifically the points raised by the hon. Member for Plymouth, Moor View (Alison Seabeck) in a minute—and extended their opening hours.
We have increased the number of paper-based assessments, so in many cases it should be possible, based on the paperwork that people produce, to make a decision without having to call them in for an assessment. The hon. Member for Edinburgh East is right that, at the beginning of the process, the number ran very low and below where we expected it to be. We have improved the process. I hope she will be pleased to know that, when claimants have been unable to work and have gone through the work capability assessment, we are joining up the process, so that we take the ESA85—the report from the work capability assessment—and put it with their PIP form and any other evidence they have provided. That is enabling us to make more decisions based on the paperwork without needing to call people in for assessments. I hope that is sensible.
Jim Shannon
Those are admirable steps in the right direction, and we appreciate them. Might it also be a good idea to set targets to reduce those figures within a certain period, given all the things that are happening? Sometimes if things are emphasised with targets, they are delivered.
Mr Harper
I will come to that in a minute, but let me deal with the point I was going to make on the hon. Gentleman’s constituents and Northern Ireland. These issues are, of course, devolved, so all the points he made about his constituents and the welfare system, although perfectly reasonable, should be addressed not to me but to the Minister responsible in the Northern Ireland Executive. I have no responsibility for such issues in Northern Ireland; they are devolved.
Jim Shannon
We know where the responsibility lies, but we also know that Capita is the company responsible not only for Northern Ireland but for central England and Wales. I am conscious that the system came in because the Government drove through the new PIP system. That is universal, so there is, in effect, a policy in Northern Ireland. The Minister is not the person responsible—I understand that the Minister in Northern Ireland is responsible—but the debate was secured for the purposes of illustrating where the PIP system is falling down across the whole of the United Kingdom.
Mr Harper
I am pleased to deal with the issues in Great Britain, but in Northern Ireland this is not my responsibility; there is a separate contract for Northern Ireland. I am happy to be accountable and to have people beat me up—figuratively speaking only, hopefully—for the things I am responsible for, but I am not responsible for the welfare system in Northern Ireland. That is the responsibility of the Northern Ireland Executive and the Minister for Social Development. The hon. Gentleman’s points are perfectly well made and I will deal with them as best I can—he has raised the same issues as Members from Great Britain. However, for Northern Ireland, I am afraid he needs to direct his points to the Minister and the Executive.
The initiatives I was setting out have meant that providers have quadrupled their output since January. Hon. Members quoted the latest published statistics, which were published in September. They gave the statistics for July, showing that, by then, we had increased the number of decisions to more than 35,000 per month, and there will obviously be a new set of statistics published in December, which will bring the figures up to date to September.
The Department was referred to by a couple of hon. Members. Changes to our processes, our IT systems and the work we do with providers have improved the process.
The hon. Member for Bolton South East referred to claimant communications, emphasising the need to be clearer to claimants. We have improved the communications at the front end of the process so that claimants know what the best evidence to supply is. We have also been clearer with people to let them know how long their claim may take. I know that it is not great when people are told that their claim will take a long time. I will go on to say a bit more about what we are doing about the delays, but at least we are being clearer with people, so that they know what to expect, which is better than their not knowing and having to keep chasing up progress reports.
Since April, we have been confirming to people, by sending a text message, that we have received their PIP form, so they know it has been received and not lost. I cannot remember who asked me about that—I think it was the hon. Member for Plymouth, Moor View. I do not have the data to hand on the number of people who have reported that they have sent a form back that has then been lost, but I will go away and consider it. I do not know whether we have that data, but I will investigate and write to the hon. Lady. In fact, I will write to all hon. Members attending the debate so that they are aware of the data.
Alison Seabeck
Of the nine cases I listed so that they could be discussed today, a third involved files being lost.
Mr Harper
That was why we put the text message system in place—so that, when claimants send their form back, they receive a confirmation that we have received it, and therefore do not have to wait and make inquiries later before say, “We’ve never had your form.” They receive that confirmation at the beginning. The assessment providers also provide claimants with improved information about where they are in the process, how long a claim may take and who to contact at each stage of their claim.
Face-to-face consultations are a key part of the assessment process for most individuals, enabling a proper look at their circumstances and giving them an opportunity to put across their views about the impact of their health condition on their everyday lives. Of course, PIP is not based on the diagnosis of a medical condition; it is based on the impact of that medical condition or disability on someone’s daily life. However, if we have enough evidence to make an assessment or recommendation, individuals do not have to come in for a consultation and we will do it on paper. As I alluded to following a previous intervention, we can currently make far more decisions on paper than we could make in the earlier part of the process because we have the information. When we can do so, it clearly makes sense for us not to put somebody through an assessment.
Of course, it is worth saying that part of the purpose of the change from the disability living allowance to PIP, to which the hon. Member for Stretford and Urmston referred, is dealing with the conditions that DLA was not very good at dealing with. The PIP assessment process is better than the DLA assessment process at dealing with people who have mental health problems, cognitive impairments or fluctuating conditions. The fact that the DLA assessment process was not good at recognising those conditions was part of the reason for the change to PIP.
Let me deal other specific issues that came up in the debate. There is one issue that I will touch on only briefly because the Secretary of State dealt with it in the Chamber earlier. I was getting mixed messages from Opposition Members about the best way to roll out PIP. Before the hon. Member for Edinburgh East came into the Chamber, the hon. Member for Bolton South East said that we should roll it out more slowly, be more careful and thoughtful, and that sort of thing. Of course, that is exactly the process we are following on universal credit. I am guessing—probably accurately—that, when the Secretary of State was in the House earlier, the shadow Secretary of State for Work and Pensions, the hon. Member for Leeds West (Rachel Reeves), was beating him up and saying he was not going fast enough. That is what the hon. Member for Edinburgh East said in the debate—she believes we are going too slowly.
The Opposition cannot have it both ways. I accept the point about the problems, but we have adopted the test-and-learn approach to universal credit and been criticised for that, too. That is simply the point I was making.
Kate Green
I merely wanted to point out that, in part, it is a matter of expectations. We were assured throughout the process by the Secretary of State that universal credit would come in without difficulty, and in full, by 2017, and each time he has been called to the Chamber to report on its progress we have heard something to that effect, but obviously reality has not borne him out. On the other hand, we are very early on in the process of PIP. MPs, Lords and outside groups suggested that it would be sensible to pilot the programme first, but Ministers chose not to do so. We are merely saying how important it is that Ministers not only adopt the right process, but communicate what they are going to do and then do it.
Mr Harper
I have been clear about communicating what I have been doing to improve the process.
Let me just try to make progress on responding to the issues raised in the debate. I congratulate the hon. Member for Plymouth, Moor View on battling through the effects of her dental treatment. I am not sure how painful it was, but we got her point on terminal illness. Just to be clear, it is not only in cases of terminal illness that we can make decisions on paper. That can be done in any case in which the position is clear. We have a separate process for terminal illness, which is about speeding up the assessment process to 10 days. She also asked about existing DLA claimants. That point has been raised personally with me by my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard). I am considering those cases and I will report to the House in due course on whether we can make a change. However, she made a good point, and it has made to me previously.
Under-staffing is a problem. As I have highlighted, both providers have made considerable progress in hiring new members of staff.
There is a problem with some work capability assessment centres, but all PIP assessment centres are accessible—no PIP assessment centre is on the first floor. In Plymouth, a new six-room centre was opened in September to boost capacity, building on two centres in the Atos supply chain in Plymouth. We have new centres opening in Chelmsford, Edinburgh and Newcastle. In addition, Atos opened a large 18-room assessment centre in Manchester, and there are further plans for centres in Liverpool, Wakefield, Preston, Blackburn, Wigan, Carlisle and Lancaster. Providers are increasing not only the number of staff they have, but the size of their estate.
On statistics, I am sure that few Opposition Members, with the possible exception of the shadow Minister, the hon. Member for Stretford and Urmston, are assiduous readers of the PIP statistics website on the gov.uk page. If they are assiduous readers, they will know that, last week, we set out that we will publish the PIP clearance times statistics, and waiting or outstanding times statistics, for the first time in March, which is before the election. The release will be pre-announced in line with the UK Statistics Authority release protocols. My statisticians have been working on getting figures that will give a proper and rounded picture, without leading to any perverse incentives. I will not go into that now—I have set out my views on it clearly and at length for the Work and Pensions Committee.
The hon. Members for Stretford and Urmston and for Edinburgh East mentioned success rates, which the Department is looking at. The priority has been ensuring that we not only deal with the delays but keep the quality of the assessments high. The hon. Member for Edinburgh East said that the problem is delays—admittedly, she said she had only anecdotal evidence, but evidence has come from elsewhere. When people have had their assessments, generally the experience has been a positive one. I am not saying that every single case has been positive, but generally speaking the experience has been positive. It is important that we do not lose sight of that.
Finally, in response to a point made by a couple of hon. Members about our forecasts for the cost of the system, they will not be surprised to learn that I will not pre-empt what the Chancellor will set out next week in the autumn statement, when further forecasts will be published—not mine, but those of the Office for Budget Responsibility.
London Transport Zones (Croydon)
(9 years, 5 months ago)
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Mr Steve Reed (Croydon North) (Lab)
It is a pleasure to serve under your chairmanship this afternoon, Mr Crausby. I am delighted to have this opportunity to make the case for moving East Croydon and West Croydon stations from zone 5 to zone 4, or more precisely to zone 4/5, saving local commuters up to £336 on the cost of an annual travelcard into central London.
I hope to make the case for change by establishing, first, that these stations are closer to central London than other stations that are already in zone 4; secondly, that there is ample precedent for stations being re-zoned when a persuasive social and economic case is made; thirdly, that re-zoning these stations will support the local Labour council’s ambitious £9.5 billion growth and regeneration bid that would benefit a large swathe of south London and south-east England; fourthly, that there will be a net financial benefit from making this change; and finally that there will be much-needed savings for people travelling into central London, but no increase in fares for people travelling into Croydon from further south.
Travel distances from central London are standardised by measuring from Charing Cross. On that basis, East Croydon station is 9.3 miles away and West Croydon station is 9 miles away. The two stations, serving areas that include the town centre, are both in zone 5 on Transport for London’s transport travel zone maps, but many London stations that are further away are included in zone 4, including Kenton, which is 9.7 miles from Charing Cross, Malden Manor, which is 10.3 miles out, Hounslow, which is 10.6 miles out, Abbey Wood, which is 10.7 miles away and Chigwell, which is 11.7 miles away from Charing Cross. There is clearly an anomaly when those stations, all further from central London than East Croydon and West Croydon, are all in zone 4, while the Croydon stations are in zone 5. On the TfL map it looks as though the zone boundaries carve out Croydon for no good reason, although it has the effect of costing Croydon’s commuters more in travel fares than other Londoners have to pay to travel greater distances.
There is strong support for making this change from commuters I have spoken to outside both stations. One or two people have asked whether it is actually possible to get stations moved into different travel zones. The good news is that it is not only possible, but it has happened on many occasions—I have mentioned some—and there is no reason why it cannot also happen in Croydon, given the strength of the case.
Jim Dowd (Lewisham West and Penge) (Lab)
Can I take my hon. Friend to the northern extremity of his constituency, where it shares a boundary with mine, to Crystal Palace station? Even though that station is in my constituency, a lot of his constituents use it. That station was re-zoned a few years ago—it was zone 4 and now it is zone 3/4—yet Penge East, which is a bit further away but has a much better service into Victoria and is in railway terms much closer, is in zone 4. People who want to get to Victoria quickly have to pay a premium for doing so. There are obviously problems with boundaries anyway, but there are huge anomalies in that part of London, and I wish my hon. Friend well in what he is trying to do.
Mr Reed
I am grateful to my hon. Friend for his contribution and I wish him luck in his campaign to secure a better outcome for Penge East and the many commuters living in his constituency who commute into London from that station.
I remember well that Crystal Palace station was moved into zone 3/4 in 2004. Similarly, in 2007, Roding Valley, Chigwell, Grange Hill, Hainault, and Barkingside were all moved into zone 4 from zone 5. Earlier this year Stratford, Stratford High Street and Stratford International stations were all moved from zone 3 to zone 2/3. These are just a few of many examples of London stations being re-zoned.
Re-zoning Stratford was estimated to cost around £7 million, primarily, I understand, in reduced fare income, but it is expected to bring at least £25 million in increased economic benefit to the area every year. Croydon would also, in all likelihood, cost a similar amount but would also generate vastly more in economic benefit than it costs.
Croydon elected a Labour council earlier this year on a promise to be “Ambitious for Croydon”. I am delighted that it has been as good as its word and has unveiled an extraordinarily bold but eminently achievable £9.5 billion regeneration and growth package for the borough that could bring in 16,000 new jobs, 9,500 new homes and around 2,000 new businesses. The effects will generate economic growth not just in Croydon, but across a wide swathe of south London and along a corridor stretching from Croydon to the south coast via Gatwick airport, whose own expansion plans are co-ordinated with Croydon’s. Re-designating Croydon’s two central stations in the heart of this regeneration zone as travel zone 4 would help underline how close the area is to central London, as well as making Croydon more attractive to investors, businesses, home buyers, workers and visitors.
There are some concerns that re-zoning these stations would lead to higher fares for people travelling into central Croydon from other parts of the borough that are currently in the same fare zone. In fact, that would not be the case. There is no extra cost for travelling from zone 5 into zone 4, and the pay-as-you-go single fares and daily caps are the same for travelling across zone 4 and 5 as travelling within either of the two zones. Commuters travelling from East Croydon or West Croydon stations into central London would realise considerable savings. An annual travelcard holder would save up to £336 a year if this change were made. At a time when many people have found their wages held down or cut in real terms, this saving in travel costs would be particularly welcome.
I pay tribute to people who have offered support to the Zone 4 Croydon campaign, first and foremost the hundreds of Croydon commuters who were quick to sign a petition in support of making this change that I will, in due course, seek to raise on their behalf with the Mayor of London. He is ultimately responsible for taking the decision, subject to approval by the Department for Transport. I should mention Sarah Jones, a local mum and campaigner, who has recently been selected as Labour’s parliamentary candidate in Croydon Central, who launched the campaign with me. I am grateful to the Croydon Guardian and the Croydon Advertiser for their support, and to the leader of Croydon council, who has personally backed the campaign and intends to seek the formal endorsement of the council within weeks. There is real, strong support in Croydon for making this change. I trust that we will hear today that the Government will also offer their unequivocal support.
As my hon. Friend the Member for Lewisham West and Penge suggested, south London is poorly served by the current zoning arrangements, relative to other parts of the capital. This is not a problem that affects only East Croydon and West Croydon stations. Although I strongly sympathise with the other cases, I would not want any decision about East Croydon and West Croydon to be delayed while other worthy cases are also considered. Local commuters would not thank anyone who tried to put hurdles of this kind in the way of making this change. Re-zoning is not something that has to be implemented across a number of stations at the same time. It has always happened incrementally.
I believe the strength of the social and economic case, and simple fairness, demand that East Croydon and West Croydon stations must be moved into zone 4 as soon as possible. I look forward to hearing the Government’s view and hope very much that it is supportive and positive.
The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)
It is a joy to serve under your chairmanship, Mr Crausby. I congratulate the hon. Member for Croydon North (Mr Reed) on securing this important debate on London transport zones and Croydon. I recognise that the zoning of stations has a real impact on the cost of travel in London, and I am aware that this is a matter of some concern locally. We do, as a Government, understand how important rail travel is for this country’s economy and for all of us who use these services to get to work, to visit family and to get around. That is why this Government are investing £38 billion over the next five years to improve the national network, generating faster, more comfortable and more punctual journeys. I understand how important it is to keep travel costs for hard-working people down. That is why last year we curbed the rail industry’s powers to increase fares. It is also why we will hold down rail fares next year to retail prices index inflation for the second year in a row.
We recognise the importance of investing in transport in London. That is why we have provided Transport for London with more than £10 billion during this Parliament, which has enabled upgrades to the tube network that have already increased capacity on the Jubilee line by 33%. We will also see a 20% increase capacity on the Northern line from next month. The investment will also bring the first air-conditioned walkthrough trains to serve customers on the Metropolitan, Circle, District and Hammersmith and City lines. We have also transformed major London stations including King’s Cross, St Pancras, Stratford, Blackfriars and Paddington. The Crossrail project is on track to deliver a brand new railway across London by 2018, transforming journeys across the capital.
We are improving rail travel in Croydon. The Government’s investment in London transport has enabled the Thameslink programme of upgrades, transforming the line, which serves East Croydon station. Capacity will dramatically increase by 2018. A fleet of 115 spacious new trains will run every two to three minutes through central London at peak times.
Mr Goodwill
The hon. Gentleman need not worry. As he has left me plenty of time to speak, I thought I would put the debate in the context of the unprecedented investment that the Government are putting into rail, not only in London, but across the country.
Croydon receives an excellent and frequent train service. Someone would be hard-pressed to find an area in zone 5 with better services to central London than Croydon. The hon. Gentleman mentioned that Croydon is closer to central London than other stations in zone 4. Ultimately, there will be winners and losers in any simple zoning system, as stations near the boundary of a zone will be closer or further from London stations than others. Distance is only one factor in determining the zone in which a station falls.
The hon. Gentleman’s arguments for re-zoning Croydon stations are interesting, and it is important to have these debates, but there is an established process for re-zoning stations, which works as follows. The travelcard map, which shows the zone in which each station falls, is set out as part of the travelcard agreement made between the train operating companies and TfL. The Government are not a signatory. Any changes to station zones must be proposed by a signatory to the agreement; the Government are not able to do that. The proposal must then be agreed by the remaining signatories. The Department for Transport can approve or reject the change proposals. The decision is made by the Secretary of State for Transport on the basis of the business case. If the proposal does not represent good value for money, it is unlikely to get approval. The Government cannot and should not promote or back any proposal outside that established process.
Mr Reed
I thank the Minister for his explanation. On the basis of what he has just heard and the link to the dramatic and bold £9.5 billion regeneration bid being proposed for Croydon through a regeneration and growth bid—we hope the Chancellor of the Exchequer will endorse it in the autumn statement—does he personally think that the proposal should be supported?
Mr Goodwill
As I made clear, it is a matter for TfL and the train companies. In passing, I point out that eight stations in East Croydon’s zone are closer to central London. Indeed, one is only nine miles away, while East Croydon is 10.25 miles, or 10 miles and 34 chains, I think, from Victoria. There is no official rule about where distances are measured from. By convention, some measure London distances from Charing Cross, but we are not aware of any reason why that should be the overriding rule. Generally the distance from the terminus station would seem to be the most sensible choice. That is Victoria in this case, although London Bridge is slightly nearer.
If one of the train operating companies running stations in Croydon wishes to formally propose the change, a number of factors would need to be considered. First, changing the zone of a station does not come free. A season ticket for zones 1 to 5 costs £2,136. The season ticket for zones 1 to 4 costs £1,800, so the difference between them is the figure of £336 that the hon. Gentleman drew attention to. Reducing the cost of travelling from a station reduces the revenue brought in by that station, and that can add up to millions of pounds a year. Ultimately, those costs would be covered by the taxpayer. A loss at Croydon might need to be compensated by raising fares elsewhere. At a time of intense financial pressure, is it fair to ask taxpayers as a group to pay for travellers in Croydon to have cheaper fares? It might be.
Mr Reed
I am grateful to the Minister for his frequent kindness in letting me intervene. In looking at the cost of making the change, does he take into account the net economic benefit, as was the case with Stratford? The Greater London authority estimated that, although that change cost £7 million, the net economic benefit was £24 million, which is multiples more than the cost of making the change.
Mr Goodwill
I understand the sensible point that the hon. Gentleman is making, which contributes to the debate. It is possible that the economic benefits to the area would outweigh the costs, but the question cannot be answered without some serious consideration. How would re-zoning impact businesses in the area? How would it impact residents? How would it impact surrounding stations and the areas that they serve? For example, passengers who live slightly closer to a station that was in the next zone might decide to change their journey plans and travel to East Croydon to save on their season ticket. The change could put increasing pressure on the station, which is already very busy.
The train operating companies would need to investigate all those issues. The argument for re-zoning would need to be demonstrated in a robust business case. The effects of re-zoning a station are not only financial; there would also be changes to demand at the stations. If it is cheaper to travel from one station in an area than another, people will choose the cheapest journey. That is the logical response, but a change will also make stations more crowded. East Croydon is already one of the busiest stations in the UK outside central London, and re-zoning it would make that worse.
Jim Dowd
A constituent raised the issue that my hon. Friend the Member for Croydon North (Mr Reed) kindly allowed me to mention earlier. The Minister said that passengers will choose the cheapest option, but that is not true in every case. It is also about the service. In the case that I highlighted, Crystal Palace is eight stations from Victoria, but Penge East is a mere five stations away. It is a much faster service from Penge East, although it is more expensive. People choose to go from Penge East; they do not necessarily go for the cheapest option.
Mr Goodwill
The hon. Gentleman is right. The current zoning seems to as much be down to historical reasoning as anything else, but it is the basis on which the franchises have been let and the basis on which the train operating companies have calculated their revenue. In cases of re-zoning, compensation might need to be paid to those train operating companies to allow for the difference in income.
Is increased congestion at their station a trade-off that commuters are willing to make? Is it a trade-off that provides value for money? Finally, what consideration has been given to commuters who travel into Croydon for work? As the hon. Member for Croydon North has said, Croydon’s economy is flourishing and there are many jobs in the local area. If Croydon is re-zoned, travel costs for people living in London’s outer zones could increase significantly.
Mr Goodwill
Yes, if the stations moved into zone 4/5, but if they just moved into zone 4, there would be an increase in cost, which would be a consideration for fare revenue. The re-zoning could have an impact on train operating companies. All those things need to be carefully considered.
As we have heard several times during the debate, Croydon is not the only place where calls for re-zoning are being made. A formal proposal has been submitted requesting that the Stratford stations should be re-zoned, and my Department has received correspondence asking for stations to be moved into the London zonal fares area. Other hon. Members have made similarly passionate arguments in favour of re-zoning stations such as Kingston, Surbiton and Epsom. I am sure that there are many others for which local arguments could be made.
Clearly, a wholesale transfer of stations into lower zones would not be affordable. It is, of course, important that the station zoning is reviewed and that re-zoning can take place when there is a strong case. The established process for re-zoning a station ensures that value for money and the impacts on other transport users are considered. That is what will need to happen with the proposals to re-zone Croydon.
In summary, I hope that I have been able to clarify the process for considering proposals to re-zone London stations. As discussed, it would not be appropriate for the Government to comment at this stage on the merits or otherwise of re-zoning Croydon. We will reflect carefully on the points made in today’s debate but can make no promises. The proposal will need to go through the proper channels and the proper process, and there will need to be agreement between the train operating companies and Transport for London. We would want to satisfy ourselves that any re-zoning proposal for stations in Croydon represents value for money. The Government are committed to ensuring that value for money is maintained to allow us to keep transport costs affordable for the travelling public—a key part of our wider commitment to improving the transport network both in London and across the country.
Furniture and Furnishings (Fire Safety)
(9 years, 5 months ago)
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Andrew Stephenson (Pendle) (Con)
It is a pleasure to serve under your chairmanship, Mr Crausby. The Furniture and Furnishings (Fire) (Safety) Regulations 1988 set out the levels of fire resistance for domestic upholstered furniture, furnishings and other products containing upholstery. Between 7 August and 7 October the Government ran a consultation on proposed changes and, subject to its results, the Department for Business, Innovation and Skills proposed implementing the changes in April 2015.
I have called for this debate because employers in Pendle have expressed to me their deep concerns about the proposed changes. Pendle’s local economy relies heavily on manufacturing, and a sizeable proportion of people work in the furniture sector. Silentnight in Barnoldswick employs around 800 people, sofa manufacturer Buoyant Upholstery in Nelson 800, and Furnico in Pendle around 400. Many other companies are also involved in the sector. Clarkson Textiles, based in Nelson, represents about 25% of the fire-retardant or FR coating market in the UK.
Silentnight was one of the companies that helped with the creation of the existing regulations, implemented 26 years ago. When people such as Iftikhar Mirza, Silentnight’s quality assurance and laboratory manager, who was involved in the original process, express concerns, we know that those concerns are not simply a knee-jerk reaction but are based on decades of research and experience.
All those companies are proud of how our fire regulations save lives and help to prevent fires. As the BBC 1 “Fake Britain” investigation into sofas and mattresses back in January showed, if the regulations are not adhered to, the consequences can be deadly. Silentnight even took the opportunity to mention the importance of the regulations to the Prime Minister when I took him to visit the company back in May. I, too, have expressed concerns about enforcement over the years with Ministers, Lancashire trading standards and the Lancashire fire and rescue service.
The Government’s consultation on the proposed changes to the regulations sets out some laudable aims, namely to improve safety, to make UK furniture greener and to bring savings to the industry. I will take each aim in turn to explain why I and the businesses that I represent feel that the proposals fail in each and every regard.
On improving safety, the existing test method is a simple pass-or-fail test, and one that I have observed being carried out by local businesses. Fabric arrives at a coating company such as Clarkson Textiles and is treated and certified, or it arrives already treated at a furniture manufacturer and is tested before it is used. The new test introduces a two-tier system, with the additional clause relating to the size of the hole formed during testing.
Offering a choice of tests does not lend itself well to the supply chain in the industry and will make the job of trading standards officers almost impossible. How can trading standards police and prosecute with so many variables in the new test method, such as filling 1, filling 2 or the size of the hole produced on burning? The existing method offers a simple, worst-case test because the foam underneath the material being tested is also flammable. Replacement of that with fire-retardant foam reduces the severity of the test. Inclusion of the polyester fibre in filling 2 goes some way to increasing severity, but it is still not as robust a test, and it therefore runs the risk of leading to less safe furniture.
Proponents of the changes will, I am sure, say that the new regulations, by insisting that all internal components are fire retardant if the size of the hole produced by a flame is over a certain level, will mean that overall the item of furniture will be safer. With respect, however, that is simply not true. The existing regulations provide for a flame-retardant barrier over the furniture against small ignition sources, such as a cigarette or a faulty electrical item. By the time a fire has been able to burn through 40 mm of fabric and foam and got all the way to the internal components of a sofa, we have lost the battle anyway.
It is also worth remembering that when fabric is sent for treatment, it is likely that it will be treated for stock, so it would not be known what kind of furniture that fabric would be used on, or even who would purchase it. Fabrics are not precision-engineered products; variables in yarn type, dye stuff, fabric weight and add-on treatments must all be accounted for. Testing over non-FR foam, as the current test does, gives extra tolerance to allow for such variables.
There is also concern about the removal of the cigarette test on fabrics that have passed the match test. As the European Flame Retardants Association pointed out, it was great to see in the 2012-13 fire statistics report a clear downward trend in fire fatalities, but the report also stated that smokers’ materials have caused the largest share of deaths in house fires. With that in mind, is it not a gamble to change the status quo at the very time when the UK can congratulate itself on its fire safety achievements and can continue leading and being an example to other European Union countries?
Concerns have been raised about enforcement of the current regulations—concerns that I have been raising for some time, and which were covered in the BBC “Fake Britain” programme. Introducing new variables, however, and a situation in which sofas would have to be purchased and pulled to pieces to test internal components are unlikely to improve enforcement by trading standards departments, which already have limited resources.
Mr David Nuttall (Bury North) (Con)
My hon. Friend is making an important case, and one that I am sure Formulated Polymer Products in Ramsbottom, which makes such chemicals, would support. Does he agree that what we need is better and more rigorous enforcement of the existing regulations by trading standards?
Andrew Stephenson
I thank my hon. Friend for making that important point. The existing regulations are incredibly effective and have saved many lives; they could save more lives if they were enforced effectively. We should be enforcing the regulations, rather than playing about with them and trying to come up with a new test that I do not think is as robust as the old one.
The second aim of the changes is to make UK furniture greener. Again, that is a laudable aim, and it is based on reducing brominated FR usage by around 50%. Those to whom I have spoken, however, feel that the total level of brominated chemical use quoted by BIS is greatly inflated by the method of calculation. No figures from the chemical or coating industry have been quoted, but it estimates that a total of 12 million to 16 million metres are coated in the UK, not the 65 million metres quoted by BIS. The BIS figure includes leather, loose covers and inherent fabric, which are not treated, so at best the documents exaggerate the level of chemical use in the industry.
Furthermore, with the new test, the application level of chemical per metre will remain the same on many fabrics, as shown by recently published research from FIRA, the Furniture Industry Research Association. In some instances, the application level could increase, and the requirement to make every internal component of the sofa fire retardant if a hole appears during the test means that the likelihood is that far more brominated chemicals will need to be used. A small reduction can be achieved on some simple, lightweight synthetic compositions, as shown by the test results offered by BIS, but, to take us back to the safety point, no fabrics tested included common add-on treatments such as fluorocarbons.
Clarkson Textiles also feels that the changes would hamper innovation and development as it and other companies explore ways to reduce the use of brominated fire retardant. The new test removes the scope for final composite testing. With careful selections of fabric and interlinings, it is already possible to produce a flame-resistant item without FR chemicals, but without final composite testing it would be illegal, because the cover may not pass over foam and fibre as specified in the new test.
We also need to consider the impact of the new regulations on the re-upholstery industry, which is easily overlooked because most of the companies involved are small. They might not even be aware of the changes proposed by the Government. At the moment the re-upholstery industry facilitates furniture recycling and reuse, helps reduce landfill and therefore helps the environment. As drafted, the proposed new regulations could destroy the sector, because many fabrics that produce a hole when tested could never be used again. The choice would be either to throw the furniture out, which is not good for the environment, or for companies to increase significantly the back coating of the fabrics with far more chemicals, which again is not good for the environment.
The third aim of the changes is to bring savings to the industry—again, a laudable one. The estimated savings projected by BIS, which were calculated on the reduction in chemical application and the removal of the cigarette test, look impressive. However, the unanimous message from the businesses I have spoken to is that the cost savings on fire regulations testing are minimal and are therefore totally outweighed by the introduction of the testing of internal components.
In its consultation response, Buoyant Upholstery clearly sets out why it does not believe the changes will save the industry money. Simply applying 50% less FR coating, even if safe, would, it estimates, save it only something like 10p per metre, whereas ensuring that every internal component is FR treated would impose massive costs on a company that currently has 120 different models in its range and uses over 1,170 different fabrics. Not only would its products need to be redeveloped, but all its floor models in furniture retailers across the country would need replacing. To put that in perspective for a company like Buoyant, the three largest retailers it supplies have 1,186 floor models between them, which have often been supplied at discounted rates. The cost for UK furniture manufactures of replacing all those floor models will be significant. Companies such as Buoyant will be hit with costs for product redevelopment and alternative components, increased supply-chain auditing and due diligence costs, increased material costs and so on.
Clarkson Textiles tells me that chemicals represent only around 33% of the coating price—£1.20—meaning that savings to customers would be only between 8p and 20p per metre. If Clarkson Textiles represents 25% of the coating market in the UK, and its total consumption of FR compound is only £1.5 million, it will be impossible to make the savings to industry of £17 million to £50 million that have been quoted by BIS during the consultation.
I turn now to what trade organisations say about the changes. In responding to the consultation, industry representative bodies have been clear: neither the Furniture Industry Research Association nor British Furniture Manufacturers think the proposals will achieve the aims set out by the Department. They see no evidence that the changes will make the industry greener, save money or, crucially, make furniture more fire safe, and do not think that the changes are viable. The National Bed Federation agrees, saying it cannot be sure that the proposals will save money or improve safety, although it recognises that making UK furniture greener is possible and that reducing FRs is becoming ever more important.
Those groups are not resisting the changes for the sake of resisting change. As FIRA makes clear in its consultation response, the industry itself has been calling for a revision of the regulations for many years. As far back as January 2010, meetings were taking place at BIS and a plan was agreed for fully revised regulations to be introduced by 2012. The industry sees change as overdue, but it sees these particular changes as inadequate and incomplete, given the many other amendments that are required and will need to be addressed in future.
I called for this debate after receiving a reply from the Minister, dated 11 November, responding to concerns raised by Joel Rosenblatt, chairman of Buoyant Upholstery. That reply said that the Department was analysing responses to the consultation, but very much implied that the changes were pretty much a done deal. However, as recently as last Thursday, BIS officials were e-mailing invites to meetings, at short notice, to select parts of the industry only, along with technical documents showing that the proposals have changed again and the reasons for the changes have altered. It would appear that as of last week the changes are no longer about saving fire retardants, but are now about safety; apparently the current regulations do not work. However, no evidence has been presented for that idea in terms of fires or deaths, and there is no evidence for what the savings will be.
The altered proposals seem to ignore the report by the Minister’s own Department into the effectiveness of the regulations, which was commissioned from Greenstreet Berman in 2009. That report suggested that between 2002 and 2007 the regulations saved 54 lives, and led to 780 fewer non-fatal casualties and 1,065 fewer fires each year, with savings to the taxpayer valued at about £140 million per year.
I am very supportive of the Government’s drive to reduce unnecessary red tape and get our economy back on track. The effects can be seen in my constituency, and Pendle businesses in this sector, such as those I have mentioned, are employing hundreds more people than they were in 2010. However, we need to work with the industry and listen carefully to what businesses are saying. There is general amazement that the biggest review of the regulations since 1988 was conducted essentially by just two people. The review could and should have involved the material manufacturers, furniture manufactures and leading test houses right from the start. The UK’s two largest independent test houses, SATRA and FIRA, were not even properly consulted at the start of the process, and FIRA has only recently been able to present its own findings to its members. Most in the industry feel the whole process should be started again, involving the right people from the start, so that more effective proposals can be driven by industry rather than, as some feel, being imposed from above.
It should not surprise the Minister that the upholstery industry is unhappy with the situation. Most businesses are unaware of the further technical changes that are now being discussed, before the results of the public consultation have even been published. As I said, no one is anti-change, but there is deep concern about the way the Department has gone about this process. Despite all the flaws, the opposition of industry and the clear evidence that the changes fail to achieve any of the intended objectives, the Department still seems keen to press ahead in order to have something implemented by April next year. The current regulations have been in force for 26 years. They are simple, effective and have saved lives. Let us not put that in jeopardy.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
It is a great pleasure to serve under your chairmanship, Mr Crausby, in this important debate. I thank my hon. Friend the Member for Pendle (Andrew Stephenson) for raising this issue in the House. The debate is particularly timely because, as he noted, the Department has recently held a consultation on the issue; at the moment, we are considering the consultation responses and thinking about our next steps. I will simply caution in advance that although I will try to respond to some of the issues he has raised today I will not be able to set out a definitive view on exactly what those next steps will be, as that matter is still very much under consideration. However, as I say, that makes today a good time to have this debate, because all the points and arguments he has raised can be considered as part of that process.
I recognise that there are a number of manufacturers in my hon. Friend’s constituency who are clearly knowledgeable about and deeply invested in this matter, not just financially but in terms of the wider safety issues. It is useful that he can bring his expertise to this debate, having spoken to them as their constituency Member. As he set out, in the proposals that we have consulted on we are aiming to achieve better safety and environmental benefits; if there is a benefit to business in the form of savings, that is also helpful. I think we all share those objectives, and I understand the concerns he set out with regard to them. The end result that not just he and I but probably the entire industry want to achieve is a robust, safe system that is not overly burdensome, but in which everyone can none the less have confidence, and excess chemicals do not need to be used. The challenge for all of us is to work out the best path to that; that was the purpose of our consultation on the issue.
In general terms, we have an excellent record on fire safety in the UK, and as the Minister with responsibility for consumer affairs, I am keen to ensure that our enforcement regime and fire safety rules remain fit for purpose. Earlier this year, my hon. Friend got in touch with the Department about imported furniture products that do not properly comply with fire safety regulations, and the concern that some of that furniture might not always have the anti-flammability properties and protections needed for UK safety standards. Not only does that lead to significant safety concerns, but such importers are able to undercut UK businesses that have very high standards and are scrupulous about adhering to our important safety rules.
The matters we are discussing are important and serious. As I explained in my responses to my hon. Friend’s earlier inquiries to the Department, we have been through many of the issues carefully with trading standards, which is responsible for enforcing the rules on safety. It is true that non-compliant imports do find their way into the UK in a range of ways. Trading standards is obviously involved clearly and closely in stamping down on that, and it has expressed concern about various issues with enforcement and fabric treatment, including some in the UK, in terms of treatment companies processing fabrics not to an acceptable standard. Many reputable companies do a brilliant job, but there are concerns about some where that is not the case.
To help to improve enforcement practice, we are funding a £25,000 project led by Rhondda Cynon Taf trading standards, which is working with five other trading standards departments around the UK to look at compliance of upholstered furniture with the fire safety regulations. They will gather important evidence about enforcement and deliver a series of recommendations to help us to target that enforcement effectively throughout the furniture supply chain.
A second relevant issue, which has been discussed in the other place, is the Consumer Rights Bill. My colleague Baroness Neville-Rolfe announced that there will be an independent review of product recalls across a range of product safety legislation to consider what information systems exist to inform consumers about product recalls and how well they work in practice. That gives a flavour of how we are looking to improve the enforcement regime, which is a key part of ensuring that the regulations work. However, that depends on the basic safety rules in place, which brings me to the review of fire safety regulations covering furniture and furnishing.
The regulations have generally been a big success, as my hon. Friend the Member for Pendle said. They have ensured that as the furniture market has grown to provide more choice and variety at a range of prices that ordinary people can afford, furniture has stayed safe. He mentioned the statistical report that was commissioned in 2009, which showed excellent safety benefits from the regulations; they have saved around 54 lives a year and prevented nearly 800 casualties and over 1000 fires. UK domestic furniture is probably the safest from fire in the world, which is a record we all wish to maintain.
The regulations are 26 years old, and we recognise that technology and manufacturing processes change and move on, so four years ago, shortly after the election, the Department for Business, Innovation and Skills started a project to look at the rules in depth to ensure that they are still fit for purpose in the context of technological and manufacturing change. It became clear that, as well as modernising the rules, there were several other big issues to address. One was concern about the high use of certain types of chemicals used as flame retardants to meet our stringent flammability tests. They include the most common brominated flame retardant used in furniture, deca-BDE, which has been banned in the USA and is restricted under REACH, the EU regulation on registration, evaluation, authorisation and restriction of chemicals.
Concerns were identified about how the current test is working, and about the fact that it might not always do what it sets out to do: to prove that the cover fabric being tested will form a barrier to protect the foam or filling underneath. The consultation we launched in the summer had two main aims. We wanted to see if we could find a way to reduce the reliance on dangerous flame retardants, and to find a new test that would not have the problems that we had identified with the current test, particularly because it fails to take account of how fabrics actually perform in furniture in the finished product. If savings can be generated for business, all well and good, although I am sure that hon. Members always want safety to be uppermost in our minds when discussing such issues.
Andrew Stephenson
I am heartened by much of what the Minister is saying. She cited what has been done in the USA in banning the use of certain chemicals. There have been reports, and evidence has been produced in the USA, particularly in California, showing a significant increase in the number of domestic fires. I hope that as the Department for Business, Innovation and Skills moves forward with the proposals, it will look at examples in other countries where banning some chemicals has, unfortunately, undermined consumer safety and led to more fires.
Jo Swinson
Clearly, that outcome is the opposite of what we want to achieve. We are analysing carefully the consultation responses, and are happy and keen to look at evidence from around the world, where changes have been made to rules on chemicals, on the impact on consumer safety. If my hon. Friend has specific information, I would be happy to receive it from him.
When we undertook the consultation, we looked at the match test, which is a key test to assess the ignitability of cover fabrics. I want to make three points about the proposal, but we are still considering the responses. We proposed to make the test set-up much more like the way furniture in the home is constructed. Currently, the cover fabric is laid directly next to a highly flammable foam filling—a kind of foam that is now illegal for use in furniture, to which my hon. Friend alluded—and that is believed to be a worst-case scenario. Most modern furniture has a lining material between the cover and the filling, so the test conditions are different from the finished product. My hon. Friend suggested that the current test is a worst-case scenario, and that if something passes it, it will be fine, but in practice, when fabrics are placed over linings, they may not always be fitted tightly, so air may be present between the fabric and the lining, which means that it may be more ignitable. There is a danger that something could pass the existing test, but when the fabric is in situ in a piece of furniture it may not comply with what was being tested. We must understand that, and the proposal was to have a test that represents much more how a piece of furniture would be used in the home.
The proposed test includes other materials that are now commonly used in furniture below the surface, such as webbing and fibreboard. They are not tested independently at the moment because it is assumed that if the cover passes the match test, it will stop a flame getting into the furniture and setting something on fire. However, our research work to investigate the existing test method suggests that that is not always the case in practice, which is why we want to correct that by introducing a test for other materials. It is important to note that that is intended as a one-off, so the material will be tested, and when it has passed, it will be published in a list of extra materials that can be classified as exempt, whereas the cover fabrics would still have to be tested regularly. We are trying to make the test more realistic and comprehensive.
The third point is to try to make the enforcement challenge for trading standards easier. The problem with the current set-up is that it does not allow for all the variations that can occur in testing because of the interactions between covers that are treated with flame retardants and the foams used in the tests, and the chemical differences that arise because the foam interacts directly with flame retardants on the cover fabrics. Those variations may mean that while doing enforcement activity, trading standards can find covers that have been passed when they should have failed. My hon. Friend pointed out that the variations in fabrics is an issue that make this a challenge. Trading standards has said that the proposed test will be easier to enforce because the pass or fail will be clearer, with a smaller grey area.
As my hon. Friend is aware, the consultation closed just over a month ago. We received a substantial number of responses, and we are continuing to digest everything that has been put to us. I think we all agree that furniture safety is essential. It is great that we have a good record in the UK, and we want it to continue. I understand his concerns and those that various parts of the industry have raised through their Members of Parliament or in the consultation. I am considering them very carefully because we want to get this right. Not every ministerial decision comes with the responsibility that people’s lives are at stake, but this is one about which I feel keenly. It is complex and there is a significant need to weigh up the different factors to ensure that we get the right course of action.
I have set out what we want to do on the enforcement side, but the fire safety rules are vital to ensure that the enforcement operation can work. My basic aim is to ensure that any changes that we ultimately make improve the safety regime and deal with some of the difficulties that have been identified with the current tests. That is an area of genuine concern. We must ensure that we understand the concerns that have been raised, and that we move ahead with new regulations that everyone can have confidence in and that will provide the safety that everyone wants.
We will listen to the views of my hon. Friend and those who responded to the consultation, and work closely with fire services, trading standards, test houses and the industry to ensure that that happens. I am grateful to my hon. Friend for raising all these concerns. I am sure he will follow the next steps with great interest.
Question put and agreed to.
Written Statements
(9 years, 5 months ago)
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Equitable Life
(9 years, 5 months ago)
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The Economic Secretary to the Treasury (Andrea Leadsom)
As of 31 October 2014, the scheme has now issued payments totalling £990.5 million to 887,061 policyholders. The scheme has published a further progress report, which can be found at: https://www.gov.uk/equitable- life-payment-scheme
The figures are broken down as follows:
409,221 payments to individual investors have been issued totalling £555.2 million.
37,732 initial payments to with-profits annuitants (WPAs) or their estates have been issued by the scheme, totalling £82 million. Subsequent annual payments totalling £187.5 million have also been issued to annuitants.
440,108 payments totalling £165.8 million have been issued to those who bought their policy through their company pension scheme.
There are now approximately 151,000 policyholders who are due a payment but where the scheme has not yet been able to trace or validate their address.
The scheme has gone to significant lengths to trace eligible policyholders. It remains committed to tracing and paying as many eligible policyholders as possible, and will continue to consider all proportionate actions it can take to do this, including working with the Department for Work and Pensions.
The scheme encourages any policyholders who believe themselves to be eligible to call the scheme on: 0300 0200 150. The scheme can verify the identity of most policyholders on the telephone, which means any payment due can usually be received within two weeks.
University of Northampton (UK Guarantee)
(9 years, 5 months ago)
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The Chief Secretary to the Treasury (Danny Alexander)
The UK Guarantees scheme was announced in July 2012 with enabling legislation, the Infrastructure (Financial Assistance) Act 2012, receiving Royal Assent on 31 October 2012. The scheme provides a sovereign-backed guarantee to help infrastructure projects raise debt finance. Guarantees for up to £40 billion in aggregate can be offered under the initiative.
The Government are confirming that they have approved a guarantee for £291.5 million to the University of Northampton for the construction of its new Waterside campus.
The Government will report to Parliament on the financial assistance given in line with the requirements set out in the Infrastructure (Financial Assistance) Act 2012.
Social Mobility and Child Poverty Commission (Annual Report)
(9 years, 5 months ago)
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The Minister for Schools (Mr David Laws)
Today I wish to inform the House of the publication of the Government’s response to the second annual report by the Social Mobility and Child Poverty Commission.
The Social Mobility and Child Poverty Commission is an independent body which monitors the progress of the Government and others in improving social mobility and reducing child poverty in the United Kingdom. The Commission plays a vital role in ensuring the Government make progress in both of these areas and we are grateful to it for its thorough and comprehensive report.
We are committed to ending child poverty. As set out in the child poverty strategy 2014-17 published earlier this year, we are taking action to improve the life chances of children by: raising the incomes of poor children’s families by helping them get into work and making work pay; supporting the living standards of low-income families; and raising educational outcomes of poor children. This approach reflects the reality of child poverty in the UK today and is the only way to achieve lasting change to protect the poorest in society.
Fairness is a fundamental value of this Government, and improving social mobility continues to be a primary goal of our social policy. We are determined to break down the barriers to social mobility at all stages of a person’s life, from when they are born right through into adulthood, to ensure that everyone can fulfil their potential.
A copy of the Government’s response will be available later today at: www.gov.uk/dfe
Agriculture and Fisheries Council
(9 years, 5 months ago)
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The Secretary of State for Environment, Food and Rural Affairs (Elizabeth Truss)
My noble Friend, the Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Lord de Mauley), represented the UK at the EU Agriculture and Fisheries Council on 10 November in Brussels. Richard Lochhead MSP was also present.
Fisheries
Deep sea fishing opportunities 2015 and 2016
Commissioner Vella outlined his ambitions for setting fishing opportunity levels for deep sea stocks in 2015 and 2016. He stressed the need to manage stocks sustainably and to protect the long-term interests of EU fishermen. Several member states raised concerns with the Commission’s proposals and pressed for higher total allowable catches (TACs). Lord de Mauley, along with Germany, the Netherlands and Denmark, agreed with the Commission that deep sea ecosystems and fish stocks were particularly vulnerable and needed to be fished sustainably to ensure the future of deep sea fisheries: The presidency and the Commission engaged in political negotiations over the course of the day and eventually tabled a compromise proposal, which Spain and Portugal voted against. The compromise proposal was, however, agreed by qualified majority voting.
Agriculture
2015 budget amending letter
A majority of member states opposed the Commission’s proposals in its amending letter to the 2015 budget to fund the emergency measures in response to the Russian import ban from the CAP crisis reserve. These member states also supported a common declaration tabled by France setting out their opposition. Lord de Mauley expressed sympathy with member states who have been heavily impacted by the illegal and unjustified trade measures imposed by Russia. However, he made clear that the Commission’s proposal was part of much wider budget negotiations and that Finance Ministers would need to consider this within those discussions. Commissioner Hogan noted comments and stated that conciliation discussions were ongoing.
Cyprus state aid
The Commission agreed to Cyprus’s request to remove a Council decision under Article 108(2) TFEU, granting an exemption from state aid rules to waive all tax on motor fuel used for agriculture, from the Council agenda until December.
Any other business
Organic regulation
Lord de Mauley, along with a number of other Ministers, broadly supported the common declaration of the V4+3 countries (CZ, PL, HU, SK, BG, RO, SI) which calls on the Commission to ensure its proposal for a new organic regulation promotes growth of the sector. The Netherlands, Austria and Germany questioned whether the Commission should withdraw its proposal and start again given the extent of member states’ concerns. Commissioner Hogan said that he was willing to consider changes to the proposals and hoped that an agreement could be reached in 2015.
Peaches and nectarines
Commissioner Hogan rejected a Greek request for additional support measures for Greek peach and nectarine producers arguing that prices in Greece were above the EU average. He also urged Greece to consider structural problems in the sector as it had suffered three crises in the last six years and these would reoccur if problems of oversupply were not addressed.
Young farmers
The presidency presented a short paper on ideas to strengthen EU policies for young farmers. Several member states were interested in the idea of working with the European Investment Bank (EIB) to increase young farmers’ access to credit. While underlining the range of existing measures available to support young farmers, Commissioner Hogan confirmed that he had established a working group between the EIB and his Commission services to explore ideas in this area.
ICAAN internet domain names
France and Spain urged the Commission to prevent the sale of generic internet domain names such as .wine or .vin as it risked undermining the protection of EU producers, particularly those with registered geographical indications. Commissioner Hogan stressed that he was keeping this under close review.
Protection of honey bees
Slovenia called for a new legal framework on residue levels for substances in bee feed composition. Commissioner Andriukaitis stressed that he would do all he could to protect bee health but believed member states and bee keepers were often better placed to help.
Western corn rootworm
Austria, Hungary and Romania called for EU-wide measures to prevent the spread of the damaging western corn rootworm. Lord de Mauley supported their request and underlined the need to review the pesticides regulation. Commissioner Andriukaitis offered to examine the situation and acknowledged that a harmonised pesticide approval system would improve the availability of pesticides.
G6 Paris
(9 years, 5 months ago)
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The Secretary of State for the Home Department (Mrs Theresa May)
The informal G6 group of Ministers of the Interior from the six largest European Union countries held its most recent meeting in Paris on 6 November 2014. Representatives of the United States of America, Canada, Turkey and the European Commission attended for part of the meeting.
The summit was chaired by the French Interior Minister Bernard Cazeneuve and I represented the United Kingdom. The other participating states were represented by Jorge Fernandez Diaz (Spain), Teresa Piotrowska (Poland), Angelino Alfano (Italy), and Thomas de Maiziere (Germany). The USA was represented by Alejandro Mayorkas (Deputy Secretary of Homeland Security) and Eric Holder (US Attorney-General). The European Commission was represented by Dimitris Avramopoulos (Commissioner for Migration, Home Affairs and Citizenship) and the European Union by Gilles de Kerchove (EU counter-terrorism co-ordinator). In addition to the usual attendees Efkan Ala (Turkey) and Steven Blaney (Canada) were present.
The first session of the day was on priority issues for the next European Parliament. The discussion touched on border checks and the importance of balancing security and liberty but focused mainly on the passenger name record (PNR) directive. Delegates agreed on the importance of making quick progress to conclude the PNR directive.
The lunchtime discussion was on migration flows. The group collectively agreed the importance of implementing the JHA Council conclusions of 10 October covering action in co-operation with third countries; reinforced management of external borders and Frontex; and action at member states’ level-reception and fingerprinting. The European Commissioner (Avramopoulos) said the implementation of the conclusions would be a priority for the Commission. Conversation in this session also touched on the importance of securing borders and the need for fingerprinting asylum seekers at their point of entry to the EU.
The first session after lunch was titled “Radicalisation via the Internet”. Delegates noted the positive progress that had been made following discussions with internet service providers (ISP) and agreed the need for joint working.
The final session of the day was on the issue of foreign fighters. A number of countries reported developments and M. Cazeneuve (France) noted their new legislation which enables them to ban people from leaving the country if they thought they were involved in terrorism by way of withdrawal of their passport and ID card. He concluded by suggesting that all countries would benefit from a power to revoke passports and that it was vital that information sharing be improved. He noted that there must be progress on PNR and border checks and strengthening of co-operation with Turkey.
In my interventions, I supported the need for an EU PNR directive which included PNR on intra-EU journeys, supported the JHA Council conclusions of 10 October on future migration policies and set out the action which the UK has taken to tackle the problem of returning foreign fighters.
It was announced at the meeting that the next G6 will take place in Dresden in Germany on 1 and 2 June 2015.
Information Commissioner's Office (Triennial Review)
(9 years, 5 months ago)
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The Minister of State, Ministry of Justice (Simon Hughes)
I am today announcing the start of the triennial review of the Information Commissioner’s Office. Triennial reviews are part of the Government’s commitment to making sure that non-departmental public bodies (NDPBs) continue to have regular independent challenge.
The review will identify and examine the key functions of the Information Commissioner’s Office and consider how best the functions can be delivered, including whether they should continue to exist at arm’s length from Government. Should the review conclude that the functions should still be performed by the Information Commissioner’s Office in its current form, it will go on to consider the potential for securing efficiencies and examine whether their control and governance arrangements continue to meet the recognised principles of good corporate governance. The findings at both stages of the review will be examined by a challenge group.
Further details of the review, including how to submit evidence to it, can be found on the Ministry of Justice website at: https://consult.justice.gov.uk/. The deadline for responses is 16 January 2015.
In conducting the triennial review, officials will be engaging with a broad range of stakeholders and users of the Information Commissioner’s Office. The review will be aligned with guidance published in 2014 by the Cabinet Office: “Guidance on Reviews of Non-Departmental Public Bodies”. I will inform the House of the outcome of the review when it is completed and copies of the report of the review will be placed in the Libraries of both Houses.
Grand Committee
(9 years, 5 months ago)
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Maternity and Parental Leave etc. (Amendment) Regulations 2014
(9 years, 5 months ago)
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Lord Popat
That the Grand Committee do consider the Maternity and Parental Leave etc. (Amendment) Regulations 2014.
Relevant document: 9th Report from the Joint Committee on Statutory Instruments
Lord Popat (Con)
My Lords, I will also speak to the Paternity and Adoption Leave (Amendment) (No. 2) Regulations 2014.
Over recent weeks we have debated some of the key regulations which will implement the Government’s modern workplace agenda, which is updating and landscaping the family-related leave legislative framework. My noble friend Lord Bourne led the debate on 10 November on the main, architectural regulations, which create a new statutory right to shared parental leave and pay for eligible working parents. On 17 November, my noble friend Lady Neville-Rolfe led the debate on the six sets of regulations which allow other groups to benefit from shared parental leave and pay. These new groups are intended parents in surrogacy arrangements and employees who are adopting from overseas. Those regulations also provide an entitlement to adoption leave and pay, and paternity leave and pay, to qualifying intended parents.
Today, we have our last debate on the regulations which will complete the overhaul of the family-related leave landscape to which this Government are committed. We are debating two sets of regulations today. First, the Paternity and Adoption Leave (Amendment) (No. 2) Regulations provide an entitlement to adoption leave and paternity leave to employees who are prospective adopters and with whom looked-after children are placed. These placements are sometimes known as fostering for adoption placements. They are made using the powers introduced into the Employment Rights Act by Section 121 of the Children and Families Act 2014.
These regulations amend the Paternity and Adoption Leave Regulations 2002 to ensure that the eligibility criteria for adoption leave and paternity leave are modified. They will now recognise the particular process in which an employee has a child placed in their home by means of a fostering for adoption placement. As a result, the regulations enable local authority foster parents who are also approved adopters and who have a child placed with them with a view to adoption to access adoption leave and pay, and their partners will be able to access paternity leave and pay, if they meet the eligibility requirements. This group of individuals is willing to take on and care for perhaps some of the most disadvantaged children in the country and to provide them with loving, stable homes. These prospective adopters do so knowing that the placement may ultimately not end up becoming formal adoption. In recognition of the role that these prospective adopters play in providing loving, long-term homes for looked-after children, the Government feel that it is only right to extend the same benefits to them as are enjoyed by other adopters.
The regulations apply to situations where a child is matched with a local authority foster carer who is also an approved adopter and the adopter is notified of that match on or after 5 April 2015. From that date adoption leave will become a day-one right, and, as provided for through the Children and Families Act 2014, if they are entitled to statutory adoption pay, prospective adopters will receive an enhanced rate of statutory adoption pay for the first six weeks which amounts to 90% of their salary.
The regulations are aimed at smoothing the transition for a looked-after child into their new home. Enabling families to spend time together when there is a new member of the family and not having to wait for the final adoption paperwork to be finalised will be an important part of the settling process. Being able to be at home for the first year following placement means that the prospective adopter is there providing love and support in those first challenging months. However, as anyone with a child will know, it is not just the first year of parenthood that is challenging. The challenges of parenthood and the difficulties of managing career and family life are not like a tap that switches off after one or even five years. Being able to find the right balance is a challenge that working parents continue to face right up until their child is an adult.
The second set of regulations that we are debating today aim to address that. The Maternity and Parental Leave etc. (Amendment) Regulations 2014 extend the period in which an employee can take unpaid parental leave from the existing five years to 18 years. That means that an employee who is entitled to 18 weeks of unpaid leave because they have been continuously employed for at least a year, and have parental responsibility for a child, will have a much longer period in which they can make use of that leave if they need to. This applies to both birth and adoptive parents. The requirement to give an employer 21 days’ notice before taking leave and the limit of taking a maximum of four weeks in a year are unchanged.
The Government announced that they were making this change in November 2012. We also decided to bring in the change to coincide with the wider package of reforms to family-related leave and pay in April 2015. In light of the broader changes, the Maternity and Parental Leave etc. (Amendment) Regulations also make a small consequential change to the right-to-return provisions to reflect the introduction of shared parental leave.
These two sets of regulations complete the full picture of reform that this Government committed to in November 2012. They mark an important milestone, which we hope will support wider cultural change to encourage greater shared parenting and equality in the labour market. They are important steps towards ensuring working parents are able to manage their careers and caring responsibilities more effectively. I commend these draft regulations to the Committee.
Paternity and Adoption Leave (Amendment) (No. 2) Regulations 2014
(9 years, 5 months ago)
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Lord Popat
That the Grand Committee do consider the Paternity and Adoption Leave (Amendment) (No. 2) Regulations 2014.
Relevant document: 9th Report from the Joint Committee on Statutory Instruments
Lord Gardiner of Kimble (Con)
My Lords, it may be necessary for the Committee to adjourn for a few moments because of the sequence of events. The Minister is arriving almost imminently but it might be sensible if we were to adjourn during pleasure for five minutes.
The Deputy Chairman of Committees (Lord Geddes) (Con)
I can hardly decline given that I was somewhat late.
Legal Services Act 2007 (Chartered Institute of Legal Executives) (Modification of Functions) Order 2014
(9 years, 5 months ago)
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Lord Faulks
That the Grand Committee do consider the Legal Services Act 2007 (Chartered Institute of Legal Executives) (Modification of Functions) Order 2014.
Relevant document: 9th Report from the Joint Committee on Statutory Instruments
The Minister of State, Ministry of Justice (Lord Faulks) (Con)
My Lords, I shall also speak to the draft Legal Services Act 2007 (The Institute of Chartered Accountants in England and Wales) (Modification of Functions) Order 2014, the draft Legal Services Act 2007 (the Chartered Institute of Patent Attorneys and the Institute of Trade Mark Attorneys) (Modification of Functions) Order 2014 and the draft Referral Fees (Regulators and Regulated Persons) Regulations 2014.
The first order—for CILEx, the Chartered Institute of Legal Executives—is made under Section 69 of the 2007 Act and modifies the functions of CILEx. CILEx is currently an approved regulator under the Legal Services Act 2007 for the following reserved legal activities: probate activities, the exercise of a right of audience, reserved instrument activities, the administration of oaths and the conduct of litigation. If made, this order will enable CILEx to operate more effectively by modifying its powers to make regulatory arrangements.
Specifically, the order will enable CILEx to make compensation arrangements as defined in the 2007 Act and allow it to make rules authorising it to establish and maintain a compensation fund, requiring CILEx-authorised entities to contribute to it. The compensation fund will protect clients of CILEx-authorised entities who suffer loss in the event of dishonesty or a failure to account.
In addition, this order modifies the provisions of Schedule 14 to the 2007 Act so that the intervention powers there are available to CILEx in its capacity as an approved regulator. For example, these powers would enable CILEx to seek an order from the High Court to intervene into an entity, to enter its premises and seize documents or property. This power will both protect consumers and provide the public with continued assurance that there are mechanisms in place to protect and safeguard their interests.
Taken together, the increased safeguards put in place by this order will enable CILEx to authorise and regulate entities for the first time. This will enable individuals who have been assessed by CILEx as sufficiently competent to carry on one of the reserved legal activities for which CILEx is designated to set up independent businesses for that reserved legal activity. The LSB conducted a public consultation between 23 June and 21 July 2014. No responses were received. This order follows a recent order designating CILEx as an approved regulator for reserved instrument activities and probate activities, bringing the total number of reserved legal activities it can regulate to five.
The Section 69 order for the Institute of Chartered Accountants in England and Wales modifies the functions of the institute in two main ways. First, it enables the institute to make regulations or rules providing for appeals to the First-tier Tribunal against its decisions as an approved regulator and licensing authority. Secondly, and similarly to the CILEx Section 69 order, this order modifies the provisions of Schedule 14 of the 2007 Act so that they apply to the institute in its capacity as an approved regulator. This gives the institute the same intervention powers as an approved regulator that it already has automatically as a licensing authority. This order follows the two orders, made in July and August this year, designating the institute as an approved regulator and licensing authority for probate activities.
This Section 69 order, dealing with appeals and intervention powers, now comes before the House following a public consultation by the Legal Services Board. No responses were received to the consultation. The recent designation of the Institute of Chartered Accountants in England and Wales as an approved regulator and licensing authority for probate activities has been an important step. The institute’s entry to this sector will help to contribute to the growth of the legal services market and bring further innovations, leading to benefits to consumers of legal services.
The order will ensure that the institute’s decisions as both an approved regulator and a licensing authority can be appealed to the First-tier Tribunal, which will help to ensure consistency of regulation. The order will also provide the institute with the same intervention powers as an approved regulator that it already has as a licensing authority, similarly ensuring consistency of regulation.
With regard to the Section 69 order for the Chartered Institute of Patent Attorneys and the Institute of Trade Mark Attorneys, CIPA and ITMA are both approved regulators under the Legal Services Act 2007 for the following reserved legal activities: the exercise of a right of audience, the conduct of litigation, the administration of oaths and reserved instrument activities. CIPA and ITMA have applied to be designated as licensing authorities in relation to the same reserved activities for which they are approved regulators.
The order essentially does two things. First, it harmonises the approach that CIPA and ITMA take in regulating all registrants to undertake patent and trade mark work, whether they are registered bodies—that is, non-alternative business structures—or licensed bodies—that is, alternative business structures. It does this by making various provisions to ensure that the regulatory framework for CIPA and ITMA is the same whether they are acting as an approved regulator or as a licensing authority. Secondly, the order enables CIPA and ITMA to make rules or regulations providing for appeals to the First-tier Tribunal or High Court against decisions made by CIPA and ITMA as an approved regulator and, in certain circumstances, as a licensing authority.
CIPA and ITMA are not yet licensing authorities, but they applied in May 2013 to the Legal Services Board to be designated as licensing authorities in relation to the same four reserved activities for which they are already approved regulators. Following a recommendation from the LSB to the Lord Chancellor, a decision in principle to make such a designation order was made by the Parliamentary Under-Secretary of State on 5 March. The order was laid in Parliament on 20 November. The present Section 69 order modifying the functions of CIPA and ITMA comes before the House following a public consultation by the LSB. No responses were received.
The order puts in place a number of measures to harmonise the approach that CIPA and ITMA take in regulating all registrants to undertake patent and trade mark work, whether they are acting as approved regulators or, eventually, as licensing authorities. This will help to ensure consistency of regulation and will pave the way for the continued widening of the legal services market.
With regard to the CILEx referral fee ban order, the background is that on 1 April 2013 a ban was introduced on the payment and receipt of referral fees in personal injury cases by “regulated persons”. The ban was introduced by the Legal Aid, Sentencing and Punishment of Offenders Act 2012, which defines “regulated persons” as solicitors, barristers, claims management companies and insurers. This ban was a response to the concern, highlighted in Lord Justice Jackson’s review of civil litigation costs, that referral fees in personal injury cases contribute to the high costs and volume of personal injury litigation.
As CILEx-regulated practitioners did not fall within the definition of regulated persons at that time, they were not included in those provisions. However, if made, the CILEx Section 69 order being debated here today will bring CILEx-regulated practitioners who are authorised to conduct litigation within the scope of the referral fee ban. Without formally extending the ban to them, they will be able to pay and receive referral fees. This would compromise consumer protection and would give them an unfair commercial advantage over other practitioners in the field.
This order therefore adds CILEx to the list of regulators for the purposes of the ban and specifies the group of practitioners to whom it will be applied. In so doing, it fulfils one of the major objectives of statutory regulation—namely, to protect and promote the public and consumer interest. It will also create a level playing field in relation to other regulated legal service providers.
In conclusion, these orders enable those bodies to strengthen their regulatory powers, leading to greater consistency and greater protection for consumers, and I commend them to the Committee.
Baroness Hayter of Kentish Town (Lab)
My Lords, I rise simply to welcome the first three orders which extend alternative business structures—which, of course, started under the 2007 Act. That change is gradually rolling out and is to be welcomed.
I want to say a particular word of welcome about the first order, on CILEx, because CILEx has gone through part of the process to enable legal executives to carry out reserved or regulated legal activities, which now include litigation, rights of audience, administering oaths, probate and conveyancing. As the Minister suggested, CILEx members are currently not able to set up their own businesses unless they get together with someone else who is regulated by another regulatory body such as the Law Society. In future, however, with this change, CILEx will be able to authorise independent CILEx businesses. That is good for clients. As we know, many local firms, particularly small ones, will not go to a lawyer when they have a legal problem because of the expense. This much broader provision of legal services will therefore be very good. At the moment, only about 12% of small businesses turn to a lawyer even when in difficulties. With this gradual increase in what they can do, as well as a greater availability of CILEx businesses, these specialist firms will be able to offer a service.
I want to say just one other thing. Because of the particular way in which CILEx’s members come up through the institute and become lawyers, CILEx is composed of a far broader mix of people, from a broader range of backgrounds, than is perhaps the case with the traditional lawyer. It has a much more diverse membership in terms of, for example, ethnicity, as one-third of CILEx members are from ethnic minorities; gender, as three-quarters are women; and social background—indeed, 86% did not have parents who went to university, a statistic which is quite different from that applying to some other groups. What is happening with individual lawyers will now also happen with these new businesses. They, too, will be more diverse, and represent the diverse needs of consumers. I therefore thank the Ministry of Justice for getting this through. The Minister indicated that there had not been many responses to the consultation but, as I understand it, that is basically because people were happy with the change. I think that it will be broadly welcomed.
Lord Kennedy of Southwark (Lab)
My Lords, the three orders that we are discussing today modify the functions of the Chartered Institute of Legal Executives, the Institute of Chartered Accountants in England and Wales, the Chartered Institute of Patent Attorneys and the Institute of Trade Mark Attorneys in respect of regulatory matters to the extent necessary to modify their powers under the Legal Services Act 2007, and the one regulation extends the ban on the payment and receipt of referral fees in personal injury cases to include appropriately qualified practitioners who are members of the Charted Institute of Legal Executives.
CILEx is an approved body to award practice rights in the reserved legal activity area and this regulation will be undertaken by ILEX Professional Standards. It also has to have the ability to protect the interests of the public who use the services of its members, and this includes the power both to provide redress in the form of compensation to clients and to be able to intervene into legal practices. The order gives it the required powers to set up a compensation fund and collect the required fees and, secondly, to take appropriate enforcement action to protect the interests of consumers. I agree with my noble friend Lady Hayter of Kentish Town that this is good news for consumers in giving them a wider choice in the marketplace when looking for legal services and in providing the public with proper protection. It is a boost to legal executives seeking to widen the sphere of work that they undertake, particularly unsupervised work, as they can demonstrate that they have proper protections in place.
The order in respect of the Institute of Chartered Accountants in England and Wales provides for appeals to the First-tier Tribunal against decisions made by the institute as an approved regulator and as a licensing authority. It also changes its arrangements and increases its scope for using intervention powers. This again is a sensible measure, and the Opposition have no issues with what is proposed here. Giving consumers uniform protections and rights is in itself a sensible move and works towards improving the efficiency of the regulatory and protection framework for legal services.
The third order makes changes to the regulatory arrangements in respect of the Chartered Institute of Patent Attorneys and the Institute of Trade Mark Attorneys acting as approved regulators and, if designated in the future, as licensing authorities. Again, the Opposition have no issue with what is proposed, but I have a few questions for the Minister. In respect of the order relating to CILEx, what work has the Ministry of Justice done to satisfy itself that the Legal Services Board has acted with due diligence in coming forward with this proposal and that CILEx has the range of competences required to undertake these new regulatory powers?
In respect of the order regarding the Institute of Chartered Accountants in England and Wales, what work has the MoJ done to satisfy itself that this order is appropriate and, again in respect of the third order, what specific work has been undertaken in the MoJ to satisfy itself that these measures are proportionate, they deliver the objectives being sought here and those objectives are right in practice?
I have no issues to raise in respect of the regulation adding CILEx-registered practitioners to those banned from the paying and receipt of referral fees.
Lord Faulks
My Lords, I am grateful for the contribution to this debate from the noble Baroness, Lady Hayter, and the noble Lord, Lord Kennedy, who I know broadly welcome all these changes by statutory instrument. I shall deal first with what the noble Baroness said about CILEx. She accurately described this as the next step in rolling out CILEx so that its increased role and activities can be used by more people. She rightly pointed out that many people will go to legal executives rather than spend more money on lawyers. There is increasing confidence in the standard of advice that they are giving. I have been to a number of events of theirs, and it is a profession that is in good health. The noble Baroness is also right to point to the range of diversity among their number. Although my figures do not precisely coincide with hers, as there were some CILEx members who chose not to provide information, I confirm that on the figures that the MoJ has, 74% of CILEx members are women and there is a higher than usual percentage of members from black and minority ethnic backgrounds—certainly not less than 16%, which is encouraging.
The noble Lord, Lord Kennedy, asked whether the Government were satisfied that CILEx had put effective and appropriate arrangements in place generally for these arrangements. He will appreciate that under the Legal Services Act 2007 the Legal Services Board was set up as a super-regulator. It was his Government who brought in that legislation, and it is not for the Government to regulate the regulator who then regulates the regulator, so we have to be satisfied that the Legal Services Board is in fact doing its job. Of course, as with all arm’s-length bodies, it is regularly reviewed.
The Ministry of Justice analysed each application made to it by the Legal Services Board before the Lord Chancellor agreed to make the specific orders that are before the Committee today. That included looking at the underlying regulatory framework. I can assure the noble Lord that that additional step was taken. The Ministry of Justice has to be satisfied with the overall framework of regulation that exists in relation to all these professions, whether it is legal executives or trade mark and patent attorneys. The Government are satisfied that effective and appropriate arrangements have been made in respect of the regulation and authorisation of CILEx members, and indeed in relation to compliance with the Legal Ombudsman, although the noble Lord did not specifically ask me about that.
The intention, by setting up the compensation fund and giving rights to intervention, is clearly to put such professionals in the same, more established position applying elsewhere and to provide additional security for consumers. That has been done, in so far as one can ever be 100% sure of these things.
Baroness Hayter of Kentish Town
Before the Minister sits down, I want to apologise: his figure was right and mine was wrong. The one-third figure refers to new CILEx students, so I got that wrong. His figure of 16% is right. However, up to one-third of new CILEx students are from black and minority ethnic groups.
Legal Services Act 2007 (The Institute of Chartered Accountants in England and Wales) (Modification of Functions) Order 2014
(9 years, 5 months ago)
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Lord Faulks
That the Grand Committee do consider the Legal Services Act 2007 (The Institute of Chartered Accountants in England and Wales) (Modification of Functions) Order 2014.
Relevant document: 9th Report from the Joint Committee on Statutory Instruments
Legal Services Act 2007 (the Chartered Institute of Patent Attorneys and the Institute of Trade Mark Attorneys) (Modification of Functions) Order 2014
(9 years, 5 months ago)
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Lord Faulks
That the Grand Committee do consider the Legal Services Act 2007 (the Chartered Institute of Patent Attorneys and the Institute of Trade Mark Attorneys) (Modification of Functions) Order 2014.
Relevant document: 10th Report from the Joint Committee on Statutory Instruments
Referral Fees (Regulators and Regulated Persons) Regulations 2014
(9 years, 5 months ago)
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Lord Faulks
That the Grand Committee do consider the Referral Fees (Regulators and Regulated Persons) Regulations 2014.
Relevant document: 9th Report from the Joint Committee on Statutory Instruments
Compensation (Claims Management Services) (Amendment) Regulations 2014
(9 years, 5 months ago)
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Lord Faulks
That the Grand Committee do consider the Compensation (Claims Management Services) (Amendment) Regulations 2014.
Relevant document: 8th Report from the Joint Committee on Statutory Instruments
The Minister of State, Ministry of Justice (Lord Faulks) (Con)
My Lords, the regulations before the Committee amend the Compensation (Claims Management Services) Regulations 2006 with regards to the available enforcement tools of the claims management regulator. The regulations provide for the regulator to impose financial penalties on non-compliant regulated claims management companies. The penalties would apply to: breaches of the Conduct of Authorised Person’s Rules; failing to comply with a code of conduct; failing to comply with directions relating to indemnity insurance; failing to comply with directions relating to redress and complaints handling; failing to comply with an information notice from the regulator; and obstructing the execution of a warrant.
The regulations also provide for certain situations in which CMCs will not be able to surrender their authorisation without the consent of the regulator. This is to ensure that a CMC cannot avoid investigation and enforcement action by simply surrendering its authorisation. The new financial penalty power provides an additional deterrent from malpractice within the regulated claims management industry. With this new power, the regulator can look to remove any monetary gain that may have been made by a CMC through non-compliant practices, where possible.
Before setting out further details about the regulations and why the Government are taking this action, I will briefly explain some background with regards to claims management regulation and the need for an additional available sanction in this area. Businesses providing regulated claims management services in England and Wales under the Compensation Act 2006 must be authorised to do so by the regulator, which forms part of the Ministry of Justice.
Claims management regulation covers a range of sectors, most notably the personal injury and financial products and services sectors. There are also a number of lower profile claims sectors, such as employment, criminal injuries, industrial injuries disablement benefit and housing disrepair, which are subject to regulation by the regulator. Once authorised, regulated CMCs are required to comply with certain conditions of authorisation, including adherence to the Conduct of Authorised Persons Rules. Where breaches of the conditions of authorisation are identified, the regulator can take enforcement action, such as the variation of the CMC’s authorisation, by imposing additional conditions or the suspension or cancellation of authorisation in the most serious cases.
These measures form part of a wide package of reforms which I will explain shortly. First, I will set out why they are needed. Bad practices by some regulated CMCs have created poor outcomes for some consumers and businesses, particularly in the area of financial products and services. Current enforcement powers have not deterred some CMCs from carrying out speculative behaviour or engaging in other forms of malpractice. This has led to delays in receiving compensation for some consumers who have legitimate claims and has increased costs for some defendant financial services firms where claims are unsubstantiated. Where a CMC is subject to formal enforcement action, such as the cancellation of authorisation, this can directly affect clients whose cases cannot be progressed by the CMC if its authorisation is removed.
The power to impose financial penalties on non-compliant CMCs does not replace any existing enforcement sanctions but provides an additional, flexible tool that will assist the regulator to carry out its duties even more effectively. This new power therefore acts in the best interests of both consumers and businesses by ensuring that the regulator has a full range of appropriate tools to deter non-compliant behaviour.
A public consultation on the proposed amendments received wide support from the claims management and banking industries as well as those with a general interest in claims management matters. Responses to the consultation suggested that the proposed measures would improve regulation while providing an additional and necessary deterrent from malpractice.
It is important to make clear that, since the start of regulation in 2007, the regulator has utilised its existing powers fully and has done extremely well to stamp out non-compliant behaviour across the claims management industry. The regulator continues to make improvements to the regulated claims market through targeted compliance programmes and enforcement action.
Since April 2013, the regulator has overseen a package of reforms to the regulatory regime. These include: key changes to the conduct rules to ensure that claims are substantiated before being pursued; naming CMCs under investigation and subject to enforcement action online; increased resources and the establishment of a specialist compliance team to tackle non-compliant marketing practices; a ban on CMCs offering financial rewards or similar benefits to potential claimants as an inducement to make a claim; a ban on the payment or receipt of referral fees between CMCs, lawyers, insurers and others; and the appointment of the first two independent non-executive board members to the executive-led claims management regulation board, enabling a greater element of external challenge and continuous improvement.
With that background, I turn to the draft amended regulations before the Committee today. In effect, the order amends the regulations to include provisions regarding: the process that must be followed to impose a financial penalty, which is the same process currently used for the imposition of existing forms of formal enforcement action; the requirements to consider the nature and seriousness of any breach by the regulated CMC and its turnover in determining the amount of the penalty; and the penalty that can be imposed, which will be a maximum of £100,000 for regulated CMCs with a turnover of less than £500,000 and 20% of turnover for regulated CMCs with a turnover of £500,000 or more. It also amends how the regulator can deduct any administration costs incurred in collecting or enforcing the payment of a penalty before the remainder is paid into the Consolidated Fund; how the penalty can be enforced by the regulator as a civil debt, if necessary; and the restriction on the surrender of authorisation by an authorised person without the consent of the regulator.
I am sure that the Committee will agree that the regulator must have the necessary tools to impose a range of appropriate sanctions that deter malpractice and encourage regulatory compliance. The order provides the regulator with additional powers to ensure that a complete range of robust and proportionate enforcement options can be considered as appropriate. I therefore commend the draft regulations and beg to move.
Lord Kennedy of Southwark (Lab)
My Lords, I say at the outset that the Opposition very much welcome what is proposed today. Since joining your Lordships’ House in June 2010, I have regularly raised the question of claims management companies and the end of the industry that indulges in bad practice. I also want to start by paying tribute to the work undertaken by the claims management unit at the MoJ, led by Kevin Roussell. It does a really good job with limited resources and the regulations will be another important tool in its box to deal with bad practitioners who rip off consumers and cause unnecessary costs for businesses to which they submit claims.
What is most reprehensible is submitting pointless, vexatious claims to financial services providers with which their client has no record of doing business. That is done as a fishing expedition on the off chance that they may get lucky, with no regard to the cost to the business, the clogging up of the processes in each business and the Financial Ombudsman Service, or to the genuine people who have been ripped off by bad practice in the financial services industry, who will have to wait even longer to have their claim settled.
I must say that I have no problem with the responsible claims management company, which can provide a valuable service to its clients. It can give advice on how to proceed, and as long as its client is aware of the charges to be incurred and is happy to pay them, and the company is properly processing and managing claims, that is fine. Nothing here will concern the responsible claims management company. In the consultation there was broad support for the proposals from all respondents, including the claims management industry, which wants to improve the image of its industry, raise standards and get rid of the rogues.
However, it is important to put on record that CMCs working in this field are dealing with bad practice in the financial services industry. There have been a number of cases in recent years where people have behaved very badly in that industry. I note in the Explanatory Memorandum that the Ministry of Justice does not see a case for consolidation at present. I think that that is probably right. I hope, however, that the department will keep this under review, as things change over time, sometimes very quickly. We may get to the point where the case for consolidation becomes more compelling. If that is the case, the Minister can be assured of support from these Benches. I have no wish to detain the Grand Committee any longer than necessary, and conclude my remarks by again welcoming the proposals.
Lord Faulks
I am grateful for the observations of the noble Lord, Lord Kennedy, who has indeed several times in your Lordships’ House raised questions about claims management and the more unattractive habits in which they have been prone to indulge. I am also grateful to him for specifically drawing the Committee's attention to the claims management unit and Kevin Roussell, who runs it. I have visited that unit in Burton-on-Trent. It is a small, efficient, extremely dedicated collection of employees who, I think, have made real progress in improving the industry. Although there are some who wonder why we need claims management companies at all, we are increasingly left with fewer, better regulated and better organised claims management companies who provide a service to clients.
I accept the noble Lord’s point that that there is a need to be nimble and alert, and possibly in due course to consolidate. This is an area where the market changes swiftly, and there has to be a swift response—if necessary, a legislative response—to make sure that changes in market do not bring about unacceptable practices. We feel that the changes embodied in the statutory instrument—the new power to impose financial penalties—which are similar to those of regulatory authorities such as the Financial Conduct Authority and the Information Commissioner’s Office, are an additional and useful adjunct to the existing powers. I hope the Committee will agree that they are proportionate and necessary measures, and in those circumstances, I commend the regulations to the Committee.
Child Poverty Act 2010 (Persistent Poverty Target) Regulations 2014
(9 years, 5 months ago)
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Lord Freud
That the Grand Committee do consider the Child Poverty Act 2010 (Persistent Poverty Target) Regulations 2014.
Relevant documents: 10th Report from the Joint Committee on Statutory Instruments, 11th Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)
My Lords, the regulations laid before the Committee today introduce a new persistent child poverty target, as required by the Child Poverty Act 2010. At the end of this Parliament, as at the start, the coalition Government remain committed to tackling the key drivers of child poverty and improving the lives of the most vulnerable people in our society. We remain committed to the goal of ending child poverty in the UK by 2020 and, despite challenging economic conditions and fiscal restraint, we are making significant progress: under this Government, 300,000 fewer children live in relative poverty.
The evidence is clear that work remains the best route out of poverty. We know that children are about three times as likely to be in poverty if they live in a workless family. Therefore, at the centre of our child poverty strategy is a commitment to tackling worklessness, and it is clear that our reforms are making a real difference. With employment up by nearly 1.7 million since 2010, there are now around 390,000 fewer children in workless households, and both the number and the proportion of children in workless households are at the lowest levels on record. Through our structural reforms to welfare, we are lifting people out of poverty, putting in the right incentives to get people into work and to make work pay.
We are not stopping there. We are helping people to progress in work through universal credit and the next phase of the Work Programme with a clear focus on skill development. Before they reach the workplace, this Government’s commitment to improving educational outcomes has seen poor children do better than ever at school. Between 2010 and 2013, the proportion of children on free school meals getting good GCSEs, including English and maths, has increased by 7% to 38%. These are substantial leaps in educational attainment, which will make a real and lasting difference to children’s lives as they develop.
Today, we are publishing the Government’s response to the Social Mobility and Child Poverty Commission’s State of the Nation 2014 report. This reiterates our goal to end child poverty and achieve lasting change for the poorest in our society. This, along with the regulations before the Committee today, demonstrates our ongoing commitment to tackling child poverty and helps us to meet our obligations under the Child Poverty Act 2010. The Government firmly believe that, in the long term, a revised set of child poverty measures are needed which underline our commitment to reducing child poverty but better reflect the evidence about its underlying causes. We are not yet in a position to put these new measures forward. In the absence of these new measures, we therefore remain committed to meeting our existing obligations under the Act and to introducing a persistent child poverty target by the end of this year.
This fourth child poverty measure will complement the three existing child poverty measures which are already in statute. These are on relative poverty, absolute poverty, and combined low income and material deprivation. There are compelling reasons for introducing a persistent poverty measure. This Government recognise that persistent poverty can be particularly harmful to children’s life chances. We know that children living in persistent and long-term poverty have a radically different experience of growing up, compared to other children. The longer that a child remains in poverty, the more likely it is that he or she will experience poor outcomes such as social exclusion, below average attainment and reduced life chances. This was a view shared in the majority of responses to our consultation on the target. Reponses from the Social Mobility and Child Poverty Commission and others put particular emphasis on the damaging effects of persistent poverty and urged the Government to continue to put this at the centre of policy ambition.
We are steadfast in our commitment to addressing child poverty in all its forms and our Child Poverty Strategy 2014-17, published in June, sets out the action that we are taking as a Government. We will continue to focus action on breaking the cycle of persistent poverty and exploring what further steps can be taken to reduce persistent poverty as far and as fast as possible. So in June this year, the Government launched a consultation on setting a persistent child poverty target of less than 7%. This means that the percentage of children living in households that are in relative poverty in at least three of the four years up to 2020-21 must be less than 7% of all children in the UK.
The Secondary Legislation Scrutiny Committee queried why we are not setting this target at zero per cent. According to all measures, child poverty is assessed using robust and well established statistical surveys to capture information about household income. However, like all sample surveys, this one contains some naturally occurring error. For example, some people will give inaccurate reports of their income when interviewed, or are between jobs at the exact point when they respond to the survey. It is therefore not statistically feasible for these surveys to report that zero per cent of children are in poverty and does not make sense to set a target at this level. That is the same reason that the existing Act’s targets were not set at zero per cent.
Our decision to choose a target of less than 7% is both evidence-based and consistent. First, it is based on analysis of the historical relationship between persistent poverty and relative poverty. Secondly, it is consistent with the ambitious relative poverty target of less than 10%, as set out in the Child Poverty Act 2010. The evidence shows that in a given year, levels of persistent poverty are typically 50% to 70% of relative poverty. According to past trends, therefore, when relative poverty reaches around 10% persistent poverty should be somewhere between 5% and 7%.
However, we must also take into account how future trends might affect the relationship between relative and persistent child poverty. As the number of children in relative poverty reduces, the children from harder-to-reach families who face most disadvantage are likely to make up a greater proportion of the group. These children are more likely to suffer from persistent poverty, which means that the historical relationship between relative child poverty and persistent poverty is likely to shift. Therefore, when levels of relative child poverty are about 10%, children in persistent poverty could make up a high proportion, if not the entirety, of the group. In such an event, the proportion of children in persistent poverty could be much closer to 10% of all children.
Baroness Lister of Burtersett (Lab)
My Lords, I endorse what the Minister has said about the damaging effects of long-term persistent poverty. However, I am sure that he did not expect me to come here to agree with him, so I will now make a few critical points. The Secondary Legislation Scrutiny Committee was critical of the lack of clarity in the explanatory material with these regulations, which, as it points out, is not for the first time. It asked about the definition of qualifying households. Just for the record, will the Minister clarify which children are excluded? The scrutiny committee referred to children in state institutions. Am I right in thinking that it also excludes the children of asylum seekers and Travellers? Are there any other groups? It would be helpful for noble Lords to know that.
A perhaps rather techie but significant point, which was not raised by the committee, is the use of before housing costs to measure child poverty. According to the Social Mobility and Child Poverty Commission’s State of the Nation report—I did not realise that the Government’s response was published today; I am not a clairvoyant and I have not read it—if you use the after-housing-costs measure rather than the before-housing-costs measure, which is preferred by the Government, it adds an additional 1.4 million children to the numbers in relative poverty. Therefore, 27% of all children rather than 17% of children are in poverty. As I say, that may seem a rather techie point but it makes a huge difference. As recent research by the Joseph Rowntree Foundation has underlined, housing costs are an increasingly important driver of poverty among people of working age and their children. When I questioned the Minister about this in Oral Questions yesterday, he did not answer my question, and it is a rare opportunity to be able to come back the next day. I will not re-ask the question, which concerned what the Government are doing about high housing costs, but I noted that, instead of answering the question, he talked about how they are making really good progress in tackling poverty. Of course any reduction in the figures is welcome, but it is interesting that every time the Government get up and say, “We’re reducing poverty”, they use a measure that in other contexts they tend to rubbish. Anyway, I will put that to one side.
If we take the figures after housing costs, they are rather less favourable. Indeed, the child poverty figures increased in 2012-13 over the previous year, whereas if you look at before housing costs, they are flat. That is just to underline the importance of these different measures and how they are used.
The scrutiny committee also queried, as the Minister acknowledged, why the target figure in the regulations is not lower. I absolutely accept that zero is not realistic, but the committee pointed out in particular that the majority of consultation responses argued for 5% or less. In fact, 31 out of 39 written responses were against the below 7% target, with only six arguing for it, and 23 were in favour of a below 5% target. One example was the Child Poverty Action Group—I declare an interest as honorary president—which made the point that:
“In setting the persistent child poverty target, the government should consider past historical performance in the UK, and the performance of other comparable countries in tackling persistent poverty. This is suggestive of a range of 3 to 5 per cent”.
It was also critical of the lack of ambition of a 7% target.
I cannot help wondering why the Government bothered to consult in the first place. When they reject a clear consensus of pretty expert opinion, I fear that that feeds cynicism around consultation exercises, despite the warm words in the Written Ministerial Statement, which the noble Lord repeated, that the Government “carefully considered all representations”.
The scrutiny committee also said that it remained unclear as to how the Government intend to implement their policy. The Minister talked about that today with regard to the child poverty strategy, which, as I am sure noble Lords are aware, was published earlier this year. I could say plenty about that, but I will not say what I think about it; I will simply quote—at a bit of length, because it is worth putting on the record—what the Social Mobility and Child Poverty Commission said in response to the draft child poverty strategy, and the final strategy was not that different regarding the overall strategic approach. The commission said:
“The new strategy is the Government’s opportunity to revise its plans for tackling child poverty to get back on track towards meeting its legal obligation to end child poverty by 2020 … Our key conclusion is that this opportunity has not been taken. While there have been improvements in the Government’s strategic approach and in some policy areas, overall the strategy falls far short of what is needed”.
The Minister talked about reducing worklessness being at the heart of the strategy, but the commission points out that its research shows that,
“ending poverty mainly through the labour market does not look remotely realistic by 2020”.
It goes on to say:
“We acknowledge that there are some good things in the draft strategy”—
as do I—but continues:
“However, overall it falls far short of what is needed. Key problems include: the lack of any clear measures, with the Government continuing to distance itself from the statutory measures in the Child Poverty Act 2010 without suggesting any additions or alternatives. This is not acceptable—a strategy which cannot be measured is meaningless. In the absence of further measures and in line with our statutory duty, the Commission will continue to monitor progress”.
Other key problems are:
“The absence of a step-by-step plan for meeting the statutory targets, with the strategy presenting a list of policies rather than a detailed plan with impacts clearly delineated. A failure to engage with independent projections that poverty is set to increase substantially … Lack of new action on in-work poverty … Limited action to mobilise society-wide efforts to tackle poverty … Ignoring the impact of additional welfare cuts”.
It points out what that likely impact would be. Then it says:
“To ensure the final strategy is an effective and credible plan for tackling child poverty, the Government needs to … set out clear measures … Develop a step-by-step plan … Engage with independent projections of increases in child poverty over the next few years … Resolve gaps in the strategic approach … by taking action to address the structural as well as the individual-level causes of poverty”.
That is a really important point, because the Government are always going on about how they are concerned about the causes of poverty but do not tend to acknowledge the structural causes as opposed to individual ones. The response also says that the Government need to:
“Ensure the strategy represents a clear plan for mobilisation and leadership of other actors in society … Engage with the challenges posed for the child poverty strategy by continued fiscal consolidation”.
All the projections are very worrying regarding what the impact of other policies will be on the numbers in poverty, including the numbers in persistent poverty. The fear is, obviously, that the 7% is not going to be achieved because of these policies. It sometimes feels a bit unreal that we are designating 7% or 5% when the policies now being implemented suggest that we are going to go the wrong way on levels of child poverty, including persistent child poverty.
Lord Kirkwood of Kirkhope (LD)
My Lords, it is a pleasure to follow the noble Baroness—my noble friend, as we steal one another’s best lines. I concur with just about everything that she has said except to say that, while I yield to no one in having demanded money over the last 30 years for social security purposes, I am getting quite frightened about the national debt; £1.449 trillion is an enormous sum of money. You may have to configure responses to these kinds of policies a little more carefully than I have been doing.
Having said that, however, I would like to gently poke the Minister in the ribs, politically speaking. The pupil premium has been a significant potential success but I am not sure that we can be certain that this is replicated throughout the United Kingdom. We will need to watch that very carefully in future. Weighing in the balance some of the work done by the IFS, of which I am a council member, the persistent reductions in the social security spend over the past five years have been enormous. There is a lot of tension here and we have to do all that we can to remain positive and ambitious.
I concur with the view expressed by just about everyone in the consultation, including the noble Baroness who has just spoken, that 5% would have been a more ambitious target. That is an opportunity missed. I am trying to understand better the basis on which the target has been set. I think that the circumstances have changed a lot since 2010. Along with other colleagues, I was responsible for the implementation of the Child Poverty Act 2010, and I thought that it was the right thing to do. It was much more focused on money than it now is, so I can understand the coalition Government’s intention to try to broaden the approach to deal with some of the underlying consequences, but it is a bit disappointing.
I know that this is not easy but at paragraph 7.2 of the Explanatory Memorandum there is a confession that the Government,
“are not yet in a position”,
to take some of these new child poverty measures forward. Can my noble friend the Minister give us any expectation of when that work may be completed? He is right to say that we are all slightly blindsided by the fact that the British Household Panel Survey data finished in 2008, so we will probably have to wait until the end of 2015 to see the data that we really need. If that is the reason for the delay, I will understand; it might be impossible to make any sensible assessments until that point. However, that leaves it rather late to try to affect things by the end of fiscal 2020, which I suppose means achieving a target by 31 March 2021.
However, that is still a very short timescale. The legislature is right to say to the Executive, “There may well be compelling reasons why we are hastening slowly here”, but it is unfortunate that we still do not have a clear idea what the Government are really driving at—an argument reflected, reasonably, by the Scrutiny Committee. From a position of relative poverty standing at 17% in 2012-13—although it may be 27%, because of the difference in before and after housing costs—trying to get to 7%, or even 5%, over the period from 2017-18 to 2021 is a good trick, if we can do it.
Lord Farmer (Con)
My Lords, I believe that it is important to acknowledge that poverty rates, and persistent poverty in particular, will not be beaten down to the small number of 7% that we are talking about today—which is, rightly, the Government’s target—by means of financial assistance alone. The root causes need to be addressed in the total war against poverty that it is morally and pragmatically necessary to fight. The Joseph Rowntree Foundation, which my noble friend mentioned, and others have made the persuasive and well evidenced case that no country can afford to keep paying the costs of poverty, not least in terms of lost human potential. Therefore, I encourage the Government, in their various policies for tackling persistent poverty in children and adults, to come at this problem from as many angles as research has shown are necessary.
The 2014 social justice progress report, which has just been published, led on the recognition that family breakdown, divorce and separation, father absence, and dysfunction are drivers of poverty, not just a result of it. The report says that,
“family breakdown and other risk factors—worklessness, educational failure, mental health or drug and alcohol dependency—can feed off one another, compounding their effects, and leading to outcomes that can be very damaging for those affected and costly to society as a whole”.
Yesterday, the front page of the Times revealed that almost two-thirds of children felt that their parents’ break-up affected their GCSEs. One in eight had turned to drugs and alcohol to ease the stress, while almost a third were at risk of developing mental health problems in the form of eating disorders. Put that alongside the fact that two-thirds of 12 to 16 year-olds in the poorest households have seen their parents separate, and it becomes clear that the full effects of family breakdown will hit the poorest the hardest. Poor family functioning also gives children a very poor start in life, so this Government are to be applauded for their investment in the troubled families programme, about which we have just heard, as well as the Family Nurse Partnership Programme and other approaches aiming for the transformation of children’s life chances. This is the much bigger prize to be won, as opposed to merely moving their parents’ income across a somewhat arbitrary line.
However, we must not mistake the battle for the war. This Government have been courageous in putting family breakdown on the policy agenda for the first time ever but 40 years of negative family trends cannot be reversed in one term and with the somewhat restrained approach which we have seen to date. Divorce and separation carry a £46 billion price tag, yet only £7.5 million is spent on prevention. This is 0.02%, or less than one five-thousandth, of the costs that the policy is trying to save. Marriage is the far more stable family form yet the transferable tax allowance for married couples is worth a meagre £200 per family per year. This is a vital form of assistance to single-earner families who are not eligible for any childcare subsidy. It should be at least doubled for families with young children, so that they have a little more choice about mum and dad staying at home for the few short years of infancy. I believe that this would cost an additional £480 million per annum—money well spent.
Finally, the Government’s groundbreaking family stability review is deemed to warrant only a scant couple of pages in the social justice progress report. It must be published in full because of its fundamental importance for local authorities. They have to construct their own local child poverty strategies and urgently need to commission on the basis of the evidence contained in that review. I urge my noble friend to look again at the policy base for tackling family breakdown and consider strengthening it in the interests of hitting the persistent poverty target that he has set through these regulations.
Lord McAvoy (Lab)
My Lords, I open by getting it on the record that the last Labour Government lifted more than 1 million children out of poverty. In passing the Child Poverty Act 2010, Parliament enshrined into law the commitment of the then Labour Government to prioritise—a word that I will come back to—the fight against child poverty. A central aspect of this legislation dictates that appropriate targets be set for poverty reduction and that future Governments be held to account for their success in reducing the number of children and families living in poverty.
My noble friend Lady Lister of Burtersett mentioned one or two points made by the Secondary Legislation Scrutiny Committee. It is worth putting on record that its 11th report states:
“These Regulations are drawn to the special attention of the House on the ground that the explanatory material laid in support provides insufficient information to gain a clear understanding about the instrument’s policy objective and intended implementation”.
Lord Freud
My Lords, I wish that the noble Lord, Lord McAvoy, had not gone rather crudely political on what is a difficult area, especially as the facts that he used are simply not true. There has been an absolute cut in income for the richest 20% and an increase for the lowest, as has been put out by the Government. This is not the forum to have that kind of crude debate and I do not want that.
Some really important points have been made today. This is a difficult area at a difficult time. My noble friend Lord Kirkwood looked at the national debt and blanched, for very good reason. I look down my nose at him because, when looking at the performance of the last Government on poverty, one saw that they achieved the trajectory for people who were out of work, and they were able to do that through income transfers, but for people at the next level who were just in work and at the next level of income, there was very little movement. That is the problem that we are addressing. We are looking at a problem that cannot be solved just by moving money around particular areas. I commend the noble Lord to look through those figures, which are very interesting and illustrate the fact that we have got to the limits of what you can do just by income transfers, which is what the previous Government did.
Baroness Lister of Burtersett
I was not part of that Government, but will the noble Lord not accept that part of their child poverty strategy was also to move people into work? Part of the problem with the current situation, as the noble Lord, Lord Kirkwood, said, is that, although it may not be completely new, this is certainly the first time where more people in poverty are in work than out of work. We all agree that work is a good route out of poverty; but it is not necessarily a route out of poverty. Both Governments have faced the same problem of what you do with a labour market which is not providing enough to keep people out of poverty.
Lord Freud
I speak here from a somewhat privileged position, in that I advised the last Government in exactly this area and now speak for the current Government on it. So I am in a position—
Lord Freud
So I am in a position, slightly embarrassingly, to do this. The trouble with statistics is that you can get very confused by them. When you have had a massive increase in employment and a lot of people entering the market—2 million people into the private sector—you have some very substantial distorting data relating to those new entrants, which change the averages. You have also had massive changes because of the biggest financial crash since the 1930s—it used to be since the 1920s. I looked through the figures, and one-third of the fall in average income, for instance, can be roughly explained, as far as I can tell, by the reduction in bonuses in the City. Before one looks at these average figures, one really needs to dig under them to understand them. Otherwise, people in the Opposition will get into some cheap points that do not really stand up and which will just look foolish when people do the research properly, which they will do in the years to come.
I come off the generality into the specifics and the very difficult set of problems involved in solving child poverty, which we remain absolutely committed to. I will go through the points raised. The noble Baroness, Lady Lister, asked about the qualifying households. Surveys work by taking data from private households, so there are a relatively small number of children—it is a small number—who are not in there. They are, as she said, children in children’s homes, Travellers and one or two other categories, as she mentioned.
The after-housing-costs point has been very thoroughly debated. My noble friend will remember the thoroughness of some of those debates; the noble Lord, Lord Northbourne, was there too. Costs before housing are the set of measures in the Act, which is why we are using them. To change the measures would be to rewrite the primary legislation. Also, clearly, if you use a different base, you might think about what the right percentage figure is. That is the reason that we use before housing costs as a standard measure and as an international comparison. It was chosen because after housing costs reflect, or can reflect, choices that people make to spend more on rent or mortgages because that is what they value more than other things. Therefore there was a good reason that that set of measures was chosen.
Baroness Lister of Burtersett
I am sorry to intervene again. Before the Minister moves on, my understanding was that although the noble Lord, Lord Kirkwood, mentioned the delay because of the survey data, he was asking about what the actual measures are, and that is separate from the survey data. There was a big consultation about a set of measures that I personally did not think were measures of poverty. That is also what most people said in response so, fortunately, that time the Government did take note of the consultation and withdrew it. However, as the commission says, they are still distancing themselves from the measures that they have without coming forward with a more acceptable set of measures to complement them. The question is: what has happened to them? Have they got lost? There have been rumours about the Treasury having had something to do with it. What has happened to those complementary measures?
Lord Freud
In the long term, the Government think that we need a revised set of child poverty measures which would better reflect the evidence about poverty’s underlying causes and where we need to target action most—the kind of thing that my noble friend Lord Farmer, in particular, was talking about, but we are not currently in a position to put those new measures forward. As our consultation, which the noble Baroness mentioned, showed, this is a complex area and there are a variety of views. I am afraid that that is all I am in a position to say at this stage.
On the noble Lord’s point about how these measures are made up; clearly, both relative and persistent poverty levels depend in part on how both median income changes and how those with low incomes improve relative to the median. That is just how the Act was made. We spent an awfully long time debating during the passage of the Bill a general level of discomfort with just this mechanistic approach to this kind of measure. That is just how it is, and that is what the Act shows, but the fundamentals are that we need to maintain our focus on helping those on lower incomes, which means helping people into work—or more work, which is what universal credit will do—and in help with living costs.
Lord Kirkwood of Kirkhope
The Minister is being very helpful, and I do not want to detain the Committee. Presumably Section 6(3) of the Child Poverty Act 2010, as I understand it, requires the Government to set a figure, which has been set at 7%. However, that is all it does. Presumably, the Government, on cause shown if the evidence changed, could in subsequent years change that target. Am I right about that?
Lord Freud
I actually said something rather careful—that we will keep the evidence under review. We will get some up-to-date evidence next year about the persistent poverty target in relation to the relative poverty targets. Clearly, we will be able to monitor that and see how it moves, but we will have set the targets here in these regulations.
Lord Kirkwood of Kirkhope
The question I am asking is: are we stuck with the 7% target until 31 March 2021?
Lord Freud
The targets are in secondary legislation, and it would be up to a future Government, for which at this stage I cannot talk, to change secondary legislation. In practice, yes; it is a changeable target.
As I said in my opening remarks, we are committed to tackling child poverty, and we have a strong record. Relative child poverty is at its lowest level for 30 years—a fact that will perhaps surprise the noble Lord, Lord McAvoy. There are 300,000 fewer children in relative poverty since the election, and now 390,000 fewer children are growing up in workless families. We are especially committed to tackling persistent poverty and to breaking the cycle which sees poor children grow up to become poor adults. That is why I am proud to present these regulations before the Committee today, which set an ambitious persistent poverty target of less than 7% of all children in the UK, meeting our obligations under the Child Poverty Act 2010.
Lord McAvoy
The noble Lord did not respond to many of my points because, as I understand it, he dismissed them as being wrong. Can I respectfully ask him if he could help me by writing to me, outlining what parts of my speech were factually wrong and what the answers were to them? I am sure that he would not want to be thought to be making a cheap accusation—a cheap note—and I am sure that he will recognise his responsibility by writing to me, giving the details of what he said.
Lord Freud
I will, with great pleasure, note down and send to the noble Lord the figures, which I think I have used in the past, about how the income of the richest 20% has moved relative to the poorest 20% under this Government. I will provide him with those precise figures. I commend the regulations to the Committee.
Reports on Payments to Governments Regulations 2014
(9 years, 5 months ago)
Grand CommitteeRead Full debate Read Hansard Text
Baroness Neville-Rolfe
That the Grand Committee do consider the Reports on Payments to Governments Regulations 2014.
Relevant document: 11th Report from the Joint Committee on Statutory Instruments
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Neville-Rolfe) (Con)
My Lords, I thank you for finding the time to consider these regulations. We tried for an earlier date, but the weight of business in the House meant that that was not possible.
I should first mention that we are introducing the regulations ahead of the next common commencement date in order to allow oil, gas and mining companies to align these reports with the calendar-year approach that they take to gathering information, making the work easier for them and avoiding reporting on a partial-year basis. The directive allows us the flexibility to implement prior to the transposition deadline.
The introduction of the regulations is important for the UK but also for the rest of the world. It is estimated that 1.6 billion people live in countries officially classified as rich in oil, gas or mineral deposits. Greater transparency will provide important information about the payments made: the income that a country gets from the extraction of natural resources. That may seem obvious, but that is not the case in every country around the world. This is a vital step in enabling citizens to hold their governments to account. Payments made to governments by companies active in the extractive industries have the potential dramatically to boost economic growth and to help resource-rich developing countries to pull themselves out of poverty.
The regulations demonstrate the UK’s commitment to transparency. We are taking the lead globally. The UK will be the first EU member state to introduce legislation to fully implement the requirement, although France is well on the way to doing so, Norway already has similar legislation in place, Canada is on track to implement a similar new law this year and we expect the USA to have rules in place next year.
Increased corporate transparency was a key feature of the UK’s presidency of the G8 in 2013. Following the discussions at Lough Erne, the official communique endorsed by our Prime Minister noted that the EU members of the G8 had committed to “quickly implement” the EU’s extractive reporting requirements. The UK is now delivering on that important commitment.
As noble Lords know, much of my career was in business. Transparency also makes good business sense: those who invest in companies must consider a wide range of issues and many investors will welcome additional information to enable them to make sound decisions. Increasing economic stability in countries where long-term investments are made is also good business.
The regulations before us are being considered following the agreement of the EU accounting directive. Chapter 10 of the directive deals with payments to governments by companies in the extractives industry. The UK took an active role in negotiating the detail of the new accounting directive. While recognising the importance of a strong and effective reporting requirement, we also recognised that the burdens imposed on industry by such a requirement needed to be proportionate. Industry and civil society representatives were closely involved throughout the negotiations for the directive. I am pleased to say that this close working relationship has continued as we developed the regulations that we are considering today.
I will now explain some of the detail of the regulations. As I have said, they implement part of the EU accounting directive and many of the requirements are fixed by that directive. Companies must report on payments made to all governments at all levels—national, regional and local—as well as to government agencies and state-owned companies. The report must detail information of the payments made on a project-by- project basis. During negotiations, we ensured that the definition of “project” was one that would reflect the ways in which industry manages and reports on its business activities.
The payments to be reported are listed within the regulations and include production entitlements, royalties, licence fees and payments for infrastructure improvements. The directive does not allow for any exemptions from reporting if a company is within scope. Companies are required only to report payments over the threshold of £86,000. The regulations also make clear, however, that one payment cannot be split to avoid the reporting requirements.
In many countries, payments to governments may not always be in cash; they may be in kind. Such payments are common and an in-kind payment could include improvements to infrastructure by building a new road, or perhaps a hospital. Such payments have to be included and, for the purpose of the report, a value must be attributed to any in-kind payment. To avoid doubt, the basis for the value given must also be set out. The directive requires all large companies and public interest companies active in the extractives sector to prepare reports. The transparency directive applies the same requirements to all companies listed on the main regulated stock markets in the European Union. This will ensure a level playing field, in that foreign listed companies also have to report even if they are not based in the EU. The Financial Conduct Authority, which is responsible, is currently considering rules to implement the requirements of the transparency directive.
Our consultation also considered the areas where the directive offered flexibility. These areas included the date of the first reporting period, the period allowed for the preparation and publication of reports and the reporting format. In line with the UK approach to improving transparency, companies will be required to prepare reports for financial years that begin from 1 January 2015—this January. The first reports will therefore be published in 2016.
The reports do not form part of the accounts but form a separate record of taxes paid directly to each level of government in each country around the world where they operate. The information will be set out project by project, so it will be possible to see the taxes paid directly to an individual country as a result of removing natural resources from the ground. The reports will have to be sent in two months after the deadline for filing company accounts—that is, 11 months after the end of the financial year, or six months for listed companies. This will allow sufficient time to compile the appropriate information without putting extra pressure on business at the time when accounts are due. We also want the reporting format to be as simple as possible. Companies House is working closely with industry on the format of the report. Requiring electronic reporting will facilitate the efficient receipt and sharing of data contained within the reports.
The Companies Act requires companies to report on a wide range of issues. In many cases, Companies House relies on public scrutiny of the register to ensure that company information is up to date. This is the approach that we are taking to achieve compliance for reporting payments to governments. We want to ensure that all companies are able to report in a simple and effective way.
If a company fails to prepare and publish a report or delivers a factually incorrect one, the registrar will write to ask why. There is no automatic penalty imposed as it may be that a company did not actually make relevant payments to governments in the year in question, or they may have been included in a parent’s consolidated report. The company will be given the opportunity to comply with the requirements, but if they fail to do so then the law sets out a penalty regime. The penalty regime for complying with the regulations has been carefully considered. The regime is consistent with that for similar reporting requirements in the Companies Act 2006. Failure to prepare and publish a report could result in either a fine or a prison sentence—so, a criminal penalty.
There is also provision for a review of the regulations. We will report within three years on whether they are efficiently achieving the intended objectives. This report will also enable us to feed into the European Commission’s own review of the directive, which is scheduled to be completed by July 2018.
Industry recognises the importance of reporting payments made to governments. Those who responded to our consultation clearly stated that transparency was an important tool in improving governance as well as fighting against poverty. Many companies already collect this information and make it available on their websites, and they find that investors welcome it. The Reports on Payments to Governments Regulations are an important step in improving global standards in transparency reporting in extractive industries, and I commend them to the Committee.
Lord Young of Norwood Green (Lab)
My Lords, I welcome the report from the Minister on what I agree is an interesting and important introduction of new legislation, and I welcome the speed with which the Government have operated.
Most of the questions that I started to write down have been answered by the Minister. I was interested in what the penalties would be, and we got some additional information on that. In the conclusion of her contribution, the Minister referred to a three-year report. I wondered whether any interim information would be published about how companies are beginning to comply.
The other thought that crossed my mind—this is not an attempt to launch an impossible question—is how this legislation, as it seems to me it did when I checked, complies with the UN Ruggie principles. I was hoping that the Bill team were not going to look puzzled; given that these are principles that they ask businesses to enact in relation to human rights and corporate governance, I would have thought that they would have met with them. I ask that as a matter of interest because the Ruggie principles are important.
We are willing to introduce this legislation. The Minister is right that it will make a difference as the sums of money involved around the world are enormous. Hopefully, it will make a difference in giving further information to investors before they make up their mind about the ethical nature of the company that they are about to invest in. Apart from awaiting answers to those questions, I am happy to support this statutory instrument.
Baroness Neville-Rolfe
My Lords, I thank the noble Lord for his welcome—I welcome the welcome. There seems to be fair measure of agreement on the way that we have implemented this measure, including the penalty regime and the ultimate sanction of criminal penalties. I very much agree with his point about investment—that having ethical information is increasingly important for investment and the identification of, if you like, political risk.
Obviously, I very much welcome the point made by the noble Lord about the Ruggie principles, in which I certainly took an interest in my former life. But I am afraid that he has managed to ask us a question which we cannot answer. Therefore, I will write to him. My guess is the answer will be a resounding yes. There are very few things that I have introduced that seem to be closer to those principles. I will confirm that.
On interim information, we will start to see information published from 2016 at Companies House. We are not planning a formal review until 2017 but, given the interest in transparency and development, civil society certainly will be looking to see what is happening in this important area, and we will begin to get information coming through. I think that the effect in the countries of the information being available online should help to encourage regimes to use the money being given to them, either in taxes or in kind—as I have said, that is important—and will help citizens in developing countries to hold the politicians to account. That is another benefit.
The regulations mark a step change in transparency reporting. They were agreed during our presidency of the G8 and it is always good to see progress during these important leadership opportunities. It is also good to see the UK at the forefront of this change. Once payments to governments are available, citizens will be bringing governments to account to a greater extent. The fact that this is not just a UK initiative but an EU directive with changes also taking place around the world is very encouraging. I urge the Committee to support the regulations and I beg to move.
House of Lords
Domestic Violence: Refuges
Baroness Thornton
To ask Her Majesty’s Government what assessment they have made of the adequacy of provision of refuges for women and children fleeing domestic violence.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Lord Ahmad of Wimbledon) (Con)
My Lords, on this the International Day for the Elimination of Violence Against Women, I am pleased to announce that the Government are launching a £10 million fund to support women’s refuge provision. This is not just about short-term funding. We will also be publishing strengthened statutory guidance setting out clear standards for the support that victims can expect to receive. The guidance will also make it clear that support in refuges should be extended to all victims, not just those living locally.
Baroness Thornton (Lab)
I thank the Minister for that Answer. Today is indeed White Ribbon Day, which, apart from anything else, is about men committing to working for the end of violence against women, and I trust that all noble Lords will have taken the pledge to do so.
I return for the third time to the Question that I put to the Minister previously. In a way, he may have answered it, so perhaps he can be specific. It concerns women and children who seek refuge from violence but whose local authorities, like those of Gloucester, the Forest of Dean, Stroud, Cheshire West and Chester, have closed or dramatically reduced access to refuges. That is not consistent with the Government’s policy. Are the Government monitoring the effects on those families of not being able to access a refuge? Does the fund being launched represent new money, and will it be used to make up the deficits of the cuts in those local authorities that have closed refuges?
Lord Ahmad of Wimbledon
I pay tribute to the noble Baroness’s work in this area. I can assure her that this is indeed new money. It underlines the Government’s priority of this issue and follows on from the international summits that my right honourable friend William Hague led, the Prime Minister’s speech at the Girl Summit and the Home Secretary’s cross-ministerial leadership on issues relating to violence against women. This is a specifically new set of funding that will be available to local authorities to tackle those issues. The Government are acutely aware of the specific issues that the noble Baroness has raised, and safeguards in legislation recognise the inherent risks of domestic abuse. This means that victims can apply to any local authority in the country and cannot be referred back to their home authority if they are at risk of violence.
Baroness Hussein-Ece (LD)
My Lords, is my noble friend the Minister satisfied that there is sufficient consistency of provision across local authorities and across regions? As has been pointed out, local authorities cannot send women back in those instances where they have suffered domestic violence and abuse. Is he satisfied that there is enough provision wherever they may go and whichever local authority then takes responsibility for them?
Lord Ahmad of Wimbledon
My noble friend raises an important point. As with anything, there are examples of good practice and there are other local authorities that need to do more. The Government’s commitment of £10 million will ensure a maximum of new moneys of up to £100,000. Within that, as I have already said, there is statutory guidance now to make clear that support in refuges should be extended to all women, linking up with other support networks in the local area.
Baroness Uddin (Non-Afl)
My Lords, is the Minister aware that recently the all-party parliamentary group on violence against women and sexual exploitation took evidence from a number of groups, including the national Women’s Aid and Rape Crisis England & Wales? Is he aware that many of the organisations are expressing deep concern about the extensive cuts to their services over a prolonged period? Is he also aware that particularly suffering are the specialist organisations, including those dealing with the effects of domestic violence, forced marriage and so-called honour killing? Will he ensure that they also have funding equally distributed to them?
Lord Ahmad of Wimbledon
The noble Baroness raises an important point. I have met with Women’s Aid, which does an incredible amount of work, and I am sure that it will acknowledge the support that the Government are extending, not just with this new funding, which will help local authorities, but to deal with these issues of domestic abuse. Noble Lords should know that 77 women were killed last year from domestic abuse in the UK; I am sure that, for all of us, that is 77 women too many.
Lord Laming
What wonderful support, my Lords. Can the Minister assure the House that steps are being taken to equip police forces and accident and emergency units to make sure that adults and children at risk are identified at the earliest possible stage and given the right kind of protection that they need, rather than be sent back into these dangerous situations?
Lord Ahmad of Wimbledon
It is always a pleasure to take a question from the noble Lord, who raises an important point about joined-up thinking. The Government are investing a great deal more—whether, for example, through our Troubled Families programme, on which the DWP and the DCLG are working together, or through recent announcements about local health provision. The noble Lord will recall that my honourable friend Jane Ellison made an announcement on how hospitals and doctors’ practices will be encouraged to identify such cases. On policing, my right honourable friend the Home Secretary has written to each PCC to ensure that our policy is reflected as a key priority in their programmes.
Lord McColl of Dulwich
My Lords, will the Minister acknowledge that one of the problems in this field is that large numbers of people in public life refuse to admit the size of the problem, which is that millions of men are smashing up millions of women? Their reply is: “I like to think the best of people and I cannot believe the size of this problem”. We all like to think the best of people, but that does not preclude accurate diagnosis.
Lord Ahmad of Wimbledon
My noble friend again raises an important concern that has been relayed to us. Women who are abused in this way sometimes blame themselves, and it is important that we have local experts working at a local level. One of the things that we can perhaps take some comfort from is that, after a slight dip this year, we have seen an increase in referrals to the CPS on this issue. More importantly, there has been an increase of 21% in the last calendar year in prosecutions for this heinous crime committed against women and, on occasions, against children. It needs to be stamped out.
Baroness Scotland of Asthal (Lab)
Can I say to the noble Lord how welcome this news is? Can he tell us what efforts, if any, will be made to enhance the opportunity for these women to take advantage of legal aid? He will know that there has been a dramatic reduction in access to legal aid, which is trapping many women in dangerous, life-threatening circumstances.
Lord Ahmad of Wimbledon
This funding is on top of the £6.5 billion that we have invested to help vulnerable people, including those suffering from domestic violence. The whole essence of this aid is to focus on those most acutely in need of assistance—to provide, first, a safe refuge and then whatever assistance they may need to overcome being victims of crime. The noble and learned Baroness raised an important issue on assistance through the courts. Of course, extensive advice will be offered. On the specific issue of legal aid, I will write to her.
Transport: Women’s Safety
(9 years, 5 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Berkeley
To ask Her Majesty’s Government what action they are currently taking to improve women’s safety on transport.
The Minister of State, Department for Transport (Baroness Kramer) (LD)
My Lords, we work on a number of fronts to improve safety and security for all passengers and staff. In particular, the Government are supporting a British Transport Police-led academic literature and tactical review on reducing sexual offending and improving perceptions of safety on transport. This research will be delivered for February 2015 and will support an international expert session to debate the findings.
Lord Berkeley (Lab)
I am grateful to the Minister for that reply. Is she aware of a study recently done in the UK and Canada that found that,
“women passengers generally prefer staffing to technological solutions and are very skeptical of the tendency of”—
transport operators—
“to replace staff from trains or buses with automated machines”.
Will she encourage operators to have more staff and fewer machines and CCTV and to recruit more women to the front line, which women also prefer in many instances?
Baroness Kramer
My Lords, I completely agree with recruiting women to the front line. It is also important to have a staff presence where that is feasible. I am very encouraged, for example, by Transport for London’s commitment to take staff out of the ticket offices and put them out on the platforms and places where the passengers are. However, if we were to man every station at all hours at all times, we would unfortunately have to close stations because of the inherent cost.
Baroness Scott of Needham Market (LD)
Does the Minister share my concerns about the cycle rickshaws or pedicabs that operate in parts of central London? Unlicensed, the drivers are not required to be trained or insured; nor do they undergo CRB checks. Do the Government intend to take up the recommendation of the Law Commission and create local authority licensing for them?
Baroness Kramer
My noble friend is absolutely right: the Law Commission has provided some instructive direction on this. We received the Law Commission’s report in May. We will be following up on that and providing our response shortly. As she knows, the situation on licensing is somewhat different in London from elsewhere.
Lord Davies of Oldham (Lab)
My Lords, why are the Government pressing ahead with Clause 12 of the Deregulation Bill? It supposedly frees us from red tape but actually reduces the safety checks on minicabs. Will the Minister review the Government’s approach—there is still time in the legislation—in the light of the recent case reported by the Daily Mail this weekend of a young woman who was taken from Leeds to Bradford where she was attacked and raped? Will the Minister accept that this is not just a triviality about red tape; it is about reducing the chances of gang rape? The criminals involved got sentences totalling 68 years.
Baroness Kramer
My Lords, as the noble Lord, Lord Davies, knows, even under the deregulated mechanisms, whenever a taxi or private car licence is issued there will be a CRB check every three years. I have also written to all the authorities to remind them that they should be working with their local police so that wherever there is an accusation or a crime they are immediately informed and can take appropriate action—and I do not just mean in a taxi cab, but where someone is accused.
Lord Borwick (Con)
My Lords, I first declare an interest in the register that my wife is a Deputy Mayor of London and a member of the GLA. Will the Minister encourage the London Tube unions to allow Tube drivers who are not needed to drive the new automatic trains to walk along the carriages in the evening to improve the safety of women passengers rather than sitting in their cabins with nothing to do except open the doors?
Baroness Kramer
My Lords, I hope that all staff are totally aware of the priority that we must give safety for passengers. In any situation where it is safe, I would encourage staff to use an opportunity to make sure that safety is enhanced.
Baroness Farrington of Ribbleton (Lab)
My Lords, would the Minister care to expand a little on her reply to my noble friend Lord Davies about the deregulation proposals? How can people be assured of safety without reference to anyone? Someone who has a minicab licence in place A can go to place B. It is not a safety or security issue. Will she please get the Government to reconsider their policy on this? I declare an interest in that the noble Baroness, Lady Gardner of Parkes, and I were involved in getting licensing for minicabs, and this—to mix a metaphor—drives a coach and horses through that.
Baroness Kramer
My Lords, the licensing of minicabs absolutely remains in place. It means that an operator can call a cab not just from within their own fleet but from a neighbouring area. That also has to be a licensed cab driver. The operator remains responsible for the journey.
Domestic Violence
Baroness Gale
To ask Her Majesty’s Government what progress has been made since March, when the Domestic Violence Disclosure Scheme, known as “Clare’s Law”, was implemented in all police forces in England and Wales.
Baroness Williams of Trafford (Con)
My Lords, the domestic violence disclosure scheme is an important tool that can prevent tragic deaths from occurring by enabling potential victims to receive information about previous violent offending committed by their partner. The Government are committed to reviewing in the new year how the scheme has been implemented nationally.
Baroness Gale (Lab)
I thank the Minister for her reply. Can she say what measures are being taken to train front-line police, in line with the recommendations of the pilot scheme that was held last year in four police areas? There were three recommendations: training on “Clare’s law” for front-line staff; developing ways of raising awareness of “Clare’s law” locally; and working with voluntary and community sector organisations to ensure that an information pack is available for the women who seek a right to ask. No information was available, but they obviously had concerns. What back-up will be given to those women who need additional support?
Baroness Williams of Trafford
My Lords, the noble Baroness raises an important point about the change in culture that is needed to deal with women who are terribly vulnerable and who seek an empathetic response from the police. I know that the Home Secretary is chairing a national oversight group to respond to some of HMIC’s findings from earlier last year. That group will report on its findings in December. The culture in which a woman can feel confident in going to the police and in having her concerns dealt with in an empathetic and sympathetic way is certainly important.
Baroness Brinton (LD)
My Lords, I understand that under “Clare’s law” third parties may also inquire about a suspected assailant on behalf of a family member whom they are concerned about. How many such third parties asked the police for information during the pilots? Are there more data since the scheme went nationwide earlier this year?
Baroness Williams of Trafford
I do not have information on third parties, but I can give my noble friend the headline figures. There were 386 applications and 111 disclosures were made. I can write to my noble friend on third parties.
Baroness Afshar (CB)
My Lords, has the noble Baroness taken note that minority women, particularly Muslim women, would prefer to have a Muslim woman available—someone whom they can talk to openly? Are there any provisions for women who prefer to speak to people like themselves to report such activities?
Baroness Williams of Trafford
My Lords, I can think of examples where that does happen, but to go back to the question asked by the noble Baroness, Lady Gale, that whole change in approach to make the police environment a far more comfortable one for a vulnerable lady is what we are seeking. I will write to the noble Baroness on her point about the specific needs of specific types of ladies.
Baroness King of Bow (Lab)
My Lords, “Clare’s law” is most welcome, but does the Minister agree that prevention should start much earlier? If so, will the Government ensure that all young people learn that no form of violence in relationships is acceptable through the introduction of compulsory sex and relationship education, which 86% of British adults support and which Labour is committed to? Lastly, does the Minister recognise the irony of using “Clare’s law” to, for example, tell a woman that she is at risk from a convicted rapist but then denying her a place at a refuge because so many have already closed due to lack of sustainable funding?
Baroness Williams of Trafford
My Lords, my noble friend Lord Ahmad has already answered the point about the additional funding that will be made available. In April this year, the Department for Education issued Keeping Children Safe in Education, which is statutory guidance on the roles and responsibilities of schools and their staff in safeguarding children. I totally agree with the noble Baroness that we need to stop these problems before they happen and to keep children aware of what is acceptable as they grow up.
The Lord Bishop of Birmingham
My Lords, I am grateful to the noble Baroness for her response to some of the questions. I would like to press her a little further on the deep need for culture change, specifically in the area of training for the police and the Crown Prosecution Service. Is she minded to enable the Government to make that mandatory?
Baroness Williams of Trafford
My Lords, I cannot give that assurance from the Dispatch Box at the moment, but I hope that a change in culture will lead to a culture of what is and is not acceptable practice in terms of how the police deal with vulnerable people.
Baroness Scotland of Asthal (Lab)
My Lords, under the previous Administration, we had dedicated teams, both in the Crown Prosecution Service and in the police, which specifically focused on ending violence against women and responding appropriately. Are those teams still in existence at the same level or has there been a reduction? Secondly, can she give the House an assurance that every police authority across the country has implemented “Clare’s Law” so that those who wish to report or make a request of this sort are able to do so locally?
Baroness Williams of Trafford
My Lords, answering the second question first, I understand that there will be reports in the new year detailing the success of the rollout of “Clare’s law”. Certain fundings for different types of support for women and men in domestic abuse situations are committed until 2015 but I hope that, post the Autumn Statement, these will be rolled over until at least 2016.
Lord Laming (CB)
My Lords, in the light of the questions put today, do the Government accept that we all have a responsibility to help very young people understand that there is no place for violence in normal relationships, and certainly not in close family relationships?
Baroness Williams of Trafford
My Lords, I totally agree with the noble Lord. We all lead by example, whether we are parents or people in public life, and schools also have a duty so that children in those environments are somehow engaged with and led to know that what is happening is wrong.
Baroness Walmsley (LD)
Would the Minister include footballers in that group of people who should be showing an example?
Baroness Williams of Trafford
My Lords, I would say that especially footballers have a duty to reflect good behaviour to young adults.
Lord Avebury (LD)
My Lords, in answer to a previous question, the noble Lord, Lord Ahmad, referred to the Government’s Troubled Families programme. Has there been any increase in the disclosure of cases of domestic violence as a result of that scheme?
Baroness Williams of Trafford
My Lords, referrals are up by almost 15,500 to 103,000 in 2013-14. I am very pleased to say that 70% of those have been convicted. Convictions are up by 15% between 2005 and 2014.
Hong Kong
(9 years, 5 months ago)
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Baroness Falkner of Margravine
To ask Her Majesty’s Government what is their assessment of the impact of recent events in Hong Kong on the prospects for democracy in that region.
Lord Wallace of Saltaire (LD)
My Lords, Hong Kong’s future is best served through a transition to universal suffrage in line with the Basic Law that meets the aspirations of the people of Hong Kong. As noted in our repeated statements, we call for rights and freedoms to be respected, and we urge all sides to engage in constructive dialogue and to work to build a consensus that allows a meaningful advance for democracy.
Baroness Falkner of Margravine (LD)
My Lords, does my noble friend agree that the pro-democracy protesters in Hong Kong have very genuine concerns about the pushback from the joint declaration of 1984, particularly with regard to judicial independence and elections? He will be aware that the chair of the All-Party Parliamentary China Group has just been denied a visa for China for the mere act of instigating a debate in the other place on the Hong Kong situation. Does my noble friend agree that the actions of the Chinese Government are imperilling Hong Kong’s status and stability, as well as destabilising the whole region?
Lord Wallace of Saltaire
My Lords, there were several questions there and I shall try to answer at least two of them. Hong Kong plays a very important part in Britain’s relations with China. It is also one of the most sensitive issues in Britain’s relationship with China. We regret the Chinese Government’s refusal to allow Richard Graham, the chair of the All-Party Parliamentary China Group, to take part in what would have been a very valuable exchange between Members of both Houses of Parliament and their Chinese equivalents, and we have made that clear to the Chinese Government at a very senior level.
Lord Luce (CB)
My Lords, since it is in China’s, Britain’s and Hong Kong’s interests to do nothing to undermine the 1984 declaration, which the noble and learned Lord, Lord Howe, helped to negotiate, and since universal suffrage is on offer for the first time, is not the most important thing that the people of Hong Kong should engage in constructive dialogue with the Chief Executive of Hong Kong to ensure that the next time there is an election for Chief Executive, there is a reasonable and wide range of choice of candidates?
Lord Wallace of Saltaire
I thank the noble Lord for that detailed and constructive question. We are talking about the Basic Law of 1997 and not the joint declaration of 1984, and we are talking about the commitment to universal suffrage. The issue at stake regarding the demonstrations is how open the nomination of the Chief Executive should be. The question of judicial independence came up with regard to a Chinese Government White Paper of June 2014. It is the British Government’s view that judicial independence in Hong Kong has not been compromised by that White Paper.
Lord Bach (Lab)
My Lords, the Basic Law of Hong Kong, which the Minister has already referred to, dealing with the introduction of universal suffrage, also affirms rights to freedom of speech, press freedom and freedom of association. I am sure that the Minister will agree that the Basic Law of Hong Kong is crucial in the present circumstances and that it must continue to be pursued in practice.
Lord Wallace of Saltaire
My Lords, I entirely agree with that. On the whole, the demonstrations in Hong Kong have been handled well and they have continued peacefully. Recently, some of the student leaders of the demonstrations conducted discussions with the executives of Hong Kong on television. There are not that many countries in the world where that would be possible on quite such a peaceful basis. Therefore, there are aspects of the joint declaration and the Basic Law that are very fully observed.
Baroness Falkner of Margravine
My Lords, I think I understood my noble friend to say that he believed that the British Government did not feel that judicial independence had been jeopardised through the White Paper. Would he like to tell the House how requiring judges to be patriotic without defining patriotism is upholding judicial independence?
Lord Wallace of Saltaire
My Lords, there may be people inside the Chinese Government whose sense of the importance of the distinction between the different aspects of government—legislature, Executive and judiciary—is a little less highly developed than it is in the UK. However, I suspect that in some aspects of British politics, and possibly some newspapers, there are those who would think that judges who could not describe themselves at patriotic were not appropriate judges, even in the UK. I am not at all saying that Her Majesty’s Government are pleased with that.
Lord Howarth of Newport (Lab)
My Lords, is there not a striking contrast between the passion for democracy among the people of Hong Kong and the democratic inertia and cynicism of so many people in this country who are entitled to vote and do not do so?
Lord Wallace of Saltaire
My Lords, I can only agree, but it is up to all of us and the Members of the other place, as well as all those involved in democratic politics, to re-enthuse the British public with democratic politics as far as we can and, in particular, in the next five months.
Lord Faulkner of Worcester (Lab)
My Lords, bearing in mind that the noble Baroness’s question refers to democracy in the region, will the Minister take the opportunity to pay tribute to the people of Taiwan, who change their Governments regularly through the ballot box, and whose parliamentary system is very close to our own, unlike that of mainland China? I declare an interest as co-chair of the British-Taiwanese All-Party Parliamentary Group.
Lord Wallace of Saltaire
My Lords, there are a number of states across east, south-east and southern Asia that have made successful transitions to democracy. There are others that have some way to go. We welcome the evidence in a range of Governments there of the rule of law, open elections and the transition from one head of Government to another, all of which are fundamental. These are principles to which good Governments and well run economies should adhere.
Lord Roberts of Llandudno (LD)
My Lords, we must welcome the statement in the Wales Bill last week that the electoral registration officers in Wales—all 22 of them—are to encourage new ways of registering young voters. Can we ask whether this might also apply to all electoral registration officers throughout the United Kingdom?
Lord Wallace of Saltaire
My Lords, I hesitate to suggest that Her Majesty’s Government should bring that to the attention of the Chinese Government. I accept the noble Lord’s point that all of us, in every way, including the many Members of this House who go out on school visits, should be doing our utmost to raise the level of interest of people of all ages in the democratic process.
Recall of MPs Bill
Business of the House
(9 years, 5 months ago)
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Baroness Stowell of Beeston
That the debate on the Motion in the name of Lord Liddle set down for today shall be limited to three hours and that in the name of Baroness Kingsmill to two hours.
House Committee
The Chairman of Committees
That the 2nd Report from the Select Committee (Access and the use of facilities by retired members) (HL Paper 59) be agreed to.
The Chairman of Committees (Lord Sewel)
My Lords, the House Committee has considered access privileges for those Members retiring under the provisions of the House of Lords Reform Act 2014. The House has previously agreed the procedure for marking those retirements.
In the interests of simplicity and striking a balance between acknowledging the contribution of retiring Members and avoiding unreasonable burden on the taxpayer, the House Committee has agreed that Members retiring under the Act should be entitled to a photo identity pass, may sit on the steps of the Throne, may use the Library—but not its research facilities—and have limited access to catering facilities.
These are the same modest privileges currently afforded to retired bishops, and I suggest to your Lordships on this occasion that what is good enough for the bishops is good enough for the rest of us. Those Members who cease to be Members as a consequence of non-attendance would not be entitled to any such access rights.
Lord Steel of Aikwood (LD)
My Lords, I hate to press the Chairman of Committees on this matter, but, since the passage of the Act, the committee has not done anything to encourage retirement and get the numbers in this House down. Is the committee going to look at the various suggestions that have been made, or will we have a special Select Committee to do that?
The Chairman of Committees
I think that I can give some comfort to the noble Lord. What is going on may not necessarily show above the waterline, but quite a lot of friendly, informal activity is taking place underneath.
Economic Affairs Committee
The Chairman of Committees
That Baroness Wheatcroft be appointed a member of the Select Committee in place of Baroness Noakes, resigned.
Insurance Bill [HL]
The Chairman of Committees
Further to the resolution of the House of 19 November 2014 appointing a Special Public Bill Committee to consider the Bill, that the Committee have the power to appoint a specialist adviser.
The Chairman of Committees (Lord Sewel)
My Lords, last week, the House appointed a Special Public Bill Committee to consider the Insurance Bill. That committee has since met and has agreed that it would be desirable to appoint a specialist adviser. While it is unusual for a Special Public Bill Committee, I consider the technical nature of this particular Bill a good and sufficient reason to grant the committee the power to appoint a specialist adviser. I beg to move.
Modern Slavery Bill
(9 years, 5 months ago)
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Lord Bates
That it be an instruction to the Committee of the Whole House to which the Modern Slavery Bill has been committed that they consider the Bill in the following order:
Clauses 1 to 14, Schedule 1, Clauses 15 to 37, Schedule 2, Clauses 38 to 45, Schedule 3, Clauses 46 to 53, Schedule 4, Clauses 54 to 58.
Intelligence and Security Committee of Parliament Report: Fusilier Lee Rigby
(9 years, 5 months ago)
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The Lord Privy Seal (Baroness Stowell of Beeston) (Con)
My Lords, with the leave of the House, I will now repeat a Statement made by my right honourable friend the Prime Minister in another place. The Statement is as follows.
“Mr Speaker, today the House of Commons Intelligence and Security Committee has published its report into the murder of Fusilier Lee Rigby. He was a British soldier who stood for our country and for our way of life, and he was killed in broad daylight on the streets of our capital city. It was an appalling, sickening act and it was a stark reminder of the threat we face from home-grown terrorists and extremists plotting to murder our people. But at the same time we should be clear that it was a betrayal of Islam and of the Muslim communities in Britain who give so much to our country. I am sure that the thoughts of the whole House are with Lee Rigby’s friends and family at this time.
When I spoke in the House in the aftermath of the attack, I said that we would bring those responsible to justice and that we would learn the lessons of what happened in Woolwich. The two murderers, Michael Adebowale and Michael Adebolajo, have since been convicted and sentenced to life in prison. And today this report answers the questions we had about what our security services knew about these murderers and the lessons we can learn to help prevent similar attacks in the future. I am grateful to my right honourable friend the Member for Kensington and his committee for their comprehensive report. It contains an unprecedented degree of detail on the current workings of MI5, the Secret Intelligence Service and GCHQ. I wanted us to get to the truth as quickly as possible, without a prolonged judicial process, and I think that is exactly what has been done with this exceptional report. Few countries in the world would publish this degree of detail about the activities of their security services. It reflects the way we have strengthened this Committee with new powers to hold our security services to account. And for this report, the agencies have carried out the same searches they would for proceedings in the law courts.
Before I turn to the key findings, let me be clear that this is a very serious report and there are significant areas of concern within it. I do not want anyone to be in any doubt that there are lessons to be learnt and that things need to change. But on the key findings, I am sure the House will welcome that the Committee does, and I quote,
‘not consider that, given what the Agencies knew at the time, they were in a position to prevent the murder of Fusilier Lee Rigby’.
Furthermore, as the Committee says,
‘it is greatly to the Agencies’ credit that they have protected the UK from a number of terrorist plots in recent years’.
As the Commissioner of the Metropolitan Police says, at least four serious plots have been foiled this year alone. So much of what our agencies do necessarily goes unreported. They are Britain’s silent heroes and the whole country owes them an enormous debt of gratitude. But there are four broad areas where things need to change: in dealing with the delays in the process of investigating potential terrorists; in dealing with low-priority cases and so-called self-starting terrorists; on the role and responsibilities of internet companies in helping to keep us safe; and tackling foreign fighters travelling abroad for terrorist purposes. I want to take each in turn.
First, the report identifies a number of serious delays and potential missed opportunities. The committee expressed concern over the four-month delay in opening an investigation into Michael Adebolajo following his return from Kenya in 2010 and the eight-month delay before Michael Adebowale was first actively investigated in 2012. The report concludes that an application for intrusive surveillance on Michael Adebowale in 2013 took,
‘nearly twice as long as it should have,
and that had the original target been met,
‘these further intrusive techniques would have been in place during the week before, and on the day of the attack’.
But crucially the report goes on to say that,
‘there is no indication that this would have provided advance warning of the attack: retrospective analysis of all the information now available to the agencies has not provided any such evidence’.
The report also finds that the two murderers were in contact 39 times between 11 April and 22 May, including seven attempted calls and 16 text messages on the day before the murder. But again we should be clear that post-event analysis shows:
‘None of these text messages revealed any indication of attack planning or indeed anything of significance’.
So while the committee accepts that these delays and missed opportunities did not affect the outcome in this case, it is, however, absolutely clear that processes need to be substantially improved. MI5 are improving guidance and training for investigators for its online teams and it is looking at new automated processes to act on extremist material online.
The MI5 initial lessons learnt document has already been published in today’s report, and I have asked the Security Service to provide a further detailed report to the Home Secretary and to me in the new year setting out progress on implementing each and every one of the lessons learnt. In all of this we need to remember the extreme pressure our agencies are under. As the Director-General of MI5 put it in his evidence to the committee:
‘We are not an army that has battalions waiting in barracks for deployment’.
Everyone they have is always out there working.
Secondly, one of the most challenging tasks facing our agencies is how to prioritise the many and various potential threats to our security. This is incredibly difficult and it is not an exact science. During the weeks prior to the Woolwich attack, MI5 were running several hundred counterterrorism investigations and, as the committee notes, they are monitoring at any one time several thousand subjects of interest.
It is obviously essential to focus on the highest-priority cases and especially those where there is specific intelligence that terrorists are planning an attack in the UK. But the report details how Michael Adebolajo and Michael Adebowale were both known to the security services for some time. Michael Adebolajo had featured in five separate Security Service investigations since 2008 and MI5 had put significant effort into investigating him as part of several of these investigations. Michael Adebowale featured in two lower-priority investigations. Now, while none of these investigations revealed any intelligence of an attack, the committee does recommend improvements to the processes for dealing with recurring subjects of interest, with low-priority cases and with so-called self-starting terrorists.
This Government have protected budgets for counterterrorism and the security services and they have been clear with me that they have always had the resources they need. But the increasing threat we face, including from these so-called self-starting terrorists, means that we should now go further in strengthening our capabilities. So my right honourable friend the Chancellor of the Exchequer will make an additional £130 million available over the next two years, including new funding to enhance our ability to monitor and disrupt these self-starting terrorists.
The report also makes clear the important role of all public bodies in dealing with the threat of self-starting terrorists and extremists. The Counter-Terrorism and Security Bill being introduced tomorrow will include for the first time a clear legal obligation on our universities, prisons, councils and schools to play their part in tackling this poisonous extremism. The new funding being made available today will include additional resources for programmes to prevent radicalisation.
Thirdly, turning to the role of internet companies, the committee is clear that it did find,
‘one issue which could have been decisive’.
In December 2012, five months before the attack, Michael Adebowale had a crucial online exchange in which he wrote about his desire to kill a soldier, but the automated systems in the internet company concerned did not identify this exchange. Further, when it automatically shut down other accounts used by Michael Adebowale on grounds of terrorism, there was no mechanism to notify the authorities. So this information only came to light several weeks after the attack as a result of a retrospective review by the company.
The committee concludes that,
‘This is the single issue which—had it been known at the time—might have enabled MI5 to prevent the attack’.
This is a very serious finding. The report does not name the company and it would not be appropriate for me to give a running commentary on the level of co-operation from different internet companies. But the committee is clear, and I agree, that it has serious concerns about the approach of a number of communications service providers based overseas.
This summer, the Government introduced emergency legislation to put beyond doubt in UK law that the Regulation of Investigatory Powers Act applies to companies based overseas but that deliver services in this country, and I appointed Sir Nigel Sheinwald as a special envoy in intelligence and law enforcement data-sharing to address concerns that there could be a conflict between UK and US law in this area.
Since then, a number of companies have improved their co-operation. But as I said in my speech to the Australian Parliament earlier this month, there is much further to go. We are already having detailed discussions with internet companies on the new steps they can take, and we expect the companies to report back on progress in the New Year. But the truth is this: terrorists are using the internet to communicate with each other, and we must not accept that these communications are beyond the reach of the authorities or the internet companies themselves. We have taken action. We have passed emergency legislation. We will continue to do everything we can. But, crucially, we expect the internet companies, too, to do all they can. Their networks are being used to plot murder and mayhem. It is their social responsibility to act on this, and we expect them to live up to that responsibility.
Fourthly, the report also raises a series of issues directly relevant to the increased threat in recent months from British citizens travelling to fight abroad—so-called foreign fighters. The committee expresses concern about what it describes as a ‘deeply unsatisfactory’ response to Michael Adebolajo’s arrest in Kenya. It highlights the importance of tackling British citizens travelling to fight with terrorists groups in Syria and Iraq, and the report recommends further powers, including considering whether existing proscription powers should be amended to enable further prosecutions.
Tackling foreign fighters is an absolute priority for our agencies. To be fair to the agencies and police, in the case of Michael Adebolajo, he was interviewed on his return from Kenya to the UK. Their operational effort has been stepped up, with more than 120 arrests this year for Syria-related offences, compared to just 27 in the whole of 2013. However, the committee is right to ask whether we need to give our agencies stronger powers to tackle extremists, so our Counter-Terrorism and Security Bill—being introduced in Parliament tomorrow—will include essential new powers to seize passports to prevent travel; to stop suspects returning unless they do so on our terms; and to relocate suspected terrorists to other parts of the country and away from their extremist networks. I very much hope that we can take this Bill forward on a cross-party basis so our agencies are able to start using these vital powers as soon as possible.
Finally, the committee criticises the Secret Intelligence Service for the handling of allegations of Michael Adebolajo’s mistreatment in Kenya. This Government took the important step of publishing the consolidated guidance in 2010 on the obligations of our agencies and the Ministry of Defence in relation to detainees who are being held overseas. Of course, however, there are cases which fall outside the scope of this guidance: for instance, where people are entirely dealt with by overseas agencies, but where the Secret Intelligence Service clearly still has an operational interest. In these cases, the agencies are clear that they always seek assurances about the treatment of detainees and that in future, they will record the outcome of their investigations and inform Ministers if mistreatment has in any way occurred.
Of course, it is right that there is vigorous oversight of this issue, so the Government will put the oversight role of the Intelligence Services Commissioner on a statutory footing. I will issue a direction under the Regulation of Investigatory Powers Act in the coming days to formalise Sir Mark Waller’s role in overseeing the guidance on detainees. Sir Mark will have full access to all the material referred to in the report and will be able to examine the concerns raised by the committee about the Government’s responsibilities in relation to partner counter-terrorism units overseas.
Today’s report contains a number of very detailed recommendations. We will publish a full response to all the points that are raised in the new year. We will not shrink from doing what is necessary to keep our people safe. The terrorist threat we face cannot be ignored or contained: we have to confront it. We have to equip our security services with the powers and the information they need to track down these terrorists and stop them attacking our people. We have to confront the extremist ideology that drives this terrorism by defeating the ideas that warp so many young minds. Of course, none of this will be easy: we will need stamina, patience and endurance, but we will in the end defeat this extremism and protect our people and our way of life for generations to come. I commend this Statement to the House”.
That concludes the Statement.
Baroness Royall of Blaisdon (Lab)
My Lords, I am grateful to the Leader of the House for repeating the Statement made by the Prime Minister. Fusilier Lee Rigby served his country with courage. He was a brave soldier and his murder was an appalling act—an atrocity. Our thoughts today are with his family and friends, for whom reading this report will mean the pain of reliving his brutal killing. I also thank the members of the Intelligence and Security Committee for their investigation. It is right that this investigation took place; the report was the most detailed account of the agencies’ work ever published.
The security services and the police play a vital role in keeping us safe, often in challenging circumstances. They do a hugely difficult job of seeking to identify those who pose a risk to our country. We should remember that, while the perpetrators of terror need succeed only once to achieve their dreadful aims, our agencies and others need to be successful every time to keep us secure. In so far as there are criticisms in the ISC’s report, they need to be understood in that light. The ISC’s report outlines in detail how the two men who killed Lee Rigby—Michael Adebolajo and Michael Adebowale—were under investigation at various times before the murder.
We welcome the announcement of additional resources, but will the Leader of the House tell us whether it is simply a question of resources or whether she thinks a better strategy is needed for dealing with those, like Adebolajo, who are recurring subjects of interest on the periphery of several investigations? In addition, the report points to the fact that at times there is a lack of co-ordination between MI5 and the police. Can the noble Baroness outline the steps that will be put in place to strengthen the working relationship between the different agencies—MI5, SIS, GCHQ and the police?
The report also highlights the issue of returning foreign fighters. We will engage constructively with the forthcoming Bill and welcome the decision to reinstate relocation powers, which were removed three years ago. As the Leader of the House said, Michael Adebolajo was arrested, but the report states that his case was not then followed up. This is not simply about the powers but the way in which cases are followed up. Can she assure us that there will be a more systematic and rigorous response to returning foreign fighters, including mandatory referrals to deradicalisation programmes?
The report underlines the fact that these two individuals, and in particular Michael Adebowale, were radicalised over a number of years, including by accessing extremist material online. Thus it makes a compelling case for an expansion of the Prevent programme. The report says:
“The scale of the problem indicates that the Government’s counter-radicalisation programmes are not working”.
Noble Lords will recall that we raised this important issue in the House before. How will the Government ensure that Prevent will receive the priority and resources it needs? Would the noble Baroness agree that we should consider widening the scope of Prevent so that in future people like Michael Adebowale would be included, and to ensure that local communities are engaged in the prevention of radicalisation?
The role of internet companies is clearly of crucial importance. This raises two vital issues: whether the companies have a responsibility to draw authorities’ attention to issues of national security and whether the major US companies regard themselves as compelled to comply with UK warrants legally authorised by Ministers in cases of national security. Can more be done to encourage companies to flag up issues of concern where matters of national security are raised? The report says that companies may sometimes decide to pass on information to the authorities when they close accounts because of links to terrorism, but in this case they did not.
Part of the problem in this area is that there are different practices by different companies and no agreed set of procedures. In the case of images of child abuse, there is a procedure in place for companies to take action and refer abuse allegations to the authorities. There should be much stronger procedures in place and a much stronger responsibility placed on companies when it comes to terrorism as well. Does the Leader of the House agree? Further, can the Leader update the House on work being done to improve our ability to get information, with a warrant, from companies based in the US?
Lastly, on the issue of detention, we welcome the Government’s announcement that oversight will be strengthened but urge them to go further. For some time we have said that the framework of commissioners needs strengthening and this report demonstrates the value of thorough scrutiny and the ability to learn lessons. Can the noble Baroness confirm whether David Anderson’s review also covers strengthening oversight and the role of commissioners?
This report is a stark reminder of the threats we face in keeping our country safe. The murder of Fusilier Lee Rigby was an appalling act of cruelty and depravity. We must learn the right lessons—and that is what the ISC report seeks to do. It does so thoroughly and with diligence. In seeking to put those lessons into practice, the Government will have our full support.
Baroness Stowell of Beeston
I am very grateful to the noble Baroness for her response and the manner in which she made her remarks on the Statement by the Prime Minister that I repeated. I certainly join her in paying tribute to Lee Rigby’s family and in recognising that this must be a very difficult day for them indeed. I also agree with the noble Baroness about the good work the committee has done in its investigation and the thoroughness of its report. Of course, she is absolutely right to restate that the security services and the police do a very difficult job in keeping us safe. We very much acknowledge that.
On the questions that she asked, first she asked about increased resources and whether the security and intelligence services had sufficient funding. It is worth explaining to the House that funding for the security and intelligence services has increased in cash terms now by 5% compared with 2010 and they had a good funding settlement compared with other departments, including in the 2013 spending round where they saw an increase when other departments saw a reduction in their funding.
The noble Baroness asked about the way in which MI5 and the security services are responding to some of the identified persons who might be described as peripheral risks or operating on the periphery. MI5 responds to this point in its initial response to the report and says how it has already started to take steps to improve in this area. We will come back again with more detail on this in the new year. She also asked about how connections could be improved between the different agencies and the police service. They are continuing to improve all the time and they are working well and seeking always to address any issue that should be strengthened.
The noble Baroness asked about returning foreign fighters and the approach being taken to them. In its report, the committee criticised the way in which the particular person concerned was examined when he returned. The committee is right to say that we should look at this case by case and, indeed, one of the measures being introduced in the new counterterrorism Bill is to make sure that there is an improvement in this area and a more systematic approach.
The noble Baroness also asked about the improved arrangements for deradicalisation. Again, in the new counterterrorism Bill, which will be introduced tomorrow, the measures we have already in place, including those under the Prevent scheme referred to as Channel, will be put on a statutory footing.
As to the noble Baroness’s comments on Prevent funding and on how Prevent operates, it is worth reminding noble Lords that in 2011 this Government asked my noble friend Lord Carlile to carry out a review of Prevent. His conclusion was that Prevent should be split, with the money for integration—the more community-based measures to improve cohesion in communities—moving to DCLG, where that money now sits with the programme for cohesion, and the remainder of the money being specifically focused on guiding people away from extremism and terrorism. The money spent on Prevent has increased from £35 million in 2012 to £40 million in 2014. It is worth adding that in my noble friend Lord Carlile’s report he said there were cases under the previous Prevent regime where groups which we now consider to support an extremist ideology had received funding. Changing the Prevent regime by moving the cohesion aspect of it into DCLG and making Prevent more focused on tackling extremism and preventing terrorism was, we believe, the right approach.
As to the questions that the noble Baroness raised about internet companies, I agree with her that comparisons can be made between the way in which the internet companies have improved the way in which they remove from the internet sites and images that relate to despicable crimes of child abuse. That was at the prompting of government. We think that the same approach needs to be taken by the internet companies towards terrorism. We are very clear that these internet companies have a social responsibility to take the necessary action that should prevent any kind of terrorism activity occurring. We introduced new emergency legislation in the summer, which I referred to in repeating the Prime Minister’s Statement. We are working very hard to ensure that that legislation is properly applied to US companies which operate in the United Kingdom. As I said in the Statement, Sir Nigel Sheinwald is doing much in that area to see that there can be progress. That is something that we will pursue with vigour.
The oversight role of the Government’s adviser on counterterrorism measures, David Anderson QC, is very broad, and he is able to look at the threat response, the capabilities and important safeguards. He has done excellent work so far, and clearly we look forward to him continuing in his role and supporting us and helping us further in the weeks and months ahead.
Lord Dholakia (LD)
My Lords, I endorse the sentiments that have been expressed by both sides of this House about the death of Lee Rigby. The report talks about the introduction of the Counter-Terrorism and Security Bill tomorrow. We are told that for the first time it will include a clear legal obligation on universities, prisons, councils and schools to play their full part in tackling this poisonous extremism. Why are religious bodies excluded from this provision?
This is a serious report about significant areas of concern, yet we are told that the government response will not be available until January. What mechanism exists to ensure that the Government’s comments on the report will be available at the time the counterterrorism Bill goes through this House?
Baroness Stowell of Beeston
Religious bodies are excluded from the list of groups that will be bound by the Prevent measure that we are going to put on a statutory footing in the counterterrorism Bill because we are focusing on public bodies, and clearly religious faiths do not qualify in that area. That does not mean that all religious faiths do not have a responsibility to support us in preventing extremism and terrorism. Indeed, there is a wide range of different programmes, some of which are supported though the Department for Communities and Local Government. There is a lot of work going on in that area.
My noble friend asked about the Government’s response to the report being provided in January. Today, the Prime Minister’s Statement provided our initial response. The measures in the counterterrorism Bill being introduced tomorrow stem from two things: JTAC’s change of the security status earlier in the summer to the increased level that it is now and the creation of the extremism task force, which the Prime Minister put together following Lee Rigby’s death. The counterterrorism Bill contains measures that have been put together after careful thought and consideration. They are most definitely not a knee-jerk reaction to the ISC report published today.
The Marquess of Lothian (Con)
As one of your Lordships’ two representatives on the Intelligence and Security Committee, I welcome the commendation of our report by both the Government and the Opposition. I also welcome the announcement of further resources in this area, which is an important measure—although it is important to stress that such is the extent and pressure of the terrorist threat in this country at the moment that the prioritisation of threats to be dealt with by the agencies will have to continue.
I also make the point that despite the criticisms in this report of the agencies in regard to this particular case, on behalf of the committee I would like to commend our intelligence agencies for the sterling and tireless work they do in protecting all of us in this country from the threat of terrorism.
Finally, I raise a subject which has been raised before, which is what I call the capability gap in the agencies accessing communications from overseas communications service providers. Along with the measures that she has mentioned, I wonder whether the Minister would agree with me that in the end the United Kingdom has to use its influence with the United States through the exceptional co-operation on security between our two countries to find a final and lasting way to resolve this situation. Perhaps the Minister could say a word about what steps are being taken in that regard.
Baroness Stowell of Beeston
I am certainly grateful to my noble friend for echoing the support for the security services and the work that they do to keep all of us safe in this country. I would also like to take this opportunity to thank my noble friend for his work as a member of that committee. I know that the noble Lord, Lord Butler, from this House is also a member of the committee, and there are other Members of this House who have been previous members of that committee.
On my noble friend’s point about prioritisation still being necessary even in light of increased funding, that is right and will always be the case. There is a need for balancing prioritisation with not delaying the necessary steps. I quoted from the statement of the MI5 Director General in the Statement by the Prime Minister that I repeated. The security services do not have an army of people waiting to deploy; they have to use their resources all the time as best they see fit, and they are doing a very good job.
On the capability gap regarding communications service providers, which my noble friend mentioned, he is right that we have to use our influence at all levels and I can confirm to him and the House that that is happening right up to the highest level, including the Prime Minister with the President of the United States.
Lord West of Spithead (Lab)
The Minister will be aware that since the revelations of the traitor Snowden, terrorist groups—in particular ISIL—have changed their methods of communications, and have shifted to other ways of talking to each other. Consequently there are people dying who would otherwise be alive. Does the Minister agree that it is now critical that we move forward the Communications Data Bill, which was paused so unreasonably, because there is a very real danger that unless we do—and I am not exaggerating in saying this—people in this country will die who would have been safe if it was in place?
Baroness Stowell of Beeston
The noble Lord is right to say that the leaking by Snowden and the reporting of his leaks have had a serious effect on intelligence gathering. That is unquestionable. There is evidence that some of the terrorists and terrorist groups, in the light of that knowledge, are now moving their exchanges to different places, where the intelligence services are not operating, because they now know where they do and where they do not.
As far as introducing the Communications Data Bill is concerned, in the summer we introduced the emergency legislation which addressed some gaps there. The counterterrorism Bill that will be introduced tomorrow will close another gap. This is an area where I believe we will continue to have to keep making progress. We are not ready to move as far as the noble Lord suggests at this moment. To be successful in introducing a Communications Data Bill, we will need a consensus, and we do not have that yet.
Lord King of Bridgwater (Con)
Does my noble friend accept that this report, which I think is the most substantial one I have seen from the ISC, marks a very important stage in the development of its role of parliamentary oversight of the intelligence agencies? I hope that, on reading it, one will be able to reinforce one’s confidence in the capabilities of that committee. It is very important to this country that it carries high credibility in the world and among our people generally.
Having said that, the Prime Minister claims in his Statement that the committee had unprecedented access to detail that might not previously have been available to such an inquiry. Certainly, it seems to hold the world record for asterisks, deletions and redactions, indicating the amount of totally secret information that was available to the committee. Will my noble friend confirm that the report coincides with the announcement by the Home Secretary of the further Bill that will be introduced tomorrow—in the Commons, I assume. Will the government response be available to this House before we approach Second Reading, as I understand there is to be an accelerated procedure? Can she give any indication of when she would expect the Bill to come to this House? There is no question that it raises extraordinarily difficult issues. As the noble Lord, Lord West, indicated, the challenges faced by the intelligence and security agencies are massive and growing enormously. Some of the challenges will be revealed in the government response and we need the opportunity to consider it very carefully in this House.
Baroness Stowell of Beeston
My noble friend is a former chairman of the ISC and I pay tribute to his knowledge and assessment of the committee’s report published today. I share his view that it is a very substantial and unprecedented piece of work on the part of the committee. It shows that we were right to put the ISC on a stronger footing through the Justice and Security Act. The redactions in the report are in line with the process in that Act for redacting material and we have very much followed that process. I cannot confirm that the Government’s detailed response to today’s report will be available before Second Reading as I do not yet have the date when we will respond or, indeed, when the Bill will be introduced in your Lordships’ House. However, I will reflect on the point that my noble friend makes.
Lord Pearson of Rannoch (UKIP)
My Lords, are the Government aware that Fusilier Rigby’s murderers quoted 22 verses of the Koran to justify their atrocity? Therefore, is the Prime Minister accurate or helpful when he describes it as a betrayal of Islam? Since the vast majority of Muslims are our peace-loving friends, should we not encourage them to address the violence in the Koran—and, indeed, in the life and the example of Muhammad?
Baroness Stowell of Beeston
My Lords, British Muslims want strong counterterrorism measures in this country so that everybody in this country who shares British values, whatever their faith, is safe. That is basically all I need to say to the noble Lord.
Lord Elystan-Morgan (CB)
My Lords, may I raise with the noble Baroness the question of people leaving these shores to join armed formations abroad—and, indeed, in the event of their return, what they might do? Is it or is it not the case that the Foreign Enlistment Act 1870 is still in force? If I am correct with regard to that, has any use been made of it in the last half century? Furthermore, have the Government given any thought at all to the question of incorporating any of its provisions in the new legislation now before the House? I regret that I did not give notice of these rather technical matters but it was only when she mentioned foreign enlistment that it rang a distant bell with me.
Baroness Stowell of Beeston
I regret that I am not able to provide the noble Lord with a comprehensive answer to that question. Probably the best thing would be for me to write to him.
Lord Harris of Haringey (Lab)
My Lords, this is an important report and that importance is not diminished by the fact that the committee has only two Members of your Lordships’ House sitting on it. I would like some clarity from the Leader of the House on the extra resources that have been put in. The Statement mentions £130 million to combat the current threat over two years—I assume that is £65 million per annum. I had heard that the requirement to enhance the policing component of the response to the enhanced threat was of the order of £50 million per annum. What is the balance between the various security agencies and the police in terms of the £130 million? How much will go to funding for additional programmes to prevent radicalisation? In the case of the latter, who will be distributing those resources?
Baroness Stowell of Beeston
The overall funding for the security and intelligence agencies has increased from £2 billion in 2010 to £2.1 billion now. We do not give a breakdown of how the different agencies are funded for security reasons. The majority of the £130 million of new money announced today over the next two years will go to our agencies to give them new capabilities to monitor and disrupt terrorists—to deal with the new kind of threat that we are now facing from the so-called “self-starter” terrorists. Further funding will go to support counterterrorism policing and Prevent programmes to tackle radicalisation. My right honourable friend the Chancellor will set out more details of the breakdown of all the funding in the Autumn Statement. I would just add that we have protected £500 million of annual counterterrorism policing grant in real terms. There is quite a lot of information there, but the Chancellor will provide more in the Autumn Statement.
Baroness Falkner of Margravine (LD)
My Lords, my noble friend mentioned the Counter-Terrorism and Security Bill to be introduced in the other place tomorrow. Can she give the House an assurance that we will not use fast-track legislative procedures to take it through this House? I declare that I am a member of the Constitution Committee. She will know that the Constitution Committee believes that fast-track legislation should be used only in the most extreme circumstances. We still have parliamentary time and this Bill will need careful scrutiny by all Members of the House.
Baroness Stowell of Beeston
We ought to draw a distinction between fast-track legislation and emergency legislation. Fast-track does not mean that the time devoted to scrutiny would be diminished in any way; it means that the time between stages would be shortened. Having identified that these are important measures to address gaps that currently exist and that by addressing them we will put ourselves on a stronger footing to deal with a very serious threat, I would say to my noble friend and to the House as a whole that we should not delay doing so. I hope very much that we are able to agree that we will follow a fast-track process, but, as I said, that does not mean that the Bill will not receive the normal length of time it needs for debate in this House.
Lord Selkirk of Douglas (Con)
The Statement today is extremely welcome. Will the Leader of the House give an assurance that servicemen and servicewomen will be given advice and guidance if that should become necessary in the circumstances?
Baroness Stowell of Beeston
My noble friend is right. I can only imagine how members of the Armed Forces must feel, knowing that one of them has been attacked and murdered in cold blood on the streets of London. Our advice to the Armed Forces remains very relevant and will be reviewed should it ever be necessary to change it.
Lord Reid of Cardowan (Lab)
My Lords, can the Minister respond to the points arising from the imperative she mentioned—not to delay in doing that which is necessary to assure the country? Without being in the least bit churlish about this, what is now being admitted is that which was denied by the Government prior to, and from, 2010: first, we are fighting an international struggle against terrorism; secondly, the measures necessary for surveillance by improving GCHQ are less than adequate, for reasons connected with the coalition’s internal politics; and, thirdly, control orders, which were weakened down to TPIMs, are now being strengthened back up to become virtual control orders. If we are going to be honest and realistic about this, we have to answer the question that the public will ask. How is it that over the past four or five years, when we have had a high threat level in this country, we have diminished security and it is only now that the Government are thinking of increasing it again?
Baroness Stowell of Beeston
What I would say to the noble Lord is that what we have done and will continue to do is to take the advice of David Anderson QC on the measures that we introduce. We have responded to the increasing threat. We have listened to the security services and the police service. They have requested additional measures and we are bringing those additional measures in. Clearly, an appalling and tragic event happened, and this report focuses on that. We all wish that it had not happened. What the report tells us today is that, sadly, nothing could have been done to prevent it happening and the two men who were guilty of that crime are currently in prison serving life.
Iran Nuclear Talks
(9 years, 5 months ago)
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The Minister of State, Foreign and Commonwealth Office (Baroness Anelay of St Johns) (Con)
My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Foreign Secretary. The Statement is as follows:
“With permission, Mr Speaker, I will make a Statement on the negotiations between the E3+3 and Iran regarding the future of Iran’s nuclear programme.
In November 2013 the E3+3 signed an interim agreement with Iran, which came into force on 20 January 2014 for an initial period of six months. Under this agreement, Iran committed to freezing areas of its nuclear programme of greatest concern to the international community. In return, Iran received limited sanctions relief and the repatriation of $4.2 billion in oil revenues. Crucially, this interim agreement gave us the time and space to build confidence and begin negotiations on a comprehensive deal to ensure the peaceful nature of Iran’s nuclear programme.
Since February, we have engaged in extensive negotiations with Iran at both official and ministerial level. We always knew these negotiations would be difficult and complex, and they have been—even more so than negotiating the Geneva interim agreement. At their heart is the need to reconcile Iran’s aspirations for a peaceful civil nuclear programme with our insistence on ensuring Iran cannot develop a nuclear weapons capability. By July 2014, after several rounds of talks with Iran, we had deepened our understanding of the positions of both sides and made progress on areas of the negotiations. But we were still far short of reaching agreement on core issues. The E3+3 and Iran therefore decided to extend the negotiations until 24 November—yesterday.
Since July, negotiations between the E3+3 and Iran have intensified and we have closed the gap between the parties on a number of important issues. But significant differences remain. I and other Foreign Ministers from the E3+3 met in Vienna last Friday, and again yesterday, to evaluate the prospects of reaching agreement on a political framework for a comprehensive deal within the deadline.
The discussions in Vienna highlighted the need for further movement on some big issues by the Iranians and the need for flexibility on both sides. Despite the efforts of all parties, it was clear yesterday morning that we need more time to close the gaps between the E3+3 and Iran, particularly regarding the issue of Iran’s enrichment capacity, which remains at the heart of this negotiation. But based on the significant progress that we have made to date, I remain of the view—a view shared by my fellow E3+3 Ministers and Iranian Foreign Minister Zarif—that a comprehensive deal remains possible. We must capitalise on the momentum that we have gathered and push forward to achieve this prize.
Iran and the E3+3 have therefore agreed to extend the interim agreement again until the end of June to allow more time to bridge remaining gaps and tie down technical details. We will continue negotiations in December with the shared aim of securing an outline agreement within four months. We would, of course, have preferred to reach a comprehensive deal by yesterday’s deadline, but only if it was the right deal. As we continue to work towards such a deal, we have an interim agreement in place which maintains important constraints on Iran’s programme and the vast majority of nuclear-related sanctions. Under this arrangement, Iran will continue to be able to repatriate oil revenues on a similar basis to the current arrangements.
Successive Governments have enjoyed cross-party support in the House for the twin-track approach of sanctions and negotiations. I remain convinced that this approach is the right one and that it is yielding progress. The negotiations with Iran are tough and complex, but a comprehensive agreement would bring enormous benefits to all parties. For Iran, it would herald the beginning of reintegration into the international community and open the door to an easing of sanctions and access to significant frozen assets. For the international community, it would mark a considerable advance for regional and global security. We cannot and will not succumb to the temptation of sealing a deal at any price, but will remain steadfast in pursuit of a comprehensive agreement that respects the clear principle that Iran must not be able to develop a nuclear weapons capability”.
My Lords, that concludes the Statement.
Lord Bach (Lab)
My Lords, I thank the Minister for repeating the Statement made by her right honourable friend the Foreign Secretary in another place earlier today. It is an especial thanks to the noble Baroness, and I think she will know why I say that.
I agree with the comment in the Statement that there has long been cross-party support for a twin-track approach—sanctions and negotiations—and I confirm today in the House that that cross-party support exists.
Before asking the Minister a few questions, I am sure she will want to acknowledge the work of the EU’s outgoing High Representative for Foreign Affairs and Security Policy, my noble friend Lady Ashton of Upholland. All sides of the House will be very proud of the role that she has played. Over the past five years, she has played a decisive and constructive role on the world stage and her commitment and determination on the Iran nuclear issue in recent months have been very widely recognised. As Secretary Kerry said yesterday in his press conference,
“I want to thank … especially my good friend Baroness Cathy Ashton, whose partnership has been absolutely invaluable throughout this process and who has done a terrific job of helping to bring people together and define the process”.
We should be very proud of the role that our fellow Member has played.
Turning to events yesterday in Vienna, the fact that it was not possible to reach agreement by the already extended deadline of yesterday is, of course, a regrettable setback, but in our view it need not be an irretrievable one. The June 2015 extension could allow for a further opportunity for progress to be made towards the vital comprehensive deal.
For some years now, Iran has chosen to exploit regional sectarian tensions through supporting terrorist groups in other parts of the region, but today and in the next few months Iran has the capability to play a much more positive role. But that has to start with a clear commitment by Iran to address concerns about its nuclear programme, which have been unresolved for too long now. There should be no doubt that in an already very volatile region and at a particularly perilous period, a nuclear-armed Iran poses a threat not only to Israel and its neighbours but to wider global security. The interim agreement that the Statement talked of was a significant step forward, but it was only ever intended to freeze Iran’s nuclear programme. A final deal must focus on seeing that nuclear programme rolled back.
I seek a number of assurances from the Minister on the content, extension and negotiation of the potential deal. First, on the content of any final agreement, reports suggest that one of the main obstacles to securing a deal remains the crucial issue of the number of centrifuges Iran could operate. The Statement did not mention that matter, so can the noble Baroness say in her response what the Government’s assessment is of the appropriate number of centrifuges that Iran can retain, while still offering sufficient protections around the so-called break-out time?
Secondly, the extension of negotiations must be agreed only alongside sufficient guarantees that it will not allow Iran to gain by running down the clock. The terms of the now extended agreement explicitly forbid Iran from adding new enrichment capacity and accumulating more enriched uranium, and ban 20% enrichment altogether. Can the Minister confirm that these restrictions will remain in place and will continue to be monitored, and that any sign of breach will warrant a strong response?
Thirdly, on finance, can the Minister confirm that Iran will not enjoy any net financial gain through this extension? The Foreign Secretary said yesterday that:
“The expectation is that there will be a rollover of the current arrangements for Iran to access around $700 million per month of frozen assets”.
In the Statement, which the noble Baroness has been kind enough to read to this House, the Foreign Secretary said that Iran will continue to repatriate oil revenues on “a similar basis” to before. Can the Minister confirm that this does not allow for any further extension of sanctions relief without anything in return from Iran?
Briefly, on a separate but connected subject, we welcomed the announcement in June that the embassy in Tehran will be reopened. The Foreign Secretary’s recent answer to my right honourable friend the shadow Foreign Secretary stated that issues around getting the embassy back to a functional level and re-establishing a visa service are still under discussion. Can the Minister offer us today any timescale for when she thinks those matters will be resolved? It is important—and I hope this is a common view across the House—that that embassy is reopened as soon as possible.
Secretary of State Kerry was surely right to say that these talks will not get easier just because they go on longer. An extension is not a success in itself and must not be seen as such. The only successful outcome is a full and comprehensive deal being reached, upheld and effectively implemented. We very much hope that that is what happens as soon as possible.
Baroness Anelay of St Johns
My Lords, I thank the noble Lord, Lord Bach, for reconfirming the Opposition’s long-held view that this is a cross-party matter where both the Government and the Opposition support the policies of the twin-track approach. He quite rightly drew attention to the importance of ensuring that these talks progress in a way that achieves a fully implemented deal that can be properly monitored and to the fragility of security in the area. Against that background, he is absolutely right that we should address all these matters cautiously but firmly to achieve that full, successful outcome. I am also very glad to recognise the significant role played by the noble Baroness, Lady Ashton, and was delighted to be able to draw attention to that when I answered a Question at the Dispatch Box from the noble Baroness, Lady Deech, at the end of last month. The noble Baroness, Lady Ashton, showed, on the national stage, the skills of negotiation which she deployed so well in this Chamber.
I will address myself to the noble Lord’s questions. First, he asked about the precise number of centrifuges that the Iranians might wish to escalate to and the exact number that we might consider appropriate. This will certainly be the crux of the matter in the discussions that proceed and the noble Lord will understand that one does not necessarily go into the details of something that sensitive. However, I can say very clearly that, in all the negotiations considering how many centrifuges would be acceptable, at any stage, to a final agreement, we are very carefully balancing two facts. Whereas the Iranians might wish to increase the number of centrifuges to a level that might easily make it possible for them to move to a nuclear programme, we are determined that will not happen. The crucial part of any successful deal must be that the centrifuge numbers—and all the other technical matters, as the noble Lord will be perfectly well aware from the work he has done on this—are considered in such a way that the civilian needs of the Iranian Government can legitimately be met. However, such a deal does not allow for a number of centrifuges, or an escalation to a number of centrifuges, which would give the opportunity for any nuclear weaponry to be developed. It is the civilian use that we see as legitimate.
I come to the questions that the noble Lord properly asked about what happens now. I can certainly confirm that the restrictions on sanctions remain firmly in place, as they were before midnight last night. As the clock ticked over from midnight to one second past midnight, exactly the same restrictions as before remained in place and they will be monitored. He asked whether it means there is no net financial gain for Iran and that there will be no further extension of sanctions relief. I can reassure him on both those matters. To assist him a little more, I can say that, under the extension, Iran’s obligations under the joint plan of action continue exactly as before. This means that the most concerning elements of Iran’s nuclear programme remain frozen. In return, but just as before midnight last night, Iran receives instalments of oil revenues that had previously been restricted. The E3+3 will continue suspension of the same specific sanctions that were suspended under the joint plan of action. The EU Council decision was updated this very morning when the technical, legal provisions were put in place. This means that the Iranian Government can draw down a maximum of $700 million from oil revenues which is exactly the same position as at the beginning of the year and there will be no softening at all of any of the proliferation sanctions. I hope that reassurance satisfies the noble Lord.
He also asked whether I could give an undertaking that we would not provide further relief to the Government in Iran unless there were further concessions from that Government. That will indeed form part of the further negotiations; otherwise, existing sanctions remain in place.
The noble Lord then asked practical questions about the embassy in Tehran. As my right honourable friend in another place explained, we face two technical issues to be resolved. The first is the fact that the embassy, having been sacked, literally has to be resupplied. It is a case of getting agreements physically to take in and set up all the material that is required, and that is a matter for negotiation with the Government of Iran. Secondly, we, like the noble Lord, wish to see a visa service reinstated as soon as possible for the convenience of all—not only for Iranians travelling here but for British citizens who travel to Iran. I know that all those negotiations will be tackled in a very forthright but very careful manner. We all know that it is important for our embassies to be in position. I certainly know from talking to noble Lords that they, like me, have a great regard for our consular services.
Baroness Falkner of Margravine (LD)
My Lords, given where we were a few days ago, the extension of the talks is indeed very welcome news. I say from this side of the House that we are completely supportive of our Government’s endeavours in that regard. My noble friend will appreciate the importance of sequencing. It is really important that we have managed to hang on to the status quo at the moment. Of course there will be presidential elections in the United States in 2016, but people sometimes forget that there will also be Iranian elections, and it is terribly important that the reforming Government, such that they are, have something to show for their efforts in engaging with the E3+3 process. Will my noble friend bear that in mind as she goes back? It should be kept in mind as we go into negotiations, because this may well be our last chance.
I, too, pay tribute to the noble Baroness, Lady Ashton of Upholland, for her sterling work in this regard. However, it is slightly unclear who will now take over the principal EU negotiating role. Can my noble friend tell us whether the new high representative, Mrs Mogherini, will be doing that or whether the noble Baroness, Lady Ashton, will continue?
Baroness Anelay of St Johns
I am grateful to my noble friend for reiterating the support that I know she has expressed from her Benches before for the way in which these matters are taken forward. She asked me to bear in mind the pattern of elections. I can certainly assure her that those matters are borne in mind. I also ought to say that all those who are taking part in the negotiations bear in mind more technical details, too, regarding religious festivals in Iran, here and in the rest of Europe. That is why the next stage of the negotiations is beginning this very month. There will be no hesitation. The negotiations will begin before Christmas so that after four months we can have a framework of political agreement and we will then have the technical work that will provide the final result by the end of June.
My noble friend asked what will happen now that the noble Baroness, Lady Ashton, has completed the period for which she was “signed up”, if I may use that expression. She has given more of her time than she was due to give, so we express all thanks to her for that. This is a matter for the new Commissioner, Mrs Mogherini, to decide, and I am sure that she will be in discussions over that.
Lord Campbell-Savours (Lab)
My Lords, in terms of the debate going on inside Iran—the debate on television, on the radio and in the rest of the media—about developments in Vienna, is not one of the complicating issues of this whole affair the fact that the state of Israel refuses to give up its nuclear weapons and that many people on the streets in Iran simply cannot understand the position being taken by the western powers?
Baroness Anelay of St Johns
My Lords, I say to the noble Lord, who I know has great experience in foreign affairs matters—we have discussed them—that I think that the question is a lot more complicated than that. As we know, Israel is a signatory to the Non-Proliferation Treaty, while Iran is not. There are meetings with regard to the treaty next year, when a lot of these matters will be under discussion. I was interested to note last night that Mr Netanyahu made it clear that no deal is better than a bad deal. I think that that was an important thing for him to say, because it reflects exactly our view that, in order to achieve security there, we need a good deal for all.
Lord Hannay of Chiswick (CB)
My Lords, first, will the Minister accept support from these Benches for the reaching of a decision that was far better than breaking off negotiations or doing a bad deal? I add my voice to those who praise the noble Baroness, Lady Ashton, for a remarkable performance over the years. However, does the Minister recognise that, on the banks of the Potomac, there may be less all-party support for this prolongation than there is in this House? Will the British Government use the contacts that the embassy in Washington has with the Hill to explain why we think that this is the best outcome? Secondly, I express slight doubt as to whether the division of the next seven months into two periods as clearly as it has been done will bear the stress that time puts on it. Can she confirm, therefore, that the whole of the seven-month period will be available for negotiations and will not be artificially divided into two parts, which, if the first cannot be fulfilled in the time available, renders nugatory the second?
Baroness Anelay of St Johns
My Lords, I am grateful for the support from the noble Lord. He asks us to ensure that our colleagues across the Atlantic—perhaps all other colleagues involved in these negotiations—remain firm. In the meetings that were held last week by the Foreign Ministers, as the noble Lord will be aware, my noble friend the Foreign Secretary went twice to Vienna, on Friday and yesterday, in order to try to make sure that we got as close as possible to a result and, we hope, to a full result. All those taking part are showing an absolute resolve, so the E3+3 plus Iran have ended in a position where all have a determination to continue. I can give an assurance that our determination will be relayed to all our colleagues who are taking part in these negotiations. The noble Lord refers to the 4+3. Clearly we want to drive momentum. There must be no thought that there is time available to let anything drift and leave any nailing-down of the political framework until too late. That is why we have proposed 4+3 as a structure. If, at the end of four months, we have not got to the most perfect position on the political framework, I suspect that a huge amount of work will be going on to make sure that we do, but behind that there is a determination by all parties that we do not let this opportunity slip.
Lord Lamont of Lerwick (Con)
My Lords, I refer to my entry in the Register of Lords’ Interests as chairman of the British Iranian Chamber of Commerce. I agree with my noble friend that no deal is a lot better than a bad deal. It must be an effective deal, but it is good that the habit of dialogue, which increases understanding of each other’s position, is continuing. One hopes that that will lead to wider things. First, can the Minister say whether the Russian offer to build nuclear power stations in Iran and to convert the enriched uranium into fuel rods outside Russia has in any way contributed towards a narrowing of the gap on the scale of the programme and the scale of the centrifuges issue? Secondly, let me ask the Minister about sanctions relief for humanitarian goods. There have been reports that medicines and other humanitarian goods needed for hospitals are not getting through, despite the sanctions relief. The American banking boycott, which is not in its entirety part of British law but is imposed extraterritorially, is frustrating the supplies of humanitarian goods. We have always made it clear that we do not want the sanctions to hit ordinary people or vulnerable people.
Baroness Anelay of St Johns
My Lords, perhaps I may address that matter first. My noble friend is absolutely right to point out that humanitarian relief was never part of the sanctions regime. We have made it clear that we do not wish the sanctions to impact directly on the needs of Iranian people; they should be directed firmly at the Iranian Government. I appreciate that banks can make commercial decisions, but with regard to humanitarian relief efforts it is clear that there should not be any let or hindrance in their delivery. I have had discussions with humanitarian organisations which are firm in their belief on how to take their work forward effectively.
My noble friend also raised the issue of Russia and what it may have agreed to do. I appreciate that there was a story in the New York Times and elsewhere that Russia had agreed to take on responsibility for Iran’s stockpile of uranium and that that might have been a bit of a signal of a breakthrough in the talks. What I can say is that identifying areas for civil nuclear co-operation will be an important part of the final deal, but clearly it would not be appropriate for me to comment on the detail, let alone because it is something that Russia may or may not be involved in. I will say that a deal can be reached only if Iran addresses international proliferation concerns by simply—perhaps it is not so simple—reducing the size of its nuclear programme. That is the core of our negotiations.
Lord Reid of Cardowan (Lab)
My Lords, I thank the noble Baroness for a very well balanced Statement, which balances a degree of realism and circumspection with the political will to resolve this issue. That is something that the whole House will want. We were right to engage and we are right to endure as long as there is a prospect of achieving success. The reward, quite frankly, is staggering in its implications. Perhaps I may make a couple of points. First, in congratulating the noble Baroness, Lady Ashton, we are of course congratulating the European Union in an era when that is perhaps not fashionable in all quarters. While we all have our criticisms of the EU, I think that we should put that on the record. Secondly, this is important precisely because, as the noble Lord, Lord Hannay, said, there are more sceptical political voices on the other side of the Atlantic, so the British and European bearing could encourage a more positive approach among the politicians, if not among those who are engaged in this, although I do not doubt for a moment their bona fides. Finally, the last paragraph of the noble Baroness’s contribution is hugely important in its implications. Are we making it absolutely plain in everything that we do that, while achieving a resolution of the nuclear question as an end in itself is of course important, what is even more important in some ways is an entry through that gateway into the potential normalisation of Iran’s place and position in the world? Iran is a great and important nation with a proud history and it has a huge influence over large areas of the world which are at present unstable. If we can use these negotiations as a gateway through to normalising Iran’s role in the world, that would indeed be a prize worth winning.
Baroness Anelay of St Johns
My Lords, I agree entirely with the noble Lord, Lord Reid, and the emphasis that he places on the prize that is to be gained by having Iran return to normalisation in its relationships. The very fact of Iran being received back into the family of nations is also the prize to be seized by the rest of the world, not only in the region but elsewhere. Of course I also recognise what the noble Lord says about the noble Baroness, Lady Ashton, who has performed a great role within the EU and on the international stage. Perhaps I may take the opportunity, in answering his question, to say that in my enthusiasm when referring to the appearance on television of Mr Netanyahu last night, I suddenly signed Israel up as a signatory to the Non-Proliferation Treaty. That would certainly have surprised Israel, as it should have surprised me. Israel is not a signatory to the treaty.
Lord Howell of Guildford (Con)
My Lords, the Statement inevitably focuses somewhat narrowly on the nuclear deal, but there are those—I am one of them and I think that the noble Lord, Lord Reid of Cardowan, may be another—who believe that the more that future negotiations can open up the wider issues, including Iran’s possibly more constructive role in stabilising the chaos across the whole region and in general in the international landscape, the more likely it is that the development of those negotiations will proceed and succeed. Can my noble friend give a hint as to whether the future negotiations will go a bit wider than just “the deal”, as it seems to be called?
Baroness Anelay of St Johns
My Lords, we are not in a position where we can call it “the deal”, because we are working towards it. In a sense, the gap has been narrowed because we have been able to identify some areas where we may be able to resolve matters, but there still remains a core area that has not been resolved. It is a prize worth seeking and it can be sought —indeed, with encouragement we may get there—but I would not wish to say that we are at the stage where it is so resolved that we can think of next steps. My noble friend is absolutely right to draw attention to the role currently played by Iran in the region—it has been alluded to in this House and elsewhere—and the role for peace that it might play in the future. It could indeed play a constructive role. We welcome the support that the Iranian Government have given to the new Government of Iraq and their efforts to promote a more inclusive governance for all Iraqis, but a similar approach is needed in Syria, where Iran can and must play a constructive role. All these discussions will continue in tandem, I am sure, with what for us is the core issue today, which is to proceed with negotiations so that we can be in a position to achieve a political framework by the end of four months and by the end of seven to have a deal that is good for all.
Lord Beecham (Lab)
My Lords, is not a critical element of a settlement of this issue the existence of a robust inspection system? Could the Minister advise us on the present state of play on that important matter?
Baroness Anelay of St Johns
The noble Lord is absolutely right. It is essential that the International Atomic Energy Agency has access in Iran in order to make sure that the supervision of these matters is carried forward. That has to be an integral part of any deal so that the IAEA is able to scrutinise it. When matters have progressed and we hopefully get to agreement on a deal, at that stage the undertakings to achieve scrutiny will be included.
Lord Stoddart of Swindon (Ind Lab)
My Lords, I return to the point raised by the noble Lord, Lord Campbell-Savours, on Israel. Many people raise the point that Israel has nuclear weapons and the capacity to enrich uranium and produce more, so that is very relevant indeed. Could the Minister confirm that she said that Israel was a party to—she is shaking her head before I have asked the question—the Non-Proliferation Treaty and Iran is not? I understood that Iran was party to the treaty and Israel was not. Perhaps she could confirm or deny what I am saying.
Baroness Anelay of St Johns
My Lords, in answering the noble Lord, Lord Reid, I took the opportunity to make it clear that it is indeed that way round and that it is Iran that is a signatory to the Non-Proliferation Treaty and Israel is not. In an answer to the noble Baroness, Lady Deech, on 30 October I made that clear. This is what makes it a different type of discussion with Iran about how it fulfils its obligations under the Non-Proliferation Treaty. We know that the area has its security difficulties at the moment. All our efforts as parliamentarians are concentrated on trying to ensure security there and consequently security for a wider Europe and wider international stage. What we are doing today is discussing that part of the negotiations with Iran that focus on ensuring that we can resolve the outstanding issue, which is to prevent the acceleration and movement of Iran towards the capacity to have a nuclear weaponry system.
Lord Phillips of Sudbury (LD)
My Lords, like virtually every other speaker, I welcome strongly the Statement repeated by the noble Baroness, which represents a signal moment in the whole complex and difficult issue between Iran and the rest of the world. I do not want to labour the point, but does my noble friend accept that the fact that Israel is not a member of the IAEA or the various treaties gives a great deal of concern to the Iranians? I absolutely accept that Israel is desperate to preserve its safety by preventing Iran from obtaining nuclear weaponry. That is perfectly understandable. What is not so well understood is that within Iran there is genuine terror of an Israel with nuclear weaponry. I declare my interest as president of the British Iranian Chamber of Commerce. Does my noble friend accept that it is about time that we in the West exerted friendly pressure on Israel for it to come into the fold, so to speak, in terms of the world’s attempts at controlling nuclear power? Is that something that the Government will consider? In Iran, President Rouhani is currently taking considerable risks with his public opinion, knowing as it does that Israel sits there with weaponry and that we in the West do not even accept that it should be part of any of these arrangements. It really would be a positive step all round if something were to be done along those lines.
Baroness Anelay of St Johns
My Lords, clearly there are security issues in the area that go far beyond the discussion of whether or not Iran develops nuclear weapons. Clearly, though, the way in which the Iranian Government have sought to increase their capacity to obtain nuclear weapons has contributed to the destabilisation of the area. It is important that we continue our work with Iran in order to enable it, as the noble Lord, Lord Reid, said, to come back into the international world. That in itself would reduce instability and uncertainty in the area. Clearly, negotiations go on with all countries in the whole area of the Middle East and the Gulf with regard to security matters. There is no easy answer, let alone an easy answer for Israel or any other country there to find peace tomorrow. But what is clear is that each country needs to consider carefully what steps it takes to maintain its own security and whether those are reasonable or undermine the security of the area. Our attention is focused on the clear problem that has been caused by Iran working towards the development of nuclear weapons and that is where we should focus our attention, because we have the opportunity now to move forward in a constructive way. We need to seize that and not be diverted from it.
National Insurance Contributions Bill
(9 years, 5 months ago)
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Lord Newby (LD)
My Lords, the Bill before us today takes forward the Government’s commitment to simplify taxes and make avoiding tax harder. The Bill contains four measures: first, simplifying NICs paid by the self-employed; secondly, accelerating the payment to the Exchequer of NICs in dispute in avoidance cases, and providing for the issue of follower notices where the scheme or arrangement has been shown to fail in another party’s litigation; thirdly, applying new information powers and penalties to promoters of avoidance schemes; and, fourthly, introducing a targeted anti-avoidance rule—TAAR—to prevent people from circumventing new legislation tackling avoidance involving employment intermediaries. I will explain each of these four measures in more detail, starting with simplifying NICs paid by the self-employed.
In Budget 2014, the Chancellor announced that the Government intended to simplify the NICs collection process for the self-employed, who currently have to operate two different processes for two separate classes of NICs. This followed a 2012 recommendation by the Office of Tax Simplification and a consultation paper published in July 2013. As noble Lords may be aware, having two separate collection methods for class 2 and class 4 NICs causes confusion and extra work for both the self-employed and HMRC. Class 2 NICs are currently collected via a flat-rate charge paid through six- monthly billing or by direct debit, while class 4 NICs are a percentage charge on profits paid through self-assessment alongside income tax. This measure will move the collection of class 2 NICs into self-assessment, making the system simpler and more straightforward, while reducing administrative burdens on the self-employed by allowing them to deal with their tax and NICs in one go.
The aims of Clauses 1 and 2 and of Schedule 1 to the Bill are: to change the way in which class 2 NICs are structured; to change the means by which class 2 NICs are collected by moving their collection into self-assessment, so that they can be collected alongside class 4 NICs and income tax; to change the means by which class 2 NICs are enforced, with changes to associated appeal rights to broadly mirror those for class 4 NICs and income tax; and to make consequential changes to legislation relating to maternity allowance to allow women to continue to become eligible for it post-reform. It is proposed that these changes will take effect for the 2015-16 tax year onwards, so that the collection of class 2 NICs under self-assessment will be from 6 April 2016.
One of the key changes that will be made by this reform is that there will no longer be a need for customers with low profits who want to opt out of paying class 2 NICs to apply for a small earnings exception in advance. HMRC is aware that the self-employed find this confusing and burdensome. Under the reform, customers with profits below the new small profits threshold will not be liable to pay class 2 NICs but will be able to choose to pay on a voluntary basis. Those with low profits who want to opt out of paying class 2 NICs will not need to do anything except to confirm this when completing their self-assessment return, while those who still choose to pay—in order to protect their benefits entitlement—will be able to do so quickly and easily. Rather than requiring a separate process, this decision will be built into the self-assessment return. There is a small proportion of HMRC customers who pay class 2 NICs but are not in self-assessment. These individuals will continue to get a separate class 2 NICs payment request. They will receive this once a year instead of twice a year, as they currently do.
I will now mention some specific points on this measure that attracted interest in the other place. The Financial Secretary provided reassurance that the self-employed will continue to have the option to spread the cost of paying class 2 NICs. The facility already exists in self-assessment to make budget payments to spread the cost of tax and NICs through the year. The Bill makes provision to allow women to continue to become eligible for maternity allowance following the class 2 changes. There was a concern in the other place that the process being put in place to allow pregnant women to pay class 2 NICs if they have not yet filed their self-assessment return would be impractical and require a high level of forward planning. I would like to confirm the remarks of the Financial Secretary that this will not be the case. I emphasise that the process does not require any forward planning beyond that which a pregnant woman would routinely undertake under the current process of applying for MA. A self- employed woman who wishes to make a claim for MA and has not already submitted her self-assessment return will be able to pay for any shortfall in contributions at the time of her claim, through the exception process that HMRC and DWP are putting in place.
I turn now to the provisions in the Bill dealing with accelerating the payment to the Exchequer of amounts of NICs in dispute in avoidance cases. This also includes providing for the issue of follower notices where there is a relevant case in which the scheme or arrangement has been shown to fail in another party’s litigation. For NICs, the provisions in the Bill broadly follow new powers included in the Finance Act 2014 that allow HMRC to issue a notice to taxpayers who used avoidance schemes that failed before the courts in another party’s litigation—a so-called follower notice. It is estimated that the provisions in the Bill and the Finance Act 2014 will raise £5 billion in tax and NICs for the Exchequer.
A follower notice sets out HMRC’s view that a judicial decision in another case is directly relevant and that those who receive the notice should settle their disputes. If the taxpayer does not settle in response to this notice, they will face a penalty if they are unable to show that their case is materially different from the other party’s litigation, or if they do not have reasonable grounds to continue the dispute. An accelerated payment may be required from taxpayers in the following circumstances: where a follower notice has been issued and the taxpayer decides not to settle their dispute; where taxpayers are involved in schemes subject to disclosure under the disclosure of tax avoidance schemes, or DOTAS, rules; and where taxpayers have used arrangements that HMRC decides to counteract under the general anti-abuse rule, or GAAR. These measures are expected to lead to the issuing of payment notices to some 43,000 taxpayers involved in avoidance schemes currently under dispute with HMRC over the period to the end of March 2016.
In debates in another place, the issue of HMRC implementation and resourcing of this measure was raised, and assurances were sought that HMRC would be sufficiently resourced to implement the measures. I echo the reassurances provided by the Financial Secretary. Since 2010, this Government have made sure that HMRC has the resources it needs to effectively police the rules, making significant investment of nearly £1 billion to assist it in its work. HMRC’s success demonstrates that it is well resourced and doing a good job. For example, in 2013-14, HMRC brought in £23.9 billion in additional tax revenue—a record amount.
I will now explain the provisions in the Bill that apply new information powers and penalties to the highest-risk promoters of tax avoidance schemes. This measure was announced for tax in Budget 2013 and the Government’s intention has been to extend the measure to NICs at the earliest opportunity. A consultation on the tax aspects, Raising the Stakes on Tax Avoidance, ran from August until October 2013. The Finance Act 2014 included legislation that allows HMRC to issue conduct notices to promoters of tax avoidance schemes and to monitor promoters who breach a conduct notice. This Bill applies the tax legislation to NICs so that the legislation operates as one unified measure covering both tax and NICs.
Monitored promoters will be subject to new information powers and penalties, which will also apply to intermediaries that continue to represent them after the monitoring commences. The monitored promoter may be named by HMRC and required to inform its clients that it is being monitored by HMRC. Clients of monitored promoters will also be subject to certain obligations and extended time limits for assessments. This measure is part of the Government’s strategic response to avoidance and is to deter the use of avoidance schemes through influencing the behaviour of promoters, their intermediaries and clients. It is aimed at changing the behaviour of promoters of NICs and tax avoidance schemes. Naming a monitored promoter should deter intermediaries from acting for them, and clients and potential clients from using their products.
Finally, I will describe how the provisions in the Bill relating to the new targeted anti-avoidance rule will work to prevent people from circumventing new legislation tackling avoidance involving employment intermediaries. The National Insurance Contributions Act 2014 strengthened existing legislation in respect of offshore employment intermediaries. That measure was effectively intended to address the non-payment of employers’ national insurance in the oil and gas industry involving the placement of the employer of oil and gas workers—who are working on the UK continental shelf—outside the UK.
As noble Lords will be aware, the temporary labour market is quick to react to any legislative changes and to find new convoluted ways to reduce the amount of income tax and NICs they would otherwise be liable to pay. Stakeholders have indicated to HMRC that intermediaries involved in the facilitation of false self-employment may set up avoidance vehicles involving convoluted structures specifically designed to circumvent the legislation introduced in the National Insurance Contributions Act 2014. To dissuade such intermediaries, the Government propose that a TAAR, which would be similar to the tax TAAR included in Finance Act 2014 for the same purpose, is included in NICs legislation to deter such avoidance. It will focus on the motive for setting up the arrangements and what they achieve. Were they set up with the motive of avoiding NICs? Do they result in less national insurance contributions being paid? In order that the tax and NICs TAARs operate as one, both will take effect from 6 April 2014.
In conclusion, the Government have already taken action to reduce significantly the burden of NICs on earnings and employment through previous Bills. This Bill continues that approach and I commend it to the House. I beg to move.
Lord Razzall (LD)
My Lords, this is clearly an important Bill, bearing in mind the number of people in the workforce in the United Kingdom who are now self- employed. Indeed, there is an ever-increasing percentage in that position and I suspect the Minister will agree with me that, as so often in your Lordships’ House, the importance of this legislation is in inverse proportion to the number of people who want to speak on it.
On these Benches—as indeed, I understand, on the Labour Benches—we welcome this legislation. On the first point of tax simplification, every Government come in saying they are going to simplify the tax code and four years later the tax legislation is even more complicated than it was when they came in. Anything that can be done, even of a minor nature, to simplify tax legislation is clearly desirable. All noble Lords will welcome the attempts to reduce tax avoidance in this area—again, all Governments want to do that and having practical examples there is obviously beneficial.
In supporting the Bill, I will just raise three or four questions. First, the Minister was correct that concerns were expressed in another place regarding the position of self-employed women claiming maternity allowance, which he referred to in his remarks. I understand the answer that the Government have given, which is a combination of responses from the Treasury and the DWP. However, as I understand it, the Chartered Institute of Taxation has suggested that the Government should review these changes at the earliest opportunity—maybe in a couple of years’ time. I would be grateful if the Minister could indicate whether that is a suggestion that the Government welcome. The idea is to ensure that the introduction of these provisions has not resulted in the reduction in the number of claims for the standard rate of maternity allowance, which would obviously be hitting women who wish to claim the allowance.
Secondly, the Chartered Institute of Taxation has pointed out that there will be a gap of 22 months between the collection of class 2 payments for 2014-15 and for 2015-16, as the liability moves from a weekly basis to arising at the end of the tax year. Have the Government considered the cash-flow implications of class 2 NICs coming in up to 10 months after the end of the tax year rather than being paid in-year as they are at the moment? That is clearly quite a significant point in relation to the Government’s finances.
Thirdly, there are significant changes being brought in to the entitlement to contributory benefits. I would be grateful if the Minister could confirm that the Government are satisfied that moving class 2 into self-assessment will not adversely affect entitlement to contributory benefits. In particular, what proposals do the Government have in mind to educate and inform people as to these changes? For example, direct debits will have to be cancelled before the introduction of the programme in 2015.
Finally, I have a general question. As the Minister will well know, a number of people have advocated for some time the merging of the NIC structure with the general income tax structure. Do the Government feel that these proposals, when implemented, will be neutral, negative or positive on that issue?
Lord Davies of Oldham (Lab)
My Lords, as the noble Lord, Lord Razzall, indicated, the Opposition support this Bill. In fact, he succeeded in raising most of the critical points that I was going to make in my contribution—a growing sign of just where the Liberal Benches stand as we get closer to the general election, I suppose. It certainly obviates the necessity for me to repeat all those points.
This is a fairly modest Bill, but a constructive one and one that went through without opposition in the other place, although I congratulate my honourable friend Shabana Mahmood on her contribution to the debate there. She raised the points that the noble Lord, Lord Razzall, reiterated today. She was not entirely satisfied with the responses. The noble Lord, Lord Razzall, obviously is not as yet. He thinks that there are still questions, and so do I, but those questions are more on the margin than on the central thrust of the Bill, which we endorse.
It is important that we get this issue right. Some 4.5 million people are now self-employed in this economy, which is one in six people. Of course, in many cases that will be through choice, but in many other cases it will reflect the fact that getting a job that pays remotely adequately remains very difficult for many people and that there are those who are self-employed because the people who organise their work see advantages in doing so on that basis, as tax advantages accrue to the organisers of the work as well as, supposedly, to those who are self-employed. I am therefore glad that the Government have taken up this issue and have addressed their mind to improving the situation.
We are in favour of the simplification contained in the Bill, and we wholeheartedly endorse the other main objective which is the targeted anti-avoidance rule. It means that we can tackle disguised employment made possible through employment intermediaries or offshore employers. We need to make sure that the Exchequer gets its proper receipts from those working in the economy and effectively owing a contribution to the finances of the nation.
We recognise that it is important that the Government get the specifics of this position right. At present, 0.3% of the £102 billion collected in NI contributions engenders 40% of the calls to Her Majesty’s Revenue and Customs. There is something clearly wrong with this distortion, and it all revolves around the category of the self-employed. That is why the Government have acted, and they have acted well in ensuring that the class 2 payers of NICs can now pay at the end of the tax year, and that they have their assessments worked out on the basis of self-assessment. So we are clearly seeing an improvement in the position, which we greatly welcome.
The noble Lord, Lord Razzall, raised the maternity issue. I will therefore not reiterate what he said except to endorse that there are still anxieties. The Chartered Institute of Taxation said that it had enough anxieties and question marks to urge the Government to think in terms of reviewing the situation within two years, and I hope that the Minister can, perhaps, be categorical in his and the Government’s determination to guarantee that this occurs. The maternity allowance affects about 25,000 women each year who claim for it, and it is absolutely critical that the system should work effectively for them.
I also endorse the point made by the noble Lord, Lord Razzall, to which the Minister made some reference in his opening remarks. It is quite clear that the Government have to be successful in their communication of the benefits of this legislation and the way in which people respond to it. Increasingly, the Inland Revenue, for all the obvious reasons, uses the internet and the computer for communication, and expects people to be online in response. A great number of our fellow citizens are only too delighted that their tax returns and obligations to the Government are met in this much more efficient and effective way. But a great many of the self-employed, for the very reason that I established the categories in the early part of this speech, have limited abilities and understanding of how to use the internet. We have just got to recognise that a substantial percentage of our population are not computer literate. An awful lot of them will be in the category of those who are in the self-employed ranks. That is why we need the assurance of the Government that they are going to carry out an effective programme of communication to all of our citizens, to ensure that there is a fair deal for the less advantaged among them, as well as the more obviously computer literate. I hope that the Minister will give some reassurance on that front.
Of course, people will get a vague perspective that the Government have done something about the NICs situation. But there is a difference between that and being able to implement action which defends their own direct interest, as the NICs payments are clearly of such significance to the substantial number of people who get very little returns in their self-employment statement. If there is any doubt about just how lowly the returns can be to the individual, just look at the Exchequer’s problem in indicating the lower level of receipts it has been getting in certain categories. A great deal needs to be done to make this legislation effective and fair.
Of course, we endorse the targeted anti-avoidance rule. It is clearly important that workers who are self-employed are in that position through their own wishes and are not just badged as self-employed by those people who take advantage of their labour, and organise it, and do it on a self-employed basis for the obvious advantages it gives to the so-called employer, or organiser of the work, in taxation terms. Clearly, if people fail to meet their NICs payment, they will have no provision for holidays or even for sickness, unlike others in the workforce, so this is an important piece of legislation for a substantial section of our population —and a growing section, as we all appreciate.
The Bill went thorough the Commons without a Division. It is not customary to divide the House at Second Reading and therefore I have no intention of doing so in any case. However, as the House will recognise, the Opposition are fully behind the Bill. We have a few questions that we want the Minister to answer satisfactorily but we join him in commending the Bill to the House.
Lord Newby
My Lords, I thank both noble Lords who have welcomed the Bill. The noble Lord, Lord Davies, said that it was a sign of the times that my noble friend Lord Razzall agreed with him, but surely it is a sign of the times that the noble Lord, Lord Davies, agreed with my noble friend. Whoever is agreeing with whom first, it is an extremely satisfactory position for a Minister at the Dispatch Box to find such a general welcome for a Bill.
Both noble Lords asked about the impact of the changes on the administration of the maternity allowance and whether it would be sensible to have a formal review two years after the Bill comes into force. That timetable does not make any sense, because the first payment of class 2 through self-assessment does not have to be made until the end of January 2017, so a two-year review date is pointless. However, both the DWP and HMRC are committed to ensuring that this group of women is not disadvantaged by the way the reforms work and will be keeping the operation of MA under review on a continuous basis. In response to the specific point that my noble friend Lord Razzall raised, it will be possible to see on an ongoing basis whether the number of claimants falls. I assure noble Lords that if there is any sign of that happening, the Government will act to deal with whatever the administrative problem is that has caused it because, obviously, that is not the intention of the legislation.
My noble friend Lord Razzall asked how there could possibly be no Exchequer impact, particularly when the measure is introduced, with people changing from paying monthly to paying up to eight months after the end of the tax year. National insurance contributions are accounted for on an accruals basis, so the important factor is the time period for which the money is due rather than the date on which it is actually paid. It will therefore continue to be counted in the tax year itself.
My noble friend Lord Razzall asked about the impact of the reforms on entitlements for benefits claimants and how that would work. The contribution conditions for benefits are changing. In addition to the maternity allowance, which we discussed, and in order to ensure that the self-employed are not disadvantaged as a result of the changes, the DWP will modify the relevant legislation to safeguard the position of claimants who pay their class 2 NICs by 31 January—the deadline for paying class 2 NICs through self-assessment. This will be done, first, by treating them as having satisfied the relevant contribution condition at the right time and, secondly, by disapplying the 42-day penalty that normally applies where contributions are not paid until after the start of the benefit year.
Questions were also asked about how the self-employed will learn about these changes and make sure that they comply with them satisfactorily.
HMRC and the DWP are working closely together in communicating the class 2 changes to the people who are going to be affected so that key messages are cascaded in a number of ways and a number of times. The department’s communication strategy includes: undertaking customer research and testing some of the products with customers; HMRC writing to all self-employed customers; an updating of existing customer outputs, such as the small earnings exception renewal letter; making HMRC staff and DWP staff aware of the changes and building the relevant information into call scripts and telephony, where appropriate; and using stakeholder partnerships with intermediary groups, agent organisations and forums to ensure that key messages are understood by everyone so that the self-employed hear the messages through a number of channels and in a consistent way.
Finally, the noble Lord, Lord Razzall, asked whether the effect of these changes on any possible future merger of NICs and income tax would be neutral, negative or positive. The whole question of merging income tax and NICs is fraught with difficulty and complexity. To the extent that these changes would have any impact at all, were any future Government to plan such a scheme, I suppose, if anything, it would be very marginally positive, but in the overall scheme of things and in the context of such a wide-ranging review it would be almost lost in the wash.
This is a short Bill, but as all noble Lords who have spoken have recognised, it is important to simplify the way in which we administer the system and to reduce the scope for avoidance. Therefore, I commend the Bill to the House.
EU: UK Membership
(9 years, 5 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Liddle
That this House takes note of the case for the United Kingdom’s membership of the European Union.
Lord Liddle (Lab)
My Lords, it is high time that pro-Europeans made a stronger and more forceful case for Britain’s membership of the European Union, for, as matters now stand, Britain is sleepwalking towards exit. The blame for this situation, in my view —and I say this in no partisan spirit and with great regret—rests fairly and squarely on the shoulders of our Prime Minister. I have come to the sad and rather depressing conclusion that our membership of the European Union is no longer safe in David Cameron's hands.
I admired his Bloomberg speech of January 2013. It presented a well argued case for reform of the European Union that had wide resonance on the continent. While I thought that the commitment to an “in or out” referendum was a mistake, it seemed then that Mr Cameron was committed to a positive result. I remind your Lordships of what he said then:
“And when the referendum comes let me say now that if we can negotiate such an arrangement, I will campaign for it with all my heart and soul. Because I believe something very deeply. That Britain’s national interest is best served in a flexible, adaptable and open European Union and that such a European Union is best with Britain in it. Over the coming weeks, months and years, I will not rest until this debate is won”.
Yet, since the summer, the Government's European policy has hardened beyond recognition. In a “Today” programme interview in September, Mr Cameron proclaimed that he cared,
“a thousand times more strongly”,
about the break-up of the United Kingdom, had the Scots voted yes, than about Britain's membership of the European Union. I can give him five times, or maybe 10 times, but a thousand times? There is not much room left there for heart and soul commitment.
In his recent conference speech, the man who at Bloomberg had talked with great emotion about an open Europe looked straight into the television camera and declared that limiting immigration would be at the heart of his renegotiation strategy. Let us remind ourselves that in the Bloomberg speech the Prime Minister’s only reference to migration was to warn of the loss of freedom of movement rights for the over 2.2 million British citizens who live on the continent. That comes from a Written Answer from the noble Baroness, Lady Warsi, to the noble Lord, Lord Oakeshott of Seagrove Bay, earlier this year, so 2.2 million is the figure. Now, in the stampede to sound ever tougher on EU migrants, the consequences for our fellow citizens living on the continent are frankly forgotten and never get a mention.
No. 10 has licensed no less a person than the Foreign Secretary, as well as other Ministers, to talk up the possibility that the Government might recommend a no vote if their renegotiation objectives are not met. The whole focus of the Government’s European policy has become not persuading our partners of a credible reform agenda that would receive general backing in Europe but chasing after potential defectors to UKIP. The whole exercise is so pointless, for as your Lordships know there is no way you can “outkip” UKIP.
If we end up leaving, it is not as though there is a great public wave of indignation about our membership of the European Union. The latest Ipsos-MORI poll showed 56% opting in a referendum to stay in and 36% to come out. It is worth underlining that in a poll that YouGov took after the Rochester by-election, only 22% of UKIP supporters actually think that Europe is one of the main issues facing the country. Yet what we have now is a Prime Minister so desperate to win the next general election that he will say anything to win over UKIP votes and prevent further defections by Conservative MPs, and in the process will set renegotiation objectives that are incapable of being achieved. In the next Parliament, if he remains Prime Minister, he will find himself cornered by his own anti-Europeans in the Conservative ranks to recommend a vote to leave Europe because of the consequences of what I can only describe as recklessness and opportunism.
The sleepwalking nightmare will be upon us, and the nation will realise what a disaster its craven leaders have allowed to happen only when it is far, far too late. That is why we need to make a stronger case now to try to prevent the slide to populism, which ends up with parties making promises they will never be able to keep. Of course, as a Labour man, I want to see a Labour Government. As a pro-European, I commend my leader Ed Miliband for resisting the enormous pressure to concede a referendum. However, even if there is a Labour-led Government in the next Parliament, there may be in a hung House of Commons a majority for an EU referendum, so we have to start making the case now—and a better case than we have made so far.
The traditional British case for Europe is about growth and jobs. It is a strong one: 3 million jobs dependent on the single market, inward investment coming to Britain because of unimpeded access to that single market, and international companies relying on the scale of Europe’s home market that is the EU single market to win new global markets overseas. But I think we have failed as pro-Europeans to get across to the public the complex nature and full economic significance of the single market.
Many people I meet think, “Why can’t we rid ourselves of the encumbrance of all the EU regulation and cost, and trade freely with our EU partners?”. Pro-Europeans have to start challenging the pullers out—because that is what they are—with hard and difficult questions about their alternatives to our EU membership and the consequences of those alternatives.
Broadly, there are two. The first is to be a Norway: in other words, be outside the EU but accept all its rules, pay up to finance its budget and continue to allow the free movement of people that EU laws require. That Norwegian option gets us out of the EU but denies Britain any say whatever over the key rules that shape our economic future, so that is not much of an option, is it?
The second option is to abandon those EU rules and to say, “We’ll make our own way without them”. What will happen then? We will find that our products and services are discriminated against in EU markets because they do not meet EU approval standards. We will see the flight of foreign banks in the City to Amsterdam or Paris to avoid that discrimination and to be in the single financial area. In the case of the car industry, the most successful manufacturing renaissance that this country has seen, British producers will face a 10% tariff in order to enter the European market, with untold consequences for vital jobs in many of the deprived regions of our country. That option—that dash for the restoration of national economic sovereignty —would inflict an economic wound of massive proportions. We have to spell that out.
Of course we should fight within the EU for EU rules to be proportionate and to see unnecessary regulation abandoned. But again we should always challenge the pullers out who complain about EU regulation. What do they actually want to get out of? Do they want, for example, to get out of and have no UK equivalent of the working time directive, which guarantees British workers four weeks’ paid holiday a year? Do they want out of it or not? Similarly, on environmental laws, do they want out of the regulations that require clean rivers and beaches and not have them in Britain? Or on consumer laws, do they want to end the regulations that provide for cheap air flights and that end rip-offs in mobile roaming charges? Is that what the anti-Europeans want? If they do not want that they are going to have to comply with EU laws and regulations. Pressing the pullers out on their alternatives to EU membership will be the equivalent of the currency question in the Scottish referendum, which the nationalists could never satisfactorily answer.
Beyond these questions of national self-interest, I believe that pro-Europeans have to make an emotional argument—to use another Scottish parallel—that we are better together. Harold Wilson once dismissed the sovereignty argument against Europe with the quip that he regarded the gradual pooling of sovereignty as part of the advance of human civilisation, and he was right. In a world of interdependence, if we want to tackle problems that reach beyond national borders, we need international co-operation that is effective. For all its many problems and frustrations, there is no better example of this in the world than the EU.
Think of the world that we are now in, with China, the world’s largest economy, pursuing a national strategy of aggressive state capitalism, with the return of nationalism in Russia, barbarism and fanaticism in the Middle East, and chaos and heart-rending human tragedy in north Africa. We in Europe are surrounded by these multiple threats to our contentment and civilisation, and either we hang together in addressing them or we hang separately. Without the co-operative framework of the European Union, we cannot begin to tackle the problems of climate change, energy, migration, disease that crosses borders, terrorism and threats to peace.
But the antis now say that none of this counts for anything, because they are managing to successfully define the greatest challenge of our age as immigration. They are making the claim that as long as we remain EU members we cannot control our borders. I believe profoundly that it is the responsibility of political leaders to lead on this issue. The facts are clear: EU migration has been a huge economic benefit to Britain. The populists blame migration for overcrowded schools, for long waits for GP appointments, for housing shortages. Of course there are areas of stress, and I think that what Labour is putting forward—that there be a migration fund as part of the social and structural funds—is a good idea. But the fact is that without the tax revenues that EU migrants bring to the Exchequer, we would find it much more difficult to tackle these problems and to find the spending to address these stresses than otherwise.
Yes, I agree that exploitation in labour markets has to be tackled and that benefit abuses have to be stopped, but free movement is a fundamental founding principle of the European Union, which successive Governments have solemnly signed up to since we first thought about entry in the 1960s, and from which millions —2.2 million, to be precise—of our citizens benefit. We cannot, with our integrity intact, cross the line into quotas and blatantly discriminatory policies.
Some 16 years ago I attended the ceremony when Helmut Kohl got his freedom of the City of London. At the end of his speech he talked about his boyhood days in Ludwigshafen, when he used to need a pass to go from one zone of the town to another because they were in different zones of Germany. He contrasted that with when he went on summer evenings to the Brandenburg Gate in Berlin, the Spanish Steps in Rome and our own Trafalgar Square, where he met so many young people of different European and other nationalities, mixing together enjoyably and at peace with each other. The miracle of the European Union has contributed to that to a very considerable degree. It underpins our prosperity and contentment. As we remember this centenary, the horrors of the First World War and what came after, we cannot cavalierly throw away one of the greatest historic achievements of European civilisation.
Lord Howell of Guildford (Con)
My Lords, although the noble Lord, Lord Liddle, has just launched a number of sharp and critical arrows at the coalition Government and the Prime Minister—indeed, one might say a few howitzer shells—I am, in a strange sense, heartened by the way the debate on the European Union and Britain’s position in it is going. I believe that underneath a great deal of the rhetoric and partisan exchanges there is a clustering of opinion around the concept of reform of the European Union, of which Britain’s relations with the rest of the European Union is a part—it is certainly a part, but it is only a part. Indeed, official policy of the coalition Government is “renegotiation with a reformed Europe”. My question for all of us to ponder is: how is that reformed Europe going to come about that we can negotiate with?
If I have reservations, they are these. First, it seems to me extremely important that we should get away from the idea that negotiations will be purely bilateral between the UK and Brussels, with maybe one or two side discussions with individual member states. The issues being raised are far from being ones on which Britain is isolated. The smart pro-European think tanks are quite wrong in asserting all the time that there is no appetite for reform of the European Union around the rest of Europe. There is, it is very considerable and it was expressed at the European parliamentary elections with great vigour. It is not true that the whole political class in Europe is against all reform and regards Britain’s demands as eccentric and separate.
Secondly, to do that, we have to build up alliances very strongly. I would like to see much more of that diplomacy going on, so that we can focus on the fact that even the red-hot topic of immigration, which the noble Lord, Lord Liddle, mentioned, is not a uniquely UK issue. Almost every country throughout Europe—even the countries losing migrants—is concerned about the effects of the totally free movement of labour doctrine applied to the modern Europe, which is quite different from the one in which it was originally formulated.
Thirdly, it seems to me that if negotiation with a reformed Europe is the aim, the reform part of it should, in a sense, come first or certainly go very closely with the negotiation. We could otherwise end up finding ourselves negotiating—as we did yesterday—with a changing body: something that does not exist anymore and is being changed before our eyes.
Fourthly—and I think many people throughout Europe recognise this—we must address the fundamental issues. Even the former president of France, Nicolas Sarkozy, who I gather wants to be president again, said the other day that, unless 50% of the competencies of the European Union are returned to the nation states, the system will explode. He is just one voice among many who recognise that the system is overcentralised; it is an EU model for the 20th century and we are in the 21st. New technologies are challenging the very nature of the single market through new supply chains, global value chains. All kinds of new technologies—machine-to-machine, digital fabrication and so on—are changing the nature of trade totally, and therefore the nature in which the single market has to work. Thirdly, unemployment throughout the eurozone is much too high. Fourthly, there is the chronic euro problem, which is by no means solved. It is currently a dilemma between those in Germany who want a unified political system to run the euro and those, also in Germany, who do not want to pay for it. That is far from being resolved.
We are told that there cannot be any treaty change to meet those fundamental needs, but I say to your Lordships that treaty change is inevitable and that, in due course, a new intergovernmental conference will have to be convened. I hear that view coming from all quarters. I have even heard it from the excellent think tank that the noble Lord, Lord Liddle, operates in, the Policy Network, which has called for change in the treaty. I hear it from my good friends behind me, the Liberal Democrats. The noble Lord, Lord Maclennan of Rogart, said that he wants to see some kind of gathering to examine the fundamental role of things. I even hear it from very strong Europe builders such as Herr Schäuble, who says that we have to revisit the whole configuration, architecture and constitution of Europe. I hear the call for reform from all sides.
To my mind, that task is what the best brains, the diplomats and those outside government, in business, should concentrate on—disregarding Brexit and all that nonsense and bringing the 20th century European model into the 21st century. The best brains of Europe should be concentrated on that task.
Lord Robertson of Port Ellen (Lab)
My Lords, I am glad that my noble friend Lord Liddle has brought this debate before us. It is a debate that will dominate our politics for the next few months and perhaps for the next few years. Apart from the argument that has just taken place in Scotland, this is perhaps the most important debate of our generation.
My position is clear: I believe that leaving the European Union would be disastrous. Some of us have just spent the last two and a half years in the referendum campaign in Scotland, alongside Conservatives and Liberal Democrats, arguing against Scotland leaving the union that is the United Kingdom. We all did so in spite of our totally different politics. We did so with passion, commitment and sincerity against a well funded, well organised and highly emotional separatist campaign. At the end of the day, we won the debate and the referendum. The three parties which believed in the union campaigned—occasionally uncomfortably—together.
What did we all say during that whole campaign? “We are better together”. That was our slogan and our powerful case to the people of Scotland. We spoke of years of successful integration in a union that works for all of us. We all argued about the costs of breaking up and going it alone in a complex, multilayered and interdependent world. We all warned about creating new barriers and borders when our single market was so integrated. During the referendum campaign, we all echoed the statements made by small and large companies across the land attacking the break-up of the union and the effects it would have on jobs in Scotland which depend on the big market of our neighbour. During the campaign we all said that we had the best of both worlds—decision-making in all key areas at home but part of a bigger unit where we had an equal voice. We repeated that separatism would leave our country outside, isolated, when all the big decisions were taken elsewhere. These decisions affect our citizens—their companies, their jobs and their future.
Together, we used all of these arguments relentlessly, though some of us had never really agreed on anything else before. We all of us denounced and derided the nationalists who said that the European Union was essential but that our union should be destroyed. We made all these arguments consistently and constructively, with passion and effect, and every one of them applies to the European Union that we are part of today. Because we took the argument out, despite the fact that we were campaigning for a no vote we avoided the negativism that would automatically come from arguing for no. Very few people who heard Gordon Brown’s speech in the last stages of the referendum, and very few of the millions who watched it on YouTube afterwards, could fail to see the passion for this union.
Maybe there is not the same degree of passion about the European Union and maybe there is a disenchantment creeping in sometimes with something as big as that, yet the arguments remain the same. Those arguments succeeded in Scotland against the nationalist bandwagon and persuaded people to come out in a campaign where 97% of those eligible registered to vote and where the turnout was 84% across Scotland but over 95% in some areas. Those arguments penetrated into people’s minds and, despite the ocean of yes posters and the near hysteria of the yes campaign, people listened carefully to our constructive arguments for the union that we are in and that we benefit from.
If we make the arguments for the European Union cogently enough and face people with the alternatives to what we are in at the moment, I have no doubt that the British people will come to the same conclusion as the Scots.
Baroness Ludford (LD)
My Lords, I welcome this debate, initiated by the noble Lord, Lord Liddle, and I have pleasure in taking part. I also look forward very much to the maiden speech of my noble friend Lady Smith of Newnham, who is a considerable authority on EU affairs. I remind the noble Lords, Lord Liddle and Lord Howell of Guildford, and the House that the comments directed towards coalition policy should, in fact, be directed towards Conservative Party policy. Government policy, as expressed in the 2010 coalition agreement, is that:
“We will ensure that the British Government is a positive participant in the European Union, playing a strong and positive role with our partners, with the goal of ensuring that all the nations of Europe are equipped to face the challenges of the 21st century”.
I can but agree with my party leader, Nick Clegg MP, who yesterday described as “idiotic” the suggestion by Mr Owen Paterson MP that the Conservative manifesto should commit them to an exit—a Brexit—from the EU. Mr Clegg said:
“It would be an act of economic self-harm to jeopardise 3m jobs in that way”.
Perhaps I have set the record straight.
It is staggering that Europhobes should see the EU as the graveyard of sovereignty but would be quite happy to be like Norway, having to follow all EU rules but with no say in them. It would be the ultimate expression of powerlessness: EU regulation without representation. We cannot win all battles in Brussels but we can have a decent chance if we have a voice. It is the basic Liberal Democrat contention, which we have consistently followed for seven decades, that Europeans are better together. I had written that before the two previous speakers, so great minds think alike. My party has been consistent on this. We have not only peace but greater prosperity, security and stability by being part of a union which has, at its heart, a guarantee of the rule of law, democracy and human rights. The 20th century surely taught us that. We cannot meet the threat of cross-border crime and wider security threats unless we co-operate with our European partners. As my noble friend Lord Wallace of Saltaire said, as a Liberal Democrat, in a speech at Chatham House, these threats,
“are shared with our neighbours and partners—they’re not challenges to Britain on its own”.
We cannot meet those threats through “exit or isolation”. He insisted, not only that,
“any foreign and security policy which denies the central importance of European engagement will have a large hole at its core”,
but that that security co-operation should encompass energy, the environment, conflict prevention and many other matters, as well as cross-border policing.
Yesterday, I read something which shocked me to the core. A Daily Mail article deplored the lack of welfare regulations on duck farming—presumably in the light of the bird flu incident—and, specifically, the lack of EU legislation on duck farming. You could have knocked me down with a feather; a duck feather, of course. Even the Daily Mail recognises that sometimes we do need EU-wide standards to safeguard health, security, the environment and free trade. The serious point is, of course, that the mantra should be “Europe only when necessary”. I am proud that Liberal Democrats in the European Parliament, working with the Government, helped to secure an exemption from EU accounting rules for 100,000 smaller British firms, saving them hundreds of millions of pounds in administration costs. Liberal Democrats insist on effective and objective impact assessments before new proposals by the European Commission or European Parliament amendments are put forward. Much could be done to tighten up the scrutiny of new EU regulation. National Governments should stop policy laundering through Brussels and gold-plating on implementation. It is a great pity that the European Commission pressed on with the European public prosecutor proposal after 14 national Parliaments rejected it.
The big picture is that the UK has a huge stake in the EU single market. We must be constructive and engaged in pressing for the opening up and liberalisation of these half a billion consumers to British businesses, especially digital industries, the energy market, transport and other services. We cannot do that if we are simultaneously trying to unravel a key element in the single market: the right of free movement to work, not to claim benefits. In an increasingly multipolar, globalised world, the UK and its EU partners have the collective strength to promote our values and secure respect for them around the world, including in Washington. An active and engaged UK in the European Union is the best commitment we can make on the centenary of the First World War.
The Lord Bishop of Coventry
My Lords, I, too, am grateful to the noble Lord, Lord Liddle, for securing this debate, although I enter it with some trepidation in such company. I am constrained to do so by the story of Coventry, from where I come, and by the originating Christian contribution to the possibilities that some form of common life might have for Europe and, thereby, for the world. When in your daily life you see the scars of warfare upon a city, when you hear the testimony of those who lost homes and families on one night in November 1940, when each year you are joined by Germans in the commemoration of your city’s 500 dead, and when you join them as they remember their city’s thousands of dead, you know that peace counts and that reconciliation is indeed a precious gift, and you give thanks for the project which has had peace as its fundamental purpose.
I am not qualified to proffer an economic cost-benefit analysis of the UK’s membership of the EU. However, as a citizen of Coventry, I should like to register the deep thanks of my city to those who sought to make war in Europe, as the Schuman declaration put it,
“not merely unthinkable, but materially impossible”.
I should like to go further and say that somehow the debate about Europe, if it is to reinspire the generations, will need to appeal to something higher than money.
“Self-interest can never be a satisfactory foundation for a permanent alliance of nations”,
argued Bishop George Bell, who, even in the early days of the war, began to spell out a vision for a reconciled Europe. “Without a vision, the people perish”, said the ancient Jewish prophet.
The originating vision for Europe involved both a sense of responsibility for other peoples and nations within Europe and a responsibility for the world beyond Europe. “What can Europe do for me?” is a legitimate question but it is too small a matter to ignite the human spirit. “What can I do in Europe and through Europe for a more peaceful and prosperous, free, fair and better world?”. That is the sort of question that I would like the debate about Britain’s membership of the EU to be addressing, such as was suggested by the noble Lord, Lord Liddle.
None of this is to suggest that we should take an uncritical view of Europe as it has become. Certain characteristics of European integration—not least its democratic deficit—remain matters of profound concern, and the unease evident in many parts of Europe about its present form is an indication that a rebalancing of national sovereignty and European authority is necessary. But even here it is worth reconnecting with the original vision for a reconciled Europe, which was of “a community of communities”.
Behind that proposal lay a rich seam of Christian theology known technically as the doctrine of koinonia, or communion, in which people and churches place themselves in an ecology of interdependence, which, in promoting the common good of the whole, also serves the particular good of the parts. Indeed, I venture to suggest that this theology of, if I may put it in this way, the “covenanted mutuality of the autonomous” that is shared by Anglican, Protestant and Orthodox churches may at this point of European history complement the more distinctively Roman Catholic notion of subsidiarity, with its implication of organic unity that has been so influential on the development of Europe up to this point.
I conclude with two hopes for our national debate. The first is that it will be lifted from an exercise in accountancy to matters of higher human importance—virtues such as peace and reconciliation, responsibility and mutuality that can put the soul back into Europe. The second is that, learning from the Church of Scotland during the referendum debate, there might be a role for the churches of the UK to create the sort of safe and neutral spaces in which informed and serious debate of this kind can take place.
I am heartened in voicing my hopes on the same day as Pope Francis addressed the European Parliament, calling on its members to make Europe recover the best of itself and,
“to work together in building a Europe which revolves not around the economy”—
I would say not just around the economy—
“but around the sacredness”—
the transcendent dignity—
“of the human person, around inalienable values”,
so that Europe can be,
“a precious point of reference for all humanity”.
Lord Dobbs (Con)
My Lords, our identity is defined by our culture, not by institutions. This morning I was fortunate enough to go to the National Gallery to see some of the glories produced by that extraordinary Dutch artist, Rembrandt. It was a small reminder, among so many, that we Europeans have been the most successful peoples in the history of the world. Indeed, for 2,000 years we were the world. We bound more books, we parsed more poetry, we made more music and, in the process, we framed more freedoms than anyone else.
However, recently something has gone wrong. We have lost our sense of purpose. Why is that? President Juncker has an answer. For him, it seems, it is the fault of the people. This is what he said recently:
“We all know what to do, we just don’t know how to get re-elected after we’ve done it”.
Those are haunting words. They imply an appalling lack of leadership and a serious disconnect with the peoples, which puzzles me because, if the EU is not for the peoples, who on earth is it for?
Tragically, the single most powerful factor propping up the current hopelessly arthritic structures of the EU right now is not ambition, and least of all is it success. It is fear: fear of the unknown, fear of admitting failure, and fear of what might happen if the nettle is grasped and the eurozone is reorganised, yet fear of endless economic stagnation if it is not. But fear is a pretty miserable basis for building the future. Surely we can do better than that.
In a remarkable intervention today while on a visit to Strasbourg, the Pope, as we have heard, described the EU as,
“a ‘grandmother’, no longer fertile and vibrant”.
It might also be described as a bit of a dinosaur—all muscle-bound body and a tiny head, but with one idea echoing inside it: that of ever closer union. However, the dinosaur has entirely forgotten what that means. It was an idea launched through the treaty of Rome, which called for an ever closer union,
“among the peoples of Europe”.
I repeat: the peoples, not the institutional fixtures and fittings. In that ambition, at least, the EU seems to have succeeded. It has united the people—in dismay and growing disenchantment. The EU must change or it will be changed by the peoples.
Earlier this year I asked this House to consider an EU referendum Bill, and I recognise some familiar faces. It was never going to pass—not through this House —but the debate was necessary in order to throw light on this mighty issue. And it worked beyond my wildest dreams. Labour Members of this House rose as one to deny the people their say. They did not even wait until the white vans had pulled up in their driveways. They said, definitively, “No”. I shall be eternally grateful to a noble friend on the Liberal Democrat Benches who, at the time of the crucial vote, rose in his place, cast aside his party’s habitual coyness, pointed to the Division Lobby and cried, “This way to kill the Bill!”. His party, to a man and a woman, were counted through.
And so, through the fog of confusion, came clarity. This side of the House, the Conservative side, demands a referendum; every other party opposes it.
As grateful as I am to the noble Lord, Lord Liddle, for securing this debate, he and I could argue for a thousand years, I suspect, until we were old men, and still, I fear, we would never agree.
Baroness Ludford
My Lords, the noble Lord said that every other party opposes a referendum. I restate, for the sake of clarity, that the Liberal Democrat position, as expressed in the European Union Act 2011, is that there should be a referendum if there is a significant transfer of powers to the European Union. The Liberal Democrat spin on that is that that should be an “in or out” referendum, so we are in favour of a referendum under certain conditions.
Lord Dobbs
I thank the noble Baroness for that intervention. We hear the words—we have always heard the words—and yet we saw what they did when the time came to put their necks on the line.
I am grateful to the noble Lord for this debate. We need these debates. We need to clarify the issue. It is time to take this agonising issue—because we do not agree and we will never agree—out of the hands of us agonised politicians and give it to the people to decide. It is their future, and it must be their decision.
Lord Radice (Lab)
My Lords, I congratulate my noble friend Lord Liddle on his most eloquent speech in a most necessary debate. I do not mean that in the way that the speaker before me has suggested.
In 2011, during the passage of the European Union Bill, which has just been mentioned, I moved an amendment whose purpose was to lay a duty on Ministers to put the case for British membership of the European Union. I did not really think that it would be passed, but I said that because, with honourable exceptions, Ministers had, over many years, been extremely hesitant about arguing the case for Europe. Indeed, that criticism can be made about Labour Ministers as well as Conservative Ministers.
When I was speaking, I exempted two then Conservative Ministers from my strictures. I shall quote one of them because what he said then is still relevant. David Lidington is, miraculously, still Minister for Europe. He has lasted a very long time and he is an excellent one. He wrote, in answer to a PQ—when got at, I think, by Eurosceptics—that, first, British membership gives access without barriers to the world’s most important trading zone. Secondly, it underwrites employment for about 3.5 million UK workers, who are reliant upon exports to EU member states. Thirdly, it enables the United Kingdom to influence developments within the EU. Fourthly, it gives the UK greater leverage and negotiating power. I say: well said, David Lidington.
On the last, very important, point, at a time when the Prime Minister is calling for greater impetus behind the far-reaching TTIP—the Transatlantic Trade and Investment Partnership—negotiations between the EU and the USA, we should remember that we are represented at the negotiating table only because we are a member of the EU. That is a very important point, which I think Mr Cameron has forgotten.
As Prime Minister, Mr Cameron has a special responsibility to sustain our membership, but unfortunately for this country, instead of making the case for British membership, he has behaved like Ethelred the Unready offering danegeld in the vain hope of winning the support of Eurosceptic Back-Benchers and of impressing UKIP voters and members that he is on the right track, although there is a fat chance that he will be able to do that.
Of course, there were good things in the Bloomberg speech, but the Prime Minister unwisely promised an “in or out” referendum on the basis of renegotiated terms if the Tories won the election. That has cast a dark cloud of uncertainty over the British economy and British politics. Now the Prime Minister, feeling threatened by UKIP by-election successes, has raised expectations about curbing EU migration into Britain, which is just not realistic but infuriates our partners and therefore risks making Brexit more likely rather than less likely.
I end by quoting a leader in the Financial Times of 21 November. It ended by saying:
“The Prime Minister needs to start leading his own party and stop following another”.
He can begin by making a positive case for British membership of the European Union. Yes, reforms are needed, but, Mr Cameron, we are better together and we need to say so loudly and clearly.
Baroness Smith of Newnham (LD) (Maiden Speech)
My Lords, I have recently completed a three-year collaborative research project on national parliaments and the European Union after Lisbon. Two chambers stood out in our findings—the Folketing, renowned for holding Danish Ministers to account on European issues, and your Lordships’ House, which is internationally recognised for the depth of its expertise on European matters. It is thus with some trepidation and humility that I stand today to make my maiden speech. It is only the kindness and friendship that have been extended to me since I arrived five weeks ago that make me think maybe it will be all right, really.
I am taking the risk of speaking in this Chamber on Europe today partly because my first political memory is of the 1975 referendum. I went home from school at lunchtime and saw on the news that there was to be a vote on whether we should stay in the Common Market. I am not sure I really understood what that meant, because I was only six years old. That memory—staying in the Common Market—stuck with me, as, I am afraid, did wine lakes and butter mountains. The key thing about that debate is that it was intended to put an end to the question mark over British membership of the European Community.
That issue remained with me, and Europe has become a key part of my professional and political life. I cut my own political teeth in the 1980s, campaigning for an inspiring and committed pro-European, Shirley, now my noble friend Lady Williams of Crosby, whom I was privileged to have as one of my supporters when I was introduced into your Lordships’ House. At that time, Britain’s membership of the European Community was again contested because the Labour Party was committed to withdrawal.
I am delighted, therefore, that today the noble Lord, Lord Liddle, has brought this debate to the House, talking about the case for British membership. Thirty years on, the official position of all three main parties and the Green Party is that we believe that Britain is better off inside the European Union, even if there should be some reform of it, and even if public debate sometimes belies this position.
In my case, the study of languages at A-level and politics at university led to a doctorate on elections to the European Parliament, supervised by my noble friend Lord Wallace of Saltaire, my other supporter when I was introduced to this place. So, academics and politics came together. I spent some time then living in Germany and in Hungary before pursuing an academic career following the European Union. As an academic, I am acutely aware of the enormous benefits to research and innovation and, especially, to higher education that accrue from Britain’s membership of the European Union.
My own university, Cambridge, has seen research grant income from the EU rise from £14.4 million in 2007-08 to £52.8 million in 2013-14. That is 13% of its research grant income. The UK secured £5 billion in Framework Programme 7 funding from 2007 to 2013. In 2013, the UK higher education sector received £1.2 billion, according to Universities UK. Moreover, the UK hosts 23% of all European research council awards, more than any other member state. The Russell group of 24 leading research universities alone hosts 18% of those grants, more than Germany.
I apologise to the right reverend Prelate the Bishop of Coventry for talking about the economic side of things, but there are also the political and collaborative aspects which European funding seeks to bring about. Networks are important to academics to develop research links and an understanding of the foibles of other member states—their laws and individual approaches, their strengths and weaknesses. That is important because collaborative research is often an iterative process, not a one-shot game. Trust, respect and reciprocity are essential, but they must be earned, not demanded. As in academe, so in politics: it is vital to develop networks and alliances to build relations with like-minded colleagues in like-minded countries, irrespective of party. To have influence in Europe, it is essential to engage and build up effective relationships with partners on whom one can rely in a crisis or when seeking a reform that this country richly desires.
We in the UK need to persuade our partners in Europe of our strong bilateral contacts across Governments, parliaments and parties, and we need to persuade people that the UK’s membership of the Union is important. I look forward to working with colleagues in all parts of your Lordships’ House to ensure that the case for British membership of the European Union is made, and that it is made effectively.
Lord Empey (UUP)
My Lords, perhaps I may take the opportunity to congratulate the noble Baroness on her incisive and informative maiden speech. I am certain that her knowledge of European affairs will not go unused in this House as Europe is one of the subjects that has the capacity to get the blood flowing in the veins of your Lordships—as they may have noticed already. The noble Baroness enjoys a distinguished academic career. Having studied at both Brasenose College and St Antony’s, Oxford, she now holds the significant post of director of the European Centre at the University of Cambridge. Lecturing in international relations allows the noble Baroness to bring contemporary knowledge to your Lordships’ House for the many debates and discussions we have on this subject, and today is no exception.
The noble Baroness has two more distinctions that I wish to mention. She is the seventh “Smith” to be a current Member of this House, and I can assure her that she is in very distinguished company. She is also a serving city councillor in Cambridge, and as a former city councillor myself, I welcome the expertise that local representatives add to our deliberations. I have absolutely no doubt that the noble Baroness will bring her widespread experience at the local government level to our debates as well. We wish her good fortune as she branches out on a new and, I hope, rewarding part of her career.
I turn now to the debate secured for this afternoon by the noble Lord, Lord Liddle. I always listen carefully to his contributions, but I must say that I was somewhat dispirited by his passionate promotion of the objective without any apparent recognition of the collateral damage that the passage of time has done to the initial ideal. Anyone who was around at the end of the war could not but have realised that things had to change. Europe had been laid waste in the 20th century and our predecessors naturally had the instinct to do something to ensure that it did not happen again. To a very large extent, that particular objective of our predecessors has, so far and thank God, been achieved.
However, the EU is like any bureaucratic organisation —something to which the noble Baroness, Lady Smith, has just alluded. When we initially entered into the relationship, we were dealing with six nations of a very similar nature to our own. They were close by, they were developed countries, and there were a lot of similarities. The European Union of today is a totally different creature. It is vast in its expansion and the differences between one nation and another have grown dramatically, so the idea that you can simply apply the same rules today that were applied at the EU’s initiation is just not realistic. It is like applying the same rules to trains when they were steam driven as we do to our modern electric ones; it does not work. The disparity between the nations is such that what we are actually doing is taking young and perhaps qualified people out of the underdeveloped parts of the Union and bringing them here and to other developed countries. That cannot be consistent with the objective of levelling everyone up instead of levelling them down.
My anxiety is that to dismiss, as some seem to be doing, the vast movement of populations that has taken place—millions of people, not thousands—and to imagine that that has had no significant impact on the ordinary people of this country is totally unrealistic. I think that that attitude is the recruiting sergeant for the UKIPs of this world. It is what encourages them and helps them to gain ground. Let us look at some recent elections. Those who stood on a solidly pro-European platform have been almost obliterated. If we genuinely want co-operation—I want to see co-operation between the peoples of the European Union—it has to be done in a way that brings the people along with it. It should not be a source of division. If we want it to work, it should be a source of pride and achievement. But this country has a vast deficit with the rest of the European Union. We have hitched our wagon to a star that unfortunately is not rising at the moment because the European Union economy is stagnant and is becoming a smaller and smaller proportion of our trade. Sadly, when this country joined the European Union, we treated our former trading partners such as New Zealand and the Caribbean countries shamefully. We swept them aside overnight, and that is a source of worry for me.
My final point is this. The noble Lord, Lord Liddle, must reflect on the fact that last week his own party spokes -person, the shadow Home Secretary, made a speech about immigration in the other place. But she must remember that she was part of a Government who took the decision to allow free and open access to this country by the accession countries. That fuelled massive levels of immigration that we have not been able fully to absorb. If you fill a place up, what happens is that services become pressurised, and that starts agitation. We can see it happening in other countries. Marine Le Pen did not exist as a political force a number of years ago, and yet it is clear that in her party and others throughout the European Union there are the stirrings of the very forces which led us to the position in which we ended up in 1939-40. This debate has to be treated seriously. We cannot dismiss the concerns of the people in an arrogant fashion. We have to listen and realise that there is a problem, and we should put our minds to how to resolve it.
Lord Smith of Finsbury (Non-Afl)
My Lords, as one of the other seven “Smiths” in your Lordships’ House, I join in the warm congratulations to the noble Baroness, Lady Smith of Newnham, on her fine maiden speech. It was deeply felt and knowledgeable, and I hope that we will hear much more from her in the House over the coming weeks and months.
I want to reflect in the short time allowed on the vital importance of our membership of the European Union to our environmental protection, stewardship and improvement. Some two and a half months ago I stepped down as chairman of the Environment Agency here in England. It is responsible for overseeing much of the framework of environmental standards and protection that we have. Overwhelmingly, that framework rests on a series of European directives that drive better performance, endeavour to keep standards high, and have largely been responsible for the improvements we have seen in our environment here in the United Kingdom over recent years. Quite frankly, we would be lost without them. It would be little short of an environmental catastrophe if, heaven forbid, we were to leave the European Union.
Of course, not all European directives are perfect. Would I have drawn up the rules governing nitrate-vulnerable zones in precisely the way that has happened if I had been seeking a truly common-sense approach to a worthwhile purpose? Of course not. There is certainly scope for improvement—but, taken as a whole, the range of environmental directives in place are powerful tools to enable real benefits to be achieved for people. Safeguarding the environment is, after all, every bit as much about people as it is about birds and insects and fish. It is about the air we breathe, the land we live on and the water we depend on for life.
I will take just three examples: first, the industrial emissions directive. It is no accident that over the last 20 years sulphur dioxide emissions in this country have fallen by 70%. Nitrogen oxide emissions are down by nearly 40%. Even particulates, where we have made less progress, are down by 15%. These are real benefits and real improvements that have been brought about by sensible regulation that has driven better technology.
Secondly, the transfrontier shipment of waste directive has made it far more difficult for us to dump our waste, especially our electrical and electronic waste, on the developing world, where all too often in the past it fuelled crime, poverty, exploitation and injury. These are sensible rules applied across Europe and they matter globally because it is Europe that has put them in place.
Thirdly, the bathing water directives. Thirty years ago we were labelled as the dirty man of Europe. Beach after beach on many of the most popular parts of our coast were failing European standards because of raw sewage being discharged on frequent occasions. The directives have driven change. They have forced clean-up and have now delivered the cleanest beaches and bathing water we have had in decades. As a result, they have helped both public health and the tourism industry. So when people rail against interference from Europe, this—I would remind them—is interference that we have signed up to; it is interference that we have helped to put in place; and, in the case of this range of environmental directives, these are bits of interference from which we have substantially benefited.
Surely it makes sense to tackle these issues on an international, continent-wide basis. After all, the environment knows no national boundaries. Pollution of the air and water does not stop at the frontier. These are continent-wide issues and they require continent-wide responses. Thank goodness we have the structures in place and our membership of the European Union in place to enable that to happen.
Lord Newby (LD)
My Lords, for the benefit of the House I remind noble Lords that we have a lot of speakers and that when the clock is at five that is time up. Even if all noble Lords from now on were to speak for just half a minute beyond five minutes, that would mean not only that my noble friend would not have her full time to respond to the debate, but the noble Lord, Lord Liddle, would have no time to respond, either.
Lord King of Bridgwater (Con)
My Lords, I thank the noble Lord, Lord Liddle, for introducing this debate and the argument for making the case for Europe. We all appreciate him initiating this debate and, speaking first from our side, I also congratulate the noble Baroness, as her namesake did before me, on a most interesting and excellent maiden speech on what I think is her major topic—which was very convenient for her.
I make it absolutely clear, as somebody who has always supported our membership of the European Union, that I believe that this is the right time for a fundamental reassessment of the state of the European Union, our position in it and the importance of the negotiations on which we are about to embark. I believe, very much as my noble friend Lord Howell said, that this is not just a matter for us with a British interest; it is acutely in the interests of all the nations of Europe at the present time to stand and take stock of what is actually happening. I have found that there is huge ignorance about what Europe really looks like at the present time. I have quizzed some of my noble friends on this Front Bench before on how many members there are now in the European Union—hardly anybody ever gets it right—and the developments that are taking place.
I come to this because for six years of my life I represented the United Kingdom in the Council of Ministers in Europe, because before I did Northern Ireland and defence I was doing environment, transport and employment. There I was, sitting in the Council of Ministers of nine member states, all really with a similar standard of living and level of economy, with the possible exception of Ireland. There was very much a feeling that Ireland, with a population of 3 million joining a European Union which at that time was getting on for 300 million, would have the advantage and that its economy would be brought more to the level of those of the other countries, which is exactly what happened.
Then I take stock of what has actually happened now. The enlargement started quite gradually. In 1981 Greece came in, Spain and Portugal in 1986, Austria, Sweden and Finland in 1995—but in 2004 came this vast expansion. Estonia, Latvia, Lithuania, Poland, the Czech Republic, Slovakia, Hungary, Slovenia, Malta and Cyprus, followed—as we remember well—by Romania and Bulgaria in 2007 and Croatia in 2013. Waiting in the wings as candidates are Serbia, Montenegro, Macedonia, Albania and, if it remains as a candidate, the largest of all by far—Turkey. That is 28 going on 33 and undoubtedly, if one looks at eastern Europe, there is the possibility of one or two more.
I was brought up to believe that if Europe expanded, if we were going to move as we did and support the enlargement, it could not just be the same Europe that it had always been—and this is where the important point arises. Can ever closer union coexist with ever greater enlargement? I think the particular problem—a point made very clearly by the noble Lord, Lord Empey —is that it is happening at a time of quite exceptional international instability. We have stopped talking about the problems of immigration. The problem now is of almost mass migration out of certain countries. If you look at the membership of the boats that are sinking in the Mediterranean, are those people Iraqi, Syrian, Lebanese, Egyptian or Libyan? Look at the refugees at Calais who are coming from Eritrea, Ethiopia, Somalia and Yemen—different countries that are practically ungovernable; almost completely failed states from which huge numbers of people are deciding to get out.
That situation, along with the very porous boundaries of the Schengen agreement—there is no doubt about how all these people are arriving in these different places —is putting an additional serious pressure on the national attitude to the European Union. Those of us who believe that there are considerable benefits from our membership of the European Union cannot just sit there echoing the phrases, “Not an inch” and “No surrender”—phrases that the noble Lord, Lord Empey, knows well—to your European policy, believing that that is the right thing to stick by. Unless people wake up and realise that there needs to be a fundamental renegotiation, in the interests of all the countries of Europe at the present time, popular attitudes will become absolutely demanding of far greater change than might be in the interests of the people of this country.
Lord Giddens (Lab)
My Lords, I, too, congratulate the noble Baroness, Lady Smith of Newnham, on her excellent maiden speech. She will be a formidable addition to your Lordships’ House. It is a double pleasure to welcome another academic into this House—it is a triple pleasure to welcome another Cambridge academic —and not another deranged politician, as I think the noble Lord put it.
I speak as a strong and committed pro-European. The European Union has helped to bring peace and reconciliation to a continent with a history of devastation. Unlike the noble Lord, Lord Empey, I believe that peace project is certainly not finished, and here I also diverge from the noble Lord, Lord King. One hundred thousand people died in the conflict that followed the break-up of Yugoslavia. The incorporation of Serbia into the EU is an absolutely crucial task for the near future. Russia might already be working to destabilise that process. Will the Minister confirm that the British Government absolutely would not consider blocking further EU enlargement as a way of advancing their agenda in Europe, as some papers have reported?
I am also a committed pro-European so far as Britain’s continuing membership of the EU is concerned. The world today is massively more interdependent than ever before. Britain can have far more real control—in other words, real sovereignty—over its affairs acting in concert with other EU states than it ever could acting alone, as 60 million people confronting a world of 7 billion.
The rise of UKIP is not without its benefits for those of us who hold quite opposing views. Its success will force a public debate on Britain’s future in Europe, which is a debate that we absolutely need to have. Those of us who believe that the UK’s future necessarily lies in Europe should, as my noble friend Lord Liddle said, mobilise and put our case forcefully. He also said that we should do it with passion, and I support that. The rise of UKIP has coincided with a surge of support among Britons for staying in the Union and helping to reshape it; indeed, there may be some kind of causal connection there.
The recent Ipsos MORI poll that my noble friend Lord Liddle quoted actually had stronger results than he mentioned. It showed support for Britain’s membership at its highest level for almost a quarter of a century. If you look at those who actually expressed opinions rather than those who said “don’t know”, 61% of respondents who expressed a view endorsed continued British membership, compared to 26% who wanted to leave. That is an interesting and remarkable result.
A detailed and proper public debate will oblige Eurosceptics to say what they are for, not just what they are against. The risks are enormous. Were the UK to leave, this time it would almost certainly lose Scotland. The US would bypass this country and deal directly with the EU. Some say small is beautiful, especially in the age of the internet, or else they argue that we should turn to the Commonwealth. If that is so easy, why have we not done it already? Germany, which of course is in the European Union, has twice the level of trade with India that the UK does. Power and size do matter and the influence of geopolitics is still all too real. Without the European Union, we would live in a G2 world dominated by the United States and China. The UK should play its full part in providing that necessary counterbalance.
In conclusion, I was very interested in what the noble Lord, Lord Howell, said—what he says is always interesting. As I took it, he was suggesting that there should be a more bipartisan approach at this point to the debate in this country. I think that could be really important for the national interest, and if that is what the noble Lord meant, I heartily endorse it.
Lord Rodgers of Quarry Bank (LD)
My Lords, it is 40 years ago almost to the day when, on 30 November 1974, Helmut Schmidt, Chancellor of the Federal Republic of Germany, spoke to a Labour Party conference at Central Hall. He strongly supported Britain’s continuing membership of the European Economic Community. It was, as I remember, a tour de force, helping to swing towards a yes vote in the forthcoming referendum.
However, in Volume II of The Official History of Britain and the European Community, Stephen Wall tells a story of how the British Foreign Secretary was less enthusiastic about Europe than the German Chancellor. On his appointment, Jim Callaghan summoned Michael Butler, the Foreign Office Assistant Under-Secretary responsible for European matters. After the preliminaries, Callaghan said, “They tell me, Michael, that you really care about Europe. Well, that’s all right, as long as you remember that I really care about the Labour Party”.
Now, 40 years later, the story has come full circle. The Chancellor of Germany, Angela Merkel, strongly supports Britain’s continuing membership of the European Union and patiently leans towards David Cameron’s problems. But in turn, the Prime Minister lacks the strength to make it clear to the voters that it would be an unqualified disaster—the expression used by the noble Lord, Lord Robertson, earlier—for Britain if the country were to leave Europe.
It is immensely sad that over half a century and more, with few exceptions and some ups and downs, the leaderships of the Conservative Party and the Labour Party have never been more than half-hearted in campaigning for the European Union and its predecessors. Political parties now attach great importance to rapid rebuttal, especially at election time. But there have never been any rapid-rebuttal government procedures in answering the drip-by-drip critics on factual European Union matters. So, amid the disappointments and uncertainties, I welcome this debate and greatly applaud the content and tone of the speech of the noble Lord, Lord Liddle. I hope it will echo round his party and that his party’s leader will listen.
There are many ironies arising from the parliamentary debates on Europe 40 years ago. It was said by the opponents of joining the European Community that membership of the six or the nine was not membership of Europe but of only a small part of Europe—by implication, a bigger Europe would be better. But now that we have 28 members of the European Union, opponents complain about the free movement of labour that was the essence of the original treaties and the anticipated consequences of enlargement.
Forty years ago, we lived in a bipolar world, dominated by the United States and the Soviet Union. We, the United Kingdom, knew where we stood. But today we live in an unpredictable, open world with sophisticated communications technology and growing, complex terrorism. It is inconceivable that Britain’s security at home and abroad would be enhanced by severing our relationship with the European Union.
To give him credit, the Prime Minister does not want to leave the European Union. But there are limits to what our partners in the European Union will stand, given unrealistic and unilateral demands. It is time for Cameron to swallow hard and tell the public unequivocally that he and his Government want to stay in the European Union, and to tell his partners plainly that that is his intention.
Lord Stoddart of Swindon (Ind Lab)
My Lords, I made my first speech against joining Europe in 1962. It was in Woolhampton, when I was the prospective candidate for the Newbury constituency—which, incidentally, I did not win. In that year, Hugh Gaitskell made a great speech at the Labour Party conference. This is part of what he said about joining the Common Market, as it then was:
“it does mean … the end of Britain as an independent … state … the end of a thousand years of history”.
Those were prophetic words indeed, because he foresaw that Britain would be joining what would eventually become a single state. That, in fact, is already happening: it already has the trappings of a single state. Its central policy is “ever closer union”. Of course, “ever closer union” means that Britain will become a province in a huge European country.
This issue transcends party politics. It is not about party, it is about our country and who rules our country —who governs Britain. That is the real issue, because without that we are simply a pawn in the European construct. It is not about Tory or Labour or Liberal, it is about—and I emphasise this—who makes the decisions. Is it our Government and Parliament or is it 27 other nations?
Those who support the Motion are largely those who urged the United Kingdom to scrap the pound and join the euro. They said that we would be sidelined, that we would hit the rocks if we did not adopt the euro. Of course, what has happened? It is the euro that is just about hitting the rocks. Fortunately we did not join. How wrong the people were who urged us to join, because it would have been a disaster for this country, a complete and utter disaster. Many noble Lords who have spoken have eulogised the EU. They have mentioned all sorts of good things that it has brought. However, we could have got those without being members of the European Union by negotiating with other countries.
Of course, it is also difficult to make an economic case for Europe. On trade, for example, the current account adverse balance for 2009 to 2013 is £280 billion. That means that Europe has sold £280 billion more to us than we have exported to them, so that is not very good news. Nobody else but the members of the EU have to pay for trading with the EU. Our contribution during this Parliament will be £52 billion net and about £85 billion gross, and rising. We are therefore not getting very much for our money.
I have already said this, but the big issue is who governs Britain. Is it Parliament, through institutions built up over the centuries, or is it a centralised empire, governed by an unelected bureaucracy and 27 other countries whose policies are often inimical to our own? Gaitskell believed in Britain and so do I. I believe that we still have a great place in the world outside the EU.
Lord Haskel (Lab)
My Lords, during the short break last week, I read a book by a Swedish journalist named Göran Rosenberg. The book, A Brief Stop on the Road from Auschwitz, described a journey that he had recently made, following in his father’s footsteps from the ghetto in Lodz, Poland to Auschwitz, to a slave labour camp in Germany, to a Red Cross resettlement camp and ending up in a small town in Sweden. At the same time as I was reading this book, there were events going on to mark the centenary of the outbreak of the First World War, which reminded us of all those horrors, as the noble Baroness, Lady Ludford, told us. At the same time, there were some mean-minded nationalistic politics going on, both here and in Europe. All that reminded me why I have been a committed supporter of our membership of the European Union since its birth. It is a means of ensuring a civilised, decent life for our children and grandchildren instead of the poisonous and divisive Europe that our parents and grandparents knew. This view may have gone out of fashion, but it will be back, just as extreme politics comes back.
In my case for Europe, therefore, I make no apologies for putting the human and political arguments first and the economic arguments second. Economics is a means to an end, not an end in itself, as the right reverend Prelate the Bishop of Coventry put it. Looked at from this perspective, the EU is a good deal. The figures from the noble Lord, Lord Stoddart, are misleading. It costs us about 1% of our annual spend of taxpayers’ money. For this we get access to a huge single market and all the benefits of inward investment and trade that it brings, as other noble Lords have explained. It helps us to compete in today’s global economic environment where you must have allies. This is a world in which you cannot go it alone unless you have a portfolio of successful companies creating goods and services that are competitive with the best in the world and that are welcomed and not discriminated against.
This logic is so powerful that its detractors, particularly in the press and in the blogosphere, resort to misstatements. They are cheerfully pedalled again and again, sometimes even with a glass of beer in their spokesmen’s hands. Eventually, these misstatements develop a life of their own, with claims such as loss of sovereignty because 75% of our laws are made in Brussels. The House of Commons Library tells us that the true figure is 25%. There has also been the claim that EU membership stands in the way of our trade with the Commonwealth and Asia. I say to the noble Lord, Lord Empey, that it does not.
Another claim is that the cost is high, but 1% of our government spend is marginal. Another is that we are being overrun by immigrants from new members of the EU. My noble friend Lord Liddle replied to that. In reality, we should be protecting the integrity of our benefits, healthcare and education systems rather than blaming the immigrants from the EU who help service them.
Playing games with our EU membership has dangerous consequences. As multilateral institutions like the World Trade Organization weaken, and as the nature of trade changes, as the noble Lord, Lord Howell, explained, it becomes even more critical for a country like ours to be aligned economically with the EU rather than going it alone in a globalised world. More important, however, is the risk of losing the civilising influence of co-operation, the risk of taking us back to inflicting the terrible journeys and experiences that European nationalism inflicted on our parents and grandparents.
Lord Maclennan of Rogart (LD)
My Lords, we must all be grateful to the noble Lord, Lord Liddle, for initiating this debate. It is an opportunity to state the positive about the European Union, which most of the media have resigned from doing. They have largely focused on splits, rows and, sometimes, failures to achieve objectives. I feel that the European Union is essential to the prosperity and peace of the continent. In my earliest memories, during the bombing of Glasgow in 1941, my grandmother was blown from one end of the kitchen to another, so it is a great achievement to have the almost 70 years of peace that we have had in the European Union. We have also seen democracy growing in the additions to the early Union in eastern Europe. Poland is growing in strength and democracy. It is interesting that its former Prime Minister Tusk is now seen as a leader of the European Union.
Our trade with Europe constitutes some 48% of what we export. That seems an enormously powerful stimulator of manufacturing and organising for a wide population of 510 million. We heard from other noble Lords about the influence that we can exert over the decision-making in the rest of the world—and of course in Europe itself. We in this country have about 1% of the world’s population and about 3% of its GDP. How would we seek to hold the ears of other Governments if we did not operate as a collective unified voice? China and the United States would regard us as trivial. I do not agree with the noble Lord, Lord Stoddart, that we can pretend in this day and age that we are still an imperial power.
A great deal has been said about immigration in recent months and weeks. The fact is that 2.2 million people from this country live in the European Union. If we were to expel the 2.3 million immigrants who live here, or make it more difficult for them, we could see barriers erected against our own citizens who have chosen to live, work and retire abroad. Some 79% of the citizens of Europe who come here are in employment, according to the Eurostat figures. The average age of those people is 34. Some 32% of them have university degrees. They come here with skills. They are not sucking away public money; they contribute tax. That is a huge benefit.
I do not believe that the European Union is incapable of improvement. I would like to see the European capital markets union grow so that the City of London could become a centre for the whole of the European Union’s finances; I would like to see greater liberalisation of services adding to the GDP of this country; and I would like to see the negotiations going on with China and the United States bring greater benefits through equally prosperous integration.
Lord Birt (CB)
My Lords, the case for the UK remaining in the EU has rarely been better made than by the Prime Minister in his landmark speech of just two years ago, which I reread over the weekend—though the powerful and compelling introduction to this debate by the noble Lord, Lord Liddle, was a close contender. At the conclusion of his speech, the Prime Minister observed:
“You will not always get what you want. But that does not mean we should leave … Britain’s national interest is best served in a flexible, adaptable and open European Union”.
I do not seriously doubt that the Prime Minister continues to believe that. A former Prime Minister, the sagacious Sir John Major, concurred with that when he spoke in Berlin earlier this month. He said:
“I have not a shred of doubt that the UK is far better off inside the EU as an active member”.
Now, the single currency was misconceived. The eurozone is stagnating. Subsidiarity was agreed at Maastricht but not wholly enacted—there is no good reason why the working hours of British doctors should be set in Brussels. The single market is incomplete. Some sectors remain closed to British service providers. While freedom of movement is in every way in our interest, it must be manageable. Unique in Europe, a 7% growth in the UK’s population in a single decade places an enormous strain on our public services. These are all legitimate matters for any British Government to pursue, and to do so alongside our natural allies in Europe—of which there are many. We have strong, principled arguments and we are very likely one day to win them. However, I do not agree that we should negotiate with the EU under the shadow of an axe. As Herman Van Rompuy colourfully put it,
“How do you convince a room full of people, when you keep your hand on the door handle?”.
Our country is in an ill temper. That is no surprise: we have experienced the worst ever global economic crisis. Real wages in the UK fell 8% in the five years from 2008. We have all seen how polarising the Scottish referendum was. In a referendum on Europe, we risk a bad-tempered, irreversible decision, scapegoating Europe ludicrously for all our ills. In the process, we further risk being distracted from the critical but hard and thankless task of reducing our enormous deficit and our still accumulating burden of debt. The UK is at heart an internationalist not a nationalist nation—a key and enthusiastic participant in the UN, NATO and the EU, pressing for peace, promoting prosperity, and at the forefront of fighting Ebola, poverty and climate change. We must press for economically liberal and progressive reform in Europe, but it is preposterous to think that we would be better off as a nation outside Europe, standing alone.
Lord Lea of Crondall (Lab)
My Lords, I begin with the interesting contribution made by my noble friend Lord Robertson of Port Ellen. Taking the analogy of what we have been watching north of the border, I think that there is a scenario where our leaving the EU would rather strengthen the likelihood that Scotland would be in the EU as an independent country and we would no longer be Great Britain. I do not know where UKIP would be if we no longer had Great Britain, but it would be Little England plus Wales. I do not even know how this would affect Northern Ireland. Certainly the notion that our leaving the EU would have no domestic consequences is a point that my noble friend has provoked in the debate.
There are one or two fallacies in the debate that are not helped by the prism of the Daily Mail, from which a lot of people get their information. We cannot do much about that—at least, there could be things to do about it, but they would not go down well with Thomas Paine or John Stuart Mill, given freedom of the press, although some people would describe that in different terms, as I think William Cobbett would do. The first fallacy is that our great companies are in Europe and—I say this to the noble Lord, Lord Howell of Guildford—it is our great companies in Europe that are exporting to the rest of the world. This dichotomy or antithesis between selling to Europe and selling to the rest of the world is ridiculous.
On Monday of this week, I was part of meeting with senior representatives at Congress House on European works councils. All the great companies of Europe have European works councils. They look at world market share and try to get some minimum standards agreed between them. The idea that Europe is not interested in exporting to Latin America or Africa is a ludicrous fallacy. It is food for thought for those people who are not in day-to-day contact with how industry actually works—they used to be the Conservative Party. I know that the City of London may have its own reasons for making these fallacies the standard belief, but we ought to be clear about the facts.
The second fallacy at the present time is that we are the most successful economy in Europe and therefore we do not need Europe. We have a bigger growth rate at the moment because we dug the biggest hole. I have the latest GDP figures—the actual level of production and output—for the last complete year. Europe equals 100, Britain is 106, Sweden is 127, the Netherlands are 127, Germany is 124 and Denmark is 125. That is the measure of success of an economy, not some propaganda put from Downing Street to the Daily Mail.
The evolution of Labour Party policy was touched on by the Liberal Democrat Peer, the noble Lord, Lord Rodgers, and by the noble Baroness, Lady Smith of Newnham—I, too, congratulate her on her maiden speech. It is true that Jim Callaghan said what he said in the earlier period, but I remember an afternoon with Helmut Kohl, Jack Jones and Alan Bullock in Bonn in 1976 when we were on the Bullock committee. Jim Callaghan was clearly seeing the opening for the Labour Party to change its policy, which came to fruition in 1988. The reason why it came to fruition—apropos the weekend’s press, as if the concept of the working class had just been invented by somebody—was that, because Europe was increasing workers’ rights, we got the Labour Party overwhelmingly to change and to become pro-Europe. No historian is going to challenge that. I will have to stop there.
Lord Inglewood (Con)
My Lords, I preface my remarks with the fact that I have recently become an unpaid director of Full Fact, which is a fact-checking organisation. I do not think that it is a declaration that I need to make, but I would rather do so because it bears on some of the things that I am going to say.
This afternoon, I would like to follow up some remarks that I made last week in the debate about whether this country should opt back in to the European arrest warrant, in which I was principally speaking as chairman of the Select Committee on Extradition Law. It seems to me that the political controversy around the warrant is a microcosm of the debate that would surround any possible referendum on EU membership, although I think that the recent suggestion that we might go down the route offered by Article 50 of the Treaty on the Functioning of the European Union is foolish, since it appears to give a veto to the EU over whether we would be able to remain in it.
The interesting findings of the committee’s special report on extradition law were in paragraph 19, which says:
“Alternatives to the EAW were discussed but the Committee notes that there are credible and substantive legal and political questions about their viability. It may be that these questions could be satisfactorily answered but so far it is unclear whether the proposed alternatives are legally, let alone politically, achievable”.
This is an extremely complicated and esoteric topic and a long way from most people’s ordinary lives. Certainly anyone to whom I talked about it over the weekend—outside the House, away from London, away from Westminster—seems to have been entirely bemused. The arguments on each side hardly seem to touch each other and the proposals as far as they were concerned might have been made in different languages. The smell of snake oil hung in the air.
Whether my own private view—and I supported the Government on this—is correct does not really matter or gainsay my point, because I may be wrong, as my immediate family frequently tell me I am. The underlying reality is, as we all know, that everyone, whatever side of the debate they are on about the future of European Union membership, thinks that it is a very important matter for the country. As I said in the debate on the European referendum Bill earlier this year or last year, I have been concerned for some time that the public must be able to handle the goods before they buy. It seems to me that there is an overriding need in this debate for misleading advertising puff to be identified for what it is. Almost certainly we shall see that it is to be found on both sides of the argument.
The character of the debate around whether to opt back in to the European arrest warrant clearly left the wider public little, if at all, the wiser since, as I said, the protagonists might as well have been speaking different languages, both of which were quite different from ordinary English. This is a recipe for snake-oil salesmen on whatever side of the argument. The rules of consumer protection in this country put the vendor of physical snake oil into the courts. Are the Government concerned about political snake oil and what do they propose to do to protect the electorate from it? After all, if you take and drink real snake oil, it certainly does not do what is on the bottle and it may do you positive harm.
Lord Lennie (Lab)
My Lords, I add my congratulations to the noble Lord, Lord Liddle, on bringing this debate to the House and on his passionate contribution and persuasive case for our remaining within Europe.
One of the most puzzling aspects of the British debate over the European Union is how often our arguments on this subject are disconnected from our major national challenges of economic growth, recovery and creating prosperity. We debate Europe’s responsibility for intrusive regulation, but not its creation of export potential. We decry Europe’s responsibility for migration to Britain, but take for granted its investment in Britain. In the so-called metric martyrs case that dominated my native north-east for years, we looked on in disbelief as “Europe” tried to force market traders to use kilograms, but we paid no mind at all to the infrastructure investment coming our way.
In the north-east, the live debate on European membership has real dangers. We are a region hungry for growth. We desire investment and we are keen to attract employers and to retain the ones that we have. What would it benefit us to turn away from our closest and biggest trading partners? We can see what being in Europe has achieved for the north-east over the past 30 years. In Nissan, we have a major exporter and employer whose success is based on access to European markets. Six thousand are directly employed, the same number again is employed in the automotive sector in Sunderland alone and many thousands more are employed across the region. What does Nissan have to say about the possibility of our leaving the EU? The chief executive says that it would,
“reconsider our strategy and our investments for the future”.
Across the region, exports are crucial to the north-east. The excellent review by my noble friend Lord Adonis on growing the north-east economy points out:
“The export of goods accounts for a larger proportion of GVA in the North East than any other UK region, some 29% of total GVA in 2010”.
The north-east is often the only region with a positive balance of trade. We have 1,500 exporting companies and half of that trade is with Europe. This focus on trade helps to explain why inward investment has created 5,000 jobs a year in the north-east. This is where the debate really needs to be.
I do not suggest that all investment in Britain would halt and all exports would cease if we detached ourselves from Europe, but if business investment looked a little riskier and if opportunities for export were reduced, that would have real consequences for jobs, families and the whole of the north-east region. The hard-won gains that we have made, helped by investment from NSK, Hitachi and our 1,500 exporters, would be put at risk. The growth that we need for the future and the 20% increase in foreign investment that the North East Local Enterprise Partnership is targeting would be that much harder to achieve.
In the north-east, we have been watching the debate carefully. For the past year, businesses and trade groups have quietly spoken of the risks of leaving a Union that supports trade, exports and investment. Those who believe in national independence over co-operative union have derided those warnings and said that they were fantasy or self-interested propaganda. They were no such thing and it would be unforgivable to ignore them now.
Lord Taverne (LD)
My Lords, I, too, congratulate my noble friend Lady Smith on her excellent maiden speech. She is clearly going to be a great asset to this House. I especially want to congratulate the noble Lord, Lord Liddle, on a magnificent speech. I hope that his think tank, Policy Network, will give it the widest possible circulation.
I, too, was going to quote the occasional warm words that the Prime Minister has issued, especially in his Bloomberg speech. I was going to quote the same words, but I will add one other quotation. He said:
“There is no doubt that we are more powerful in Washington, in Beijing, in Delhi because we are a powerful player in the European Union. That matters for British jobs and British security”.
He added that the status of an outsider, like Norway or Switzerland, was no alternative. He then set out the areas in which he said the Union needs reform: competitiveness; flexibility; greater subsidiarity; and democratic accountability through a greater role for national parliaments. Subsequently this agenda was adopted by the European Council, so what more could he ask for? But that is no longer enough.
I agree that if Mr Cameron should become Prime Minister again after May, the odds are getting stronger by the day that he will take Britain out of the European Union. His speeches have become more and more Eurosceptic. He has apparently licensed his Cabinet colleagues to indicate their preference for Brexit and he appointed a declared Europhobe as Foreign Secretary. Why has he changed course and what is his real policy? It is appeasement of UKIP and his Europhobe Back-Benchers. As the Financial Times observed in a recent editorial, he has placed the interests of his party and his own survival as Prime Minister before the interests of the country.
The central issue is now immigration, which was not even on the Bloomberg list. We do not yet know what he will say in the long-trailed, great speech, but the Prime Minister has recently talked of quotas, caps and emergency breaks. With his concentration on rhetoric rather than diplomacy, which Sir John Major wisely advised him to abandon, he boasts:
“I will not take no for an answer”.
Both the leaders of the Nordic countries at the Helsinki conference and Angela Merkel have made it clear that caps and quotas are non-starters, as they contradict a basic principle of the single market. However, encouraged by his speeches and his actions, what Europhobes now expect from renegotiation is a British opt-out from the treaty commitment to the free movement of labour. Anything less will be seen as only a cosmetic change.
What if Mr Cameron is Prime Minister again after May, perhaps as the head of a minority Government supported by a substantial UKIP presence, the DUP and perhaps an assortment of allies on particular issues? He has pledged to conclude renegotiations before the referendum in 2017. What if there is no deal by then? It is not inconceivable. There would have to be a deal not for Britain especially but for the EU as a whole and many other countries want different changes. It will be no quick and easy negotiation. The date does not help, as there will be federal elections in Germany and the presidential election in France. Would he still recommend a stay-in vote without a deal? His party would never let him and, if he tried, he would be replaced. Anyway, he has declared that to recommend a stay-in vote without a deal is out of the question. Suppose he gets a deal. What if his party rejects it as cosmetic? There would be a new Conservative leader and the Conservative Government would then passionately argue in the referendum for out. A 2017 referendum, with a public mood of widespread xenophobia and anti-immigration feeling, nurtured by a significant UKIP presence in Parliament and a stridently anti-European press, would be a very different campaign from that of 1975.
Consider what Brexit would mean for British influence in the world. It would break up the United Kingdom. Why should a pro-EU Scotland want to stay in a Britain that was no longer in the EU? Even if the United Kingdom survives, Britain’s voice would no longer count, as the Prime Minister has admitted, in the United States, the Commonwealth or China. If Mr Cameron becomes Prime Minister again, the course on which he has set would make him the Prime Minister who did more to destroy British influence in the world than any of his predecessors in history.
Lord Bowness (Con)
My Lords, I congratulate the noble Lord, Lord Liddle, on introducing this debate and making the case for our membership of the European Union. I hope that the Minister will feel able to endorse the need to make the case without qualification because, whatever we seek in renegotiation, it is important that our wish to remain a member is without qualification. This is particularly important as exit is now openly discussed as a possible, if not preferred, option, and some members of the Government seem openly to contemplate the possibility of campaigning for a no vote if in their view the negotiations are unsuccessful.
A former member of the Government has suggested that we invoke the provisions of Article 50, giving notice to leave at the commencement of negotiations. Will my noble friend confirm that this procedure would in fact be a decision to exit with or without a replacement agreement within a maximum of two years and without reference to the British people?
We welcomed the states of eastern and central Europe as members. We accepted their immigrants’ contribution to our economy, but now we refer to that as if it had all been a great mistake and one which we will not repeat. That is not a way to win allies in the European Union. We are ready to accept doctors and other professionals trained and educated at the expense of other poorer member states but would consider denying less skilled working men and women working benefits. Until the rules change for everyone, that would be discrimination against—if I may use the phrase—hard-working EU citizens.
Policies are not always popular with voters, and we have to give a lead. Foreign aid is a case in point. But my right honourable friend the Prime Minister has declared it to be his proudest achievement in office, and it has a budget coincidentally very similar to the net contribution of the UK to the EU. We have come a long way, since the Prime Minister rejected the idea of a referendum, to voluntarily donning a straitjacket and pledging an “in or out” vote by the end of 2017, despite the fact that it will be extremely difficult to complete negotiations—including, as has been mentioned tonight, an IGC involving treaty change—within the timescale. That will be particularly difficult since we have chosen to leave the European People’s Party, depriving us of friends with any influence.
What do we want that involves treaty change? Competiveness and less regulation do not require treaty change or an “in or out” vote. So what are we seeking? Some change to the status of Norway or Switzerland, which is effectively a decision to leave? Or changes to fundamentals such as the freedom of movement? I beg my noble friends on the Front Bench to realise that we have to stop playing to the prejudices of those whose only agenda is for Britain to leave the European Union. It has not been successful so far—it has taken us to Clacton and Rochester, and it may take us further down a road we do not want to go.
The European Union has been the most successful voluntary union that the world has seen, and the United Kingdom should be playing a leading role, whether for example in promoting energy security and alternative sources of energy or ensuring that the combined military resources of the member states are used to the greatest effect. However, I do not intend to take time arguing the economic case.
There is, however, another case—what I could perhaps describe as the moral case—and that is the desirability and need for a strong united European Union including the United Kingdom. Some argue that the European Union founded to ensure peace in Europe is no longer relevant and that war between any of the 28 member states is unthinkable. But we are seeing the unthinkable very close to our borders. Nationalistic tendencies are to be found in a number of member states and, it is reported in today’s press, are funded perhaps by Russia. Peace and stability in the Balkans owes much to the prospect of membership, where it remains a spur for reform; and reform, stability and democracy on our borders are very much in our interest.
There are not likely to be many, if any, new accessions in the next five years but the negotiations must go on. There may be transitional arrangements, including free movement, but the basic principles must remain, and we must not kill the hopes and aspirations of those countries that seek membership. To have transitional provisions which are dependent on a country achieving comparable levels of GDP before migration is permitted is to deny people the opportunities others enjoy.
A UK exit would be a major blow, not for us only but for the European Union. However, we may be deluding ourselves if we believe that the 27 other member states will agree anything merely to retain our membership. Let us remember that we have been fortunate in recent times not to experience invasion, occupation or dictatorship. For those who have, the ideals of freedom of expression and movement, democracy and much more are the hallmarks of the EU and the institutions which guarantee it. It is time for us to have the humility to recognise this, to make our case for membership with our own British people and to work with our friends, not treating them as our opponents.
Lord Phillips of Sudbury (LD)
My Lords, in the light of what I am going to say, I should make clear that I am strongly in favour of our continued membership of the European Union. In the 1970 general election, the first one I fought, in Clacton, I was in favour of it. I was in favour of it in the referendum of 1975, I fought the first European elections in 1979 and I have always been strongly in favour of it. But the European project is in crisis. If we carry on as we are, we will find that the people of this country have ceased to support our continued membership, and that will not be confined to this country. The recent by-elections and the rise of UKIP here—and to some extent of the Scots Nats in Scotland—are very clear writing on the wall.
You may say, “What has that got to do with it?”. I spent a day in Clacton canvassing, partly for old times’ sake. I was shattered by the degree of hostility not so much to Europe or immigration but to the whole state of politics in this country. Millions upon millions of our fellow citizens feel that they are in some way outside the political tent. They feel virtually anonymous, civically speaking. They feel overlooked, ignored and anonymous. There is a terrible feeling outside London of the metro-centric nature of our modern society. Whether you are talking about this place, or the media, or big business, there is a feeling in the country—and it is evident in a hundred polls, and in a hundred perceptive pieces of research—that the ordinary person in the ordinary community is of no account, until someone wants something from them.
That is certainly the impression I got across the doorsteps of Clacton. I emphasise that it was not racist stuff. It was not anti-EU stuff, except occasionally. It was a sense of rejection, disaffection and disconnection. Unless we do something about this—and it is not easy to know quite what to do—and unless we attack this citizen ignorance and disaffection, I believe that the European project will become unsustainable. In a democracy, if the majority of those who are democrats cease to connect with a central tenet of their society and their democratic culture, then it is not sustainable.
I read the other day that the total membership of our political parties is under 1%. There are fewer members of all our political parties than there are members of the Royal Society for the Protection of Birds. In the Hansard Society’s most recent democratic audit, its single most powerful point was the sense of powerlessness on the part of our fellow country people. Of the 18 to 25 year-olds, in another recent poll—I think it might have been for the Hansard Society—only 23% felt fairly involved or connected with any political party. Under a quarter of 18 to 25 year-olds now vote. We have 3 million people who are not registered to vote. All in all, I believe that the health of our beloved country, and its democratic institutions, has not been as bad as this certainly in living memory but going back, I suspect, a long way.
I will add just one more point, which is something that we could and should do now, and that is citizenship education. Our society is inexorably complex. We know what complexity is in this place. Many of us cannot cope with the legislation we are supposed to deal with. Think of ordinary 16 and 17 year-olds. How are they supposed to relate to all of this? We do not help them. Citizenship education is collapsing, and so, too, Europe is perhaps the most ignored aspect of all. I hope we will take this issue and deal with it.
Lord Pearson of Rannoch (UKIP)
My Lords, those who favour our membership of the European Union tend to do so, as we have heard, because they believe it has brought peace to Europe, because it enhances our position in the world, and because it is good for trade and thus prosperity. Those of us who want to leave it do not believe any of that.
I start with peace. The EU can take no credit for peace in Europe, which was, of course, secured entirely by NATO. Furthermore, the EU is largely responsible for the present bloodshed in Ukraine. While the Prime Minister and other Europhiles were voicing their dream of the EU stretching from the Atlantic to the Urals, Russia made it plain that she could not tolerate Crimea passing under Brussels and eventually NATO. In the spirit of compromise in 2010, Mr Putin offered a free trade deal from Lisbon to Vladivostok but the EU responded by offering its own trade and association agreements to Georgia, Moldova, Armenia and Ukraine. The EU also spent €496 million funding some 200 front organisations, largely in Crimea and eastern Ukraine, to promote closer co-operation with Brussels. I accept that Russia’s annexation of Crimea was illegal under international law but Crimea has a largely Russian population and was given to Ukraine only in 1954 by Khrushchev. I ask the Minister this question. Was Russia’s annexation of Crimea that much more illegal than our own invasion of Iraq, which has had such catastrophic consequences? Does she think that Ukraine would be in its present tragic position if the EU had not tried to absorb it?
Another fallacy about our membership is that we depend on it for trade, and that millions of jobs would be at stake if we left, as we heard from the noble Lord, Lord Liddle, who threatened us with a 10% levy on our car industry. German, French and other EU manufacturers dominate car manufacturing. They, not politicians, will ensure that the UK-EU trade in cars in both directions continues to be tariff-free after we leave the EU. The UK imports twice as many cars from the EU as it exports to it, with 1.4 million imported and 0.6 million exported. Of the total 1.7 million cars imported to the UK in 2011, 83%—1.4 million—were from the EU and EU manufacturers have a 53% share of the UK market. It just is not going to happen. If we leave the stifling, failed political project of the EU, we would continue to enjoy the free trade upon which some 9% of our jobs depend. We are the EU’s largest client, so it needs our free trade much more than we need its. As the world’s seventh largest economy, we could also have our own free trade agreements with the rest of the world—the Commonwealth, the Anglosphere and the markets of the future.
In this respect, I draw your Lordships’ attention to a groundbreaking new study published recently by Civitas, entitled Where’s The Insider Advantage?. This finds that we have not actually benefited from our membership of the single market at all, either for our exports or for inward investment. This new study reminds us of one published in 2006 by the French think tank, the Conseil d’Analyse Économique et Social, which reports to the French President and which came to the same conclusion for France—there was no advantage from the single market in exports or in inward investment. The French think tank’s solution was, of course, “more Europe” whereas ours is “no Europe”.
I come to my last question for the Minister. I have asked it before but have not so far received an answer. Why does this planet need the EU at all? I can understand that other international bodies have an ostensible purpose—the United Nations, NATO, the World Trade Organisation and so on—but what is the EU now for? It is pointless or damaging for peace. Its diplomacy is expensive and irrelevant. Its euro is a disaster. Its economy is stagnant and will get worse. It interferes in every aspect of our lives. I can see the point for its 80,000 vastly overpaid bureaucrats but what is the point of it for the rest of us? Has it not just become an emperor without clothes? I look forward to the Minister’s elucidation.
Lord Howarth of Newport (Lab)
My Lords, the Prime Minister’s proposal to hold a referendum on Europe in 2017 has nothing to do with any foreseeable state of affairs in the European Union at that date and everything to do with the intractability of Europe in British politics. If the British people do vote on Europe in 2017, it is improbable that they will take their decision in a calmly reflective frame of mind. Europe is so emotive. For Europhiles, membership of the European Union is an article of faith; for Eurosceptics, membership of the European Union is a continuing source of irritation and not infrequently of anger. They resent the pooling of sovereignty and they resent being ruled, as they see it, from Brussels.
Unless the bread-and-butter case for Britain’s continuing membership of the European Union is clear and compelling, which it is not, as has been lucidly and rationally explained by Roger Bootle in his book, The Trouble With Europe, it is entirely possible that a majority of our compatriots would vote to come out. The establishment would, with the possible exception of one of the major party leaders, no doubt advise the British people to stay in. However, there is no longer the habit of deference that caused the British people to overcome their misgivings in 1975 and vote yes. It is quite possible that a majority of Britons will, echoing Churchill, say they are for the open seas.
Free movement of people is a great preoccupation at present but I suspect that there will be concessions on that because other countries have problems with this issue. The crucial issue is the euro. Britain opted out of the single currency but it cannot escape the consequences of the single currency. The deflationary bias, the catastrophic consequences of a single monetary policy across so many disparate economies and chronic banking and government debt crises are all dragging down the economic performance of the European Union and that of the United Kingdom. As the 18 member countries of the eurozone meet separately to determine their stance on major economic issues, Britain is increasingly marginalised within the EU and yet has to live with the consequences of decisions in which we have had no part. We have found ourselves in a situation which it was a cardinal principle of British diplomacy for hundreds of years to avoid, where the major continental powers combine in their own interests regardless of the interests of Britain.
It is hard to foresee that the minority of non-eurozone countries will be able to combine to counterbalance the power of the eurozone while maintaining a coherent European Union of 28 countries. It is hard to foresee that the countries of the eurozone itself will be able to resolve their political tensions simultaneously to satisfy the requirements of Germany for fiscal rigour and its reluctance to pay for the costs of fiscal laxity elsewhere while easing social hardship and averting baleful political pathologies. Can we foresee that there can be a viable European Union in which all the member states agree on issues of trade, the environment, crime, migration and defence while financial and fiscal issues and associated political issues are decided by the eurozone countries in a deepening political union?
Damage limitation will mean that there is no answer to that question by 2017, nor will Britain by that date, with or without the other non-eurozone countries, have devised an alternative strategy or found a “better ‘ole” to go to. It would be wiser not to cut short the diplomacy by that date by having an in or out referendum.
What is clear is that Britain will not join the single currency. However, for the single currency ultimately to survive, the eurozone will have to move to political integration and a federal state. The European Union will continue to be dominated by the eurozone. The political leaders of the eurozone countries have invested so much in that project that they will maintain the single currency for some years to come. If British policy is to be more than passivity and drift, Britain will have to establish new terms of membership in a substantially reformed European Union—that is Mr Cameron’s policy but it is hard to see how meaningful reform can be achieved given the requirement for unanimity for treaty change—or find a way to split the European Union into two separate unions, but we have no allies for that, or leave altogether. Perhaps a looser association will be possible but we should ask ourselves what pattern of engagements will make sense for Britain in a globalised world in which the European Union is a diminishing force.
Lord Willoughby de Broke (UKIP)
My Lords, the noble Lord, Lord Inglewood, will remember that in our debate on Monday a week ago the noble Lord, Lord Hannay, accused us Eurorealists of being ideologues and went on to say that Europe is not a religion. You could have fooled me. The noble Lord, Lord Howarth, who has just spoken, said quite rightly that for some Europhiles the EU is an article of faith. The high priests of this quasi-religion, the Commission and the Brussels Eurocracy, press on with their dangerous project regardless of the damage it is doing to the peoples of Europe. They are sacrificing the future of millions of Europeans on the altar of the EU and the euro.
You have only to look at Italy, Spain, Portugal and Greece, where unemployment is at 25%. Far worse than that is the youth unemployment; it is anything between 40% and 50%, depending on the country. What does that mean for this generation of school leavers and university leavers? It means that they have no future. I suppose that the high priests will say to them, “At least you need not worry about the work-life balance because there will not be any work”, but the Eurochickens now are coming home to roost. All over the EU, political parties have sprung up to oppose the notion of the central priesthood in the EU, the notion of ever-increasing centralisation and of further unity. Let us look at all the countries: in Finland they have the True Finns; in Italy, the Five Star Movement; in Greece, Syriza; in Spain, Podemos—a very new party which is leading the polls there; in France, Marine Le Pen; and even Germany, the motor of the European Union, has the Alternative für Deutschland.
That may all be very unpalatable to the Europhiles but those are the facts. In addition, of course, I have mentioned UKIP, my own party, which won the European elections and just got its second MP in Rochester. Talking of Rochester, I must congratulate the Liberal Democrat party on its performance in defeating the Monster Raving Loony Party by some 200 votes; it must be very satisfied with that. I am afraid that we have tied ourselves into an outdated and failing EU trade bloc. While the rest of the world is growing, the EU is failing. It is shrinking. It seems odd that our future should lie in this failing organisation. The idea is totally bizarre. I am grateful to the noble Lord, Lord Stoddart, for reminding the House—no one else did—that one of the principal reasons why we believe we should get out is that we would regain the right to make our own laws and to rule ourselves. Parliament would once again be sovereign, not Brussels.
My noble friend Lord Pearson asked what is the point of the EU. Surely the point of the EU is our strong voice in Europe. Let us look at the results of our strong voice in Europe recently. The Prime Minister was slapped down this summer by Angela Merkel and François Hollande on immigration; Jean-Claude Juncker was elected as president of the European Commission over the Prime Minister’s objections; we have recently been slapped with a £1.7 billion fine on top of our already enormous £20 billion annual contribution to the EU; and most recently we had the humiliating judgment by the European Court of Justice that the salaries of our bankers should be decided in Brussels, not in Britain.
I will finish by reminding your Lordships that there are 193 members of the United Nations and 165 of them seem to manage very well without being in the EU. Sometimes I wonder how they do it. The ice is cracking under the EU and the ship is sinking. We should get off it before it sinks completely.
Baroness Morgan of Ely (Lab)
My Lords, it has been a fascinating debate and I thank my noble friend Lord Liddle for introducing it. This debate has been stimulated by some careful, moderate and intelligent thought to contrast with the uninformed hysteria that we have been hearing in recent months—and in recent minutes. I have one clear message for those who might be tempted to pander to anti-EU rhetoric—the same message given by my noble friend Lord Liddle: you will never beat UKIP on Euroscepticism, so you would do much better to take a stand and make the idealistic, pragmatic and self-interested case for the UK’s continued membership of the EU.
We must not lose sight of the idealistic reason for the establishment of the EU and how, despite the fact that my generation has no memory of war directly affecting our country, it is undoubtedly true that our membership of the EU has helped to keep the peace in what was once the bloodiest continent on the planet. There is no one better to remind us of that than the right reverend Prelate the Bishop of Coventry.
The EU is a bedrock for the preservation of human rights, respect for law and for a basic level of the provision of social justice. Although I agree with the right reverend Prelate that we need to make an idealistic case for the EU, and I agree with the noble Lord, Lord Robertson, that we need to make an emotional case, in our increasingly materialistic and atomised society, people also want to know how the EU is going to benefit them directly, and an appeal to the high ideals of the EU is simply not going to cut it with many of the general public. We need to step back, look at the direction in which the world is travelling and identify how the UK can maintain any semblance of influence in our fast-changing world.
We are undergoing the most profound geo-economic reordering of our generation. The economic crisis has sped up a shift of power from West to East. It is not just economics that is driving this but population growth and demographics. By 2050 projections indicate that the population of Europe will be only 7% of the global total. The population of the UK will be a mere 0.8%—even lower than that quoted by the noble Lord, Lord Maclennan. I will be 83—if I am lucky to live that long—so this matters. We must ask ourselves seriously how we in the UK intend to make our voice heard in a world where such a profound shift is happening.
How do we maintain the European social model that is so highly respected in other parts of the world when we have an ageing population—a model that needs to be paid for in the face of global shifts? As the noble Lord, Lord Dobbs, indicated, the Pope today described the European continent as a grandmother, no longer fertile and vibrant. But I would argue that grandmothers can provide experience, instil values and provide leadership. The Eurosceptics’ answer is to put up the barriers and retreat into a protectionist model, isolating ourselves from our nearest neighbours. They argue that we can still have a relationship with our continental colleagues through membership of the EEA, and also through negotiating with each country throughout the world individually. Do they really think that little Britain could negotiate a stronger trade agreement with the USA by ourselves, rather than singing in a chorus of the EU with the powerful bargaining mandate of the largest single market in the world pressing the case on our behalf? Can they not see that to pay for our social model our best chance is to pool our intellectual ability across the continent in order to produce innovative products here in Europe that we can sell across the globe and that will help to fund the lifestyle that we have learnt to enjoy?
The EU research funding that the noble Baroness, Lady Smith of Newnham, talked about in her maiden speech, on which I congratulate her, is critical to the development and rollout of these innovative products. R&D spending in the EU is around 1.9% of GDP. In the US it is 2.9%. However, China is catching up fast and has leapt from spending 0.9% to 1.7% of its GDP on R&D in recent years. There is no question that our international influence would be curtailed without our membership of the EU. We need to speak to China, India and Russia with one voice to exert maximum negotiating pressure.
The first priority of Government must be the protection of its citizens. However, due to the interconnected world in which we live, we need to understand the inadequacy of our traditional notions of how we protect our people. We cannot hope to stop terrorist attacks without co-operating with intelligence services elsewhere. It would also be madness to desist from involvement with the European arrest warrant. This has led to the swift return to Britain of fugitives from justice, including 49 of the 65 most wanted fugitives on the run in Spain. We talked earlier today about preventing Iran from developing a nuclear weapon capability. It is the EU and our British representative that have taken the lead in this negotiation. That would be impossible if we were outside the EU.
We cannot simply cross our fingers and hope that the Ebola virus will not reach our shores. We need to tackle the problem where it is happening, ideally again through pooling our energies with other EU member states and NGOs so that we do not have 28 member states all establishing their own administrative networks in the developing world, but channel these resources through one route. We cannot tackle climate change without a global commitment to cut carbon emissions. This, again, is being led by the EU. Common Europe-wide laws to protect the environment, as mentioned by the noble Lord, Lord Smith, and cut carbon are more effective than separate national policies, as pollution does not stop at boundaries. EU laws have forced manufacturers to meet standards that cut carbon emissions—from cars to TV sets. UKIP and the Tory Eurosceptics are deluded in talking about traditional notions of sovereignty. Security, public health and the environment are all issues that can no longer be addressed from within the boundaries of any individual member state.
Two other major themes are dominating the European debate—the economy and immigration. EU membership gives us access to and influence in the biggest trading bloc in the world, with a market of more than 500 million citizens. Leaving the EU would pose the biggest threat to the prosperity of this country. It is simply not in our economic self-interest to leave.
If we want a serious debate about whether it is beneficial to be a member of the EU, we have to have a serious debate about what the alternative is and what our relationship with our prime export market would look like from outside the EU. People who advocate that we leave the EU cite Norway and Switzerland as examples of what our relationship might look like. Norway is about the 10th highest contributor to the EU budget, paying around €340 million a year, despite not being a member. Therefore, outside the EU, the UK would probably still need to contribute around €2 billion a year to the budget, while having no say on the rules and regulations that we would have to follow to access the single market.
Lord Pearson of Rannoch
Perhaps I can put on the record, just for once in your Lordships’ House, that we have never advocated being like the European Economic Area. We have never advocated being like Norway. We favour our own free-trade agreement with the world, under the World Trade Organisation—possibly more along the lines of EFTA—but not the EEA or the “fax democracy”, or whatever it is called.
Baroness Morgan of Ely
That is even madder than I thought, then.
What we have to think about is the importance of the EU in protecting consumers and restricting unfettered capitalism, which has allowed bankers’ bonuses to spin out of control. If we are not doing it in this country, I am glad that someone else is doing it. A common competition policy has protected consumers from monopolies and multinational companies. This has been seen most visibly in the airline market, which has enabled millions across Europe to enjoy cheaper flights.
It is EU laws which have allowed social protection for the workers in the EU, including a minimum of four weeks’ paid holidays for full-time workers, a right to parental leave, extended maternity leave, a new right to request flexible working and the same protection for part-time workers as for full-time workers.
Labour wants to tackle immigration head on, and we have put forward clear ideas about how we would like to see reform in this area.
The Government’s promise of a referendum following a renegotiation by 2017 is random and has caused severe uncertainty, as emphasised by my noble friend Lord Howarth. As my noble friend Lord Lennie outlined, Nissan’s future in the UK, along with that of other manufacturers, depends to a large extent on EU membership.
The Prime Minister does not seem to have grasped the fact that there is a need for unanimity in order to change the treaty. He still has not told us what he wants in a reformed EU. It is irresponsible to put the interests of party above those of the country. That is the only point on which I agree with the noble Lord, Lord Stoddart.
Baroness Ludford
The noble Baroness talked about party. Can I emphasise that Mr Cameron is speaking as leader of the Conservative Party, not as Prime Minister?
Baroness Morgan of Ely
Thank you. At a time when we have been told that the recovery is brittle at best, the constant agonising over our long-term future in the EU is extremely damaging. It is time for the Government to act and behave in the best interests of the nation and to commit to our long-term membership of the EU.
The Minister of State, Foreign and Commonwealth Office (Baroness Anelay of St Johns) (Con)
My Lords, I also join other noble Lords in congratulating the noble Lord, Lord Liddle, on introducing this debate. I particularly congratulate my noble friend Lady Smith of Newnham on her excellent maiden speech.
The debate of the noble Lord, Lord Liddle, has proved again that the question of the United Kingdom’s membership of the European Union remains one of the most important and divisive issues in British politics. There has been passion, commitment and enlightenment —by some definition. Others might disagree on the definition, but I have seen enlightenment. However, that has led to very different conclusions. There is an election next May and I suspect that we will see a lot more of that debate to come.
We have heard noble Lords such as my noble friend Lord Phillips of Sudbury and the noble Lord, Lord Howarth of Newport, but particularly my noble friend Lord Inglewood, posing the question of how we make sure that the electorate can make up their mind correctly. My noble friend Lord Inglewood asked what we in the Government were going to do to protect the electorate from political snake oil. Let us not talk down to the electorate but respect them and listen to them. Let us keep to our principles and say what we really mean. Noble Lords today have certainly said what they really mean, which is refreshing.
As the Prime Minister outlined in his speech to Bloomberg in October last year—to which the noble Lord, Lord Liddle, referred in part—the world is changing and the EU must respond and reform. We have made it clear as a Government throughout—my right honourable friend the Prime Minister continually makes it clear—that we have achieved much without treaty change. There is much more that we can and must do without treaty change. We have work ahead. We need change to ensure: that the EU becomes more competitive in international markets, through smarter regulation, a deepened single market and more free trade agreements; that the EU becomes more democratically accountable by strengthening the role of national Parliaments in EU legislation and ensuring that the European Council sets the strategic agenda; and that the EU does more to protect the interests and the rights of member states, both inside and outside the eurozone.
We have made already progress by reducing the EU’s seven-year budget for the first time in the EU’s history, reforming the common fisheries policy and exempting the smallest businesses from EU red tape. My noble friend Lord Howell asked how reform will come about. We must be bold. My noble friend Lady Smith of Newnham made clear that we must form alliances, just as my noble friend Lord Howell said. Indeed, the Government are not alone in seeing a need for reform. Many other European Governments agree, as do many representatives of industry. We have been engaging in those alliances. My right honourable friend Philip Hammond has been spending a lot of time this summer and last week on finding a way forward, travelling throughout Europe, meeting his counterparts and making alliances, out of which come practical, pragmatic changes.
Let me quote a couple of EU heads of government. The Italian Prime Minister Matteo Renzi said:
“We want better Europe, not more Europe … A very balanced Europe, against the red tape of bureaucracy”.
As my noble friend quoted, the Dutch Prime Minister Mark Rutte has called for:
“Europe where necessary, national where possible”.
We agree. As my right honourable friend the Foreign Secretary has travelled through Europe, he has been building a strong coalition, which we need to continue to build.
My noble friend Lord Bowness posed a question against the background of what is happing now, both within government, Parliament and some think tanks—not one of the think tanks of the noble Lord, Lord Liddle, I hasten to say. I am sure that an article in the press yesterday spurred my noble friend to ask: “What about Article 50?”—the treaty of Europe. He wanted to know what the Government thought about that and what the implications were. Whatever others say, they do so in a personal capacity and there will be a lot more of that from every single political party—and from none—as we go forward to the next election. The Government are not considering invoking Article 50. We are clear that Europe must change to be more competitive, flexible and democratically accountable, and we believe that we can work with our EU partners to achieve those reforms—so Article 50 does not come into it.
The noble Lord, Lord Liddle, was very clear, as were others around the House, in putting the economic case for membership of the European Union. Of course, I know that the noble Lords, Lord Stoddart, Lord Pearson of Rannoch and Lord Willoughby de Broke, totally disagree with the way in which those figures have been produced. I agree with the noble Lord, Lord Liddle. The EU is the world’s largest and wealthiest common market. Through our membership of the EU, British businesses have free access to this market, its goods and its skilled labour. Some 40% of UK exports go to European markets and four of our top five export destinations are EU member states. The other is the US, with whom the EU is currently negotiating a free trade agreement. TTIP would not be negotiated now were it not through the EU. Around the world, the UK is seen as the gateway to Europe where we are the top destination in the EU for foreign direct investment.
I agree with my noble friend Lady Ludford about the advantages that membership of the EU gives to the UK with regard to global influence. The noble Lord, Lord Radice, kindly referred to David Lidington. I was grateful for that. He was right to quote him and I appreciate the work that my right honourable friend is doing.
I agree entirely that remaining a member of an EU with 28 member states gives the UK a stronger voice in international affairs. It gives us, for example, more influence when negotiating free trade agreements with key international markets such as India, China and the US, to which I have already referred. I agree with the noble Baroness, Lady Morgan of Ely, that it gives us a stronger voice when we are talking about security and matters such as the fight against Ebola, which is not only a threat to millions of people and their security in west Africa, but elsewhere in the world.
My noble friend Lord Maclennan of Rogart, along with the right reverend Prelate the Bishop of Coventry, made a point of reminding us of the importance of the EU. Every day we think of the EU it reminds us that its birth was after a period of conflagration in the early part of the last century. Since then we have been working together and arguing. Boy can we argue, and why not? We do that in Parliament so why not in Europe? We can argue and come to sensible, pragmatic decisions where we can make concessions to each other. We can go on working together without raising a gun. That is what is important.
It is important for us to stand together in defence of our democracy and the rule of law. It is vital that we do so, for example, in the cases of Ukraine and Syria. I heard what the noble Lord, Lord Pearson of Rannoch, said and I fundamentally disagree with him over Ukraine.
Baroness Anelay of St Johns
I will not take any response to that. I need time to get through this. I find the noble Lord’s allegations that the EU is in any way responsible for the action that Russia took in Ukraine simply unacceptable.
The noble Lord, Lord Liddle, recognised the need for fairness, but the Government believe that the EU must focus on the areas where it can add the most value, such as increasing competitiveness, reducing the democratic deficit and ensuring fairness both in and out of the eurozone. I know that we will have disagreements about some of the implications of that; I listened very carefully to noble Lords. I will take competitiveness first; here, the EU needs to do more to facilitate jobs and growth. We know this because we have undertaken the largest ever analysis of the impact of EU membership on a member state. The balance of competences review was an enormous undertaking and I pay tribute to all those who took part, including someone who is sitting very close to me.
This review, due to be published by the end of the year, highlights the concerns of businesses and Governments across the EU that it is not doing enough to ensure smarter regulation. Through the balance of competences review, stakeholders across Europe told us that the EU needs to change and improve its regulatory processes. My noble friend Lady Ludford referred to the need for better regulation and the noble Lord, Lord Smith of Finsbury, made the point that not all regulation is bad: it depends on how it is framed, how it affects you and also, as we have seen from the Deregulation Bill currently before Parliament, how you change it when you know that it is out of date or having the wrong effect.
Of course, we have all read newspaper stories about EU red tape—a burden that is felt most by small and medium-sized enterprises. After all, SMEs employ two out of every three members of the EU workforce. We cannot forget them. The fact is that a 25% reduction in EU administrative burdens on businesses could lead to an estimated increase of 1.4% in EU GDP—equivalent to €150 billion. Smarter regulation helps us all.
We also need to strengthen the common market. For example, the services sector accounts for 70% of EU GDP and over 90% of new jobs, but it makes up just over 20% of intra-EU trade. We need to ensure that British businesses online are able to access customers in all 28 member states without facing legislative or regulatory obstacles.
My noble friend Lord King was absolutely right to draw attention to the fact that the number of members has changed over the years. As we now reach 28, with others seeking accession—I will turn to the question asked about accession by the noble Lord, Lord Giddens, in a moment—we need to ensure that our systems are not only robust for now but for the future. We need to ensure that British citizens can use their skills and qualifications when moving to another member state. I will also refer to migration in a little while.
In addition to strengthening the common market, the EU must continue to negotiate free trade agreements such as the Transatlantic Trade and Investment Partnership to benefit businesses in all member states by giving them access to other important global markets. But as I have mentioned, alongside the need to increase competitiveness, there is a need to redress the growing democratic deficit at EU level.
While the European Parliament has a legislative role, it cannot recreate national accountability at a European level. National Parliaments play a crucial role in holding their Governments to account, with systems of parliamentary scrutiny based on their individual democratic models and traditions. In her maiden speech, my noble friend Lady Smith of Newnham drew attention to that. We must remain true to the principle of subsidiarity. Whenever possible, action should be left to individual member states and their national Governments and Parliaments—giving them a stronger say in EU legislation.
Against the background of all this work that we need to do to reform the existing EU of 28 member states, the noble Lord, Lord Giddens, asked a pertinent question—was the UK in favour of further EU enlargement? He will know that I have been asked questions at this Dispatch Box over the last few weeks about the background to previous enlargements, and how previous Conservative Governments have worked with that; how we welcomed new members on the basis that we update the EU practices in order to reflect what they can bring to the EU and how they can work effectively within the EU. We must address the concern that many citizens in the UK currently have—and not just here but around the EU—about the impact of enlargement or we risk losing public consent.
I meet people from across the boundaries and beyond the EU who dream of joining the European Union. It is important that if their dream comes true it does not become a nightmare because we have failed to explain the case to the British public or, more importantly, failed to reform the EU to make it possible for enlargement to take place in a way that does not damage the interests of any country. We are therefore proposing reforms to the transitional controls, which need to be addressed ahead of any further accessions that might well take place.
Much mention has been made of migration, which has been discussed strongly, not only in this House but in the press and across the media. It has been raised by many noble Lords today, including the noble Lord, Lord Empey, and my noble friend Lord Maclennan of Rogart. I have already answered questions at the Dispatch Box regarding work that the Government are undertaking, in negotiation with their partners in Europe, to ensure that we can have a more robust system that will not prevent free movement or undermine the principle of free movement, but recognises that free movement is not and has never been a right without responsibilities and conditions. It has never been a completely unconditional right. It has been linked to the right to move to work.
The noble Baroness, Lady Morgan, referred to Labour Party policy. Over the last week the Government have looked to the Dano judgment regarding the German position on benefits that may or may not be claimed. We are looking very carefully at all the technical details before we fully announce what changes might be possible that are not already being undertaken. We believe that the option of living and working in other EU member states is a clear benefit of EU membership for UK nationals. However, we need to ensure that it is not used merely as a way to claim benefits. That underpins the work that has taken place both in Germany and here.
The Prime Minister set out a number of domestic measures that we are taking across government to ensure that we maintain free movement in the way that it was originally intended, but also to ensure that our controls on accessing benefits and services—including the NHS and social housing—are robust. That includes measures to prevent EU jobseekers and involuntarily unemployed EU workers from claiming jobseeker’s allowance for longer than three months unless they have a genuine prospect of work, and measures to ensure that EU jobseekers will be unable to access jobseeker’s allowance until they have been resident in the UK for three months. In July that restriction was applied to those seeking to claim child benefit and child tax credit.
The measures also include: strengthening the habitual residence test, which all migrants have to satisfy to claim income-related benefits; introducing an earnings threshold to trigger an assessment of whether an EU national has work that can be treated as meaningful and effective; amending regulations so that new EU jobseekers are unable to access housing benefit, even if they are in receipt of income-based jobseeker’s allowance; and quadrupling the maximum fine on employers for not paying the minimum wage from £5,000 to £20,000.
The Government are taking action. We believe that membership of a reformed EU is in the UK’s national interest—but reform there must be. The EU needs to become more competitive and needs to continue to sign free trade agreements with key international partners. It needs to draft smarter regulations that support, instead of hinder, SMEs. It must consolidate the common market, especially in new areas, such as the digital field. We have not done that properly yet. It needs to remain flexible and embrace our continent’s diversity and individuality, and it needs to respect and protect the democratic mandate of our national Parliaments. All those changes would be beneficial for this country. It is in our national interest and in the interest of our security, but it is also in the interest of all 28 states.
Lord Liddle
My Lords, I thank the noble Baroness for her very comprehensive, robust and intelligent response. She might be surprised by how much I agree with what she said. I also thank the noble Baroness, Lady Smith, for her excellent maiden speech. I am sure that we shall have many debates on this key issue of our times and that she will make a notable contribution to them.
I also emphasise that my passion for making the case for Europe and for remaining a member of the EU, which I think is shared by many Members on this side of the House—not all, but many—does not blind me to the need for reform. There are fundamental problems of divergence, of legitimacy and of economic performance—mind you, we have some of those same problems in our country as well. It is as the noble Lord, Lord Phillips, said: there is a crisis in politics. That is not just about the EU, but it affects many EU member states. There are profound structural reasons for it that we do not properly understand. We have to debate all these things.
I will make two points of substance. First, I do not believe that the way we get reform in the EU is by making threats. That is where I think the whole UKIP approach is completely wrong. Secondly, the Government would do well to listen to what was said by the noble Lord, Lord Rodgers of Quarry Bank. The best thing the Prime Minister could do, if he wants to have influence in the EU, is to make it clear that he thinks that we must remain a member, even though reforms are necessary. He could do a lot worse than repeat the words of Sir John Major: although lots of reforms are needed and there are lots of problems and frustrations with the EU, it is in Britain’s national interest that we remain a member.
Care Sector
(9 years, 5 months ago)
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Baroness Kingsmill
To move that this House takes note of working conditions in the care sector.
Baroness Kingsmill (Lab)
My Lords, I am delighted to have the opportunity today to throw some light on this difficult and not very well publicised area of employment. Care workers are probably the most invisible members of the United Kingdom’s workforce. I have recently written a review of their working conditions and I was shocked. In the past, I was an employment lawyer for many years. I knew very little about the care sector and I am very grateful to those Members of the House here today who know an awful lot more about it than me.
Although I knew very little about the care sector, as a former employment lawyer I knew a lot about employment. This was my fourth report on employment conditions in various sectors of the economy. The previous one was on the fashion industry and the unhealthy terms and conditions of catwalk models. I have to tell the House that there are far fewer people working as models in the United Kingdom than there are care workers and yet you would not have thought so, given the amount of publicity that particular report received. It became known as the “skinny models” report and it was all over the press. This report, however, on the terms and conditions of care workers, passed almost unnoticed. When I sought some media attention for tonight’s debate, they said, “Give us the news element of this”. What they really meant was, “Tell us some ghastly story about some hideous happenings in a care home or about people who have been badly treated”. That is what creates the attention around this sector. I am, therefore, particularly grateful for the opportunity to throw a little more light on this area and for other noble Lords to add their experience to the debate.
We all know that care is not a glamorous occupation. It involves dealing with vulnerable people on a daily basis, entering the homes of elderly and disabled people in distant locations, providing intimate care and support and, often, prompting the taking of vital medication. Engaging with elderly people with dementia, Alzheimer’s and multiple conditions, in short bursts throughout the day, is a difficult occupation which none of us would find easy to do on a daily basis. These activities do not take place in high-tech hospitals with white-coated doctors and eager students. They do not take place in a colourful playroom with engaging staff and constant activities until the users are collected at the end of the day. They take place in people’s homes and care homes where there are multiple residents with multiple conditions.
Care plays a vital role in our society. Care workers deliver the support needed to people nearing the ends of their lives, to people who are disabled and to people with chronic illnesses, enabling them to live comfortably and in a dignified way. Yet it is the poorest people in our economy who are dealing with our most vulnerable people. The people in this sector are paid less than those in any other of our economy. They are looking after our most vulnerable citizens, in many cases in the most awful of circumstances, yet we value them the least and pay them the worst. Their conditions of work are among the worst.
Care workers are undervalued, underpaid, undertrained and underregulated. There are between 1.5 million and 1.8 million people working in the care sector and we do not know who they are at all. There is no register of care workers in this country. They come and they go, they ebb and they flow, we do not know who they are or where they come from. There is no system of regulation at all. I compare and contrast this with, for example, the care of children, where there are limits. Childminders have to be trained, are limited in the number of people they can care for, and have status. They are not particularly well paid either, but they have career progression and an opportunity to acquire qualifications and improve themselves.
Care workers do not have the status of childminders and they certainly do not have the status of nurses, although they often undertake in people’s homes many of the services that nurses provide in hospitals. They are subject to no regulation or registration. When I was looking into it, I often heard people saying, “I am just a care worker”. It sounded so unfair because there are, among them, some incredibly dedicated and committed people who love what they do and love the people they are taking care of.
However, their work is far more complicated than they give themselves credit for. They often have to deal with complex feeding methods. They have to learn how to use hoists for moving clients, but they are not taught this; they have to learn it on the job and many of them suffer injuries while doing so. They learn how to dress wounds, how to administer medication and, above all, how to provide vital emotional and domestic support for vulnerable people. It is certainly not a job for the faint-hearted and it is certainly not just a job. However, as I said, they are subject to some of the worst conditions of any workers in the United Kingdom. Their wages are almost universally either the national minimum wage or no more than 15% above that minimum. Frequently, even the national minimum wage is ignored, with employers refusing to pay domiciliary workers for the time it takes them to travel between clients.
Many care workers do not know what hours they will be working from week to week. Zero-hours contracts, which we have all read about, play a huge role in the sector and destabilise workers’ lives. Qualifications are patchy, the Care Quality Commission’s requirements have been reduced, and the provision of care has been increasingly focused on the independent sector. Training varies considerably, with no real common framework for care workers. The workforce tends to be older women or migrant workers. Many older women who have never really been in the workforce before but have been bringing up families and have been in so-called caring roles for most of their lives think that, when their children leave home or no longer have the dependence they once had, they can do something that they are good at. They feel as though they have no choice—that this is the only thing they can do—and often that is the case.
The same applies to migrant workers. Frequently, agencies bring in migrant workers from different countries. In many cases, they are subject to the most minimal checks on who they are and what their background is. In many cases, English is not their first language, and indeed often they do not speak very good English at all, yet they are looking after people who are anxious and vulnerable and who need support. That is not to say that brilliant care is not often given by these very same people, but it makes for a risky situation if people cannot communicate properly with those who are looking after them.
It would be very good if there were more young people in care work, but young people rarely enter this sector. There is no career progression and no status, and it is badly paid. It would be very good if we could get career progression going in this area, but at the moment younger people are not interested because it does not exist.
The truth of the matter is that care is in crisis. The exploitation of workers in the care industry has highlighted how badly they are treated, and it has highlighted the severity of the situation regarding their ability to deliver quality care to some of our most vulnerable citizens. Poor conditions for workers often lead to poor quality of service for clients, and this is particularly the case with the elderly and the disabled.
It has to be said that the pressure of austerity measures on local authorities has led to years of underfunding and to chronic conditions for care workers and service users alike. Throughout my work on the review that I have recently undertaken, the call from all sides and from all parties was for greater funding in the care sector. Underfunding the care sector is a false economy. If we truly valued care, there would be less need for vulnerable people to go to hospital, with both a benefit for the public purse and a benefit for the service users, who would avoid the trauma and uncertainty of a hospital visit.
Let us not forget that the care industry is big business. Research from Skills for Care estimates that it is worth about £43 billion to the UK economy, and it is growing as the population ages. Care for the elderly is a lucrative industry. Despite this, it is characterised by a plethora of small businesses dependent on diminishing local authority budgets. Even the largest provider, Four Seasons Health Care, has only a 5.2% market share.
It is a sector that has been beset by scandal. Companies such as Southern Cross Healthcare, which operated 750 care homes and employed 41,000 staff until it closed in 2012 with huge debts, have left the industry with a bad a reputation for poor financial management. Many smaller providers are also just hanging on by the skin of their teeth, threatened with closure. The sector is haunted by the spectre of abuse, such as the horrific case last year of the Orchid View care home. Given that it is likely that most of us will spend the last two years of our lives in receipt of some form of paid care, it is a sector that merits a brighter light being shone on it, and I am particularly grateful for the opportunity to do so this evening.
Baroness Gardner of Parkes (Con)
My Lords, I am very grateful to the noble Baroness, Lady Kingsmill, for bringing up this subject. It is something in which I have taken an interest for some time.
I am not a qualified solicitor, but I sat for many years as a lay member on industrial tribunals, which are now of course called employment tribunals. I was therefore fascinated when it was mentioned how badly paid these people were, with no pay for their travel time between jobs. A noble Lord who spoke earlier said that they should take their case to an employment tribunal, and that without doubt the employment tribunal would give them the right to be paid. That is all very well, except that all these people are working as individuals, usually for an agency, and the agency determines everything.
I have been trying to help a particular woman who has worked for many years caring for elderly people, usually for five, six, seven years. She has just finished seven years with someone who died in their 90s. When they died, the son came over from America and said, “We will not need you any more now she is dead”. He never offered to pay a penny of notice or said anything to her whatsoever. He just vanished, and she was left with nothing. I have spoken about this to various people in this House, such as the noble Lord, Lord Whitty. He said, “She must have had a contract of employment”. There was no contract of employment, as she was considered self-employed. The elderly lady had someone else to care for her five days a week and this carer’s responsibility was to go in on Friday night and stay through till Monday morning. I worked out that that was 48 hours or more. She was paid £100. It turned out that was around only £2 an hour—I had to use my calculator—for two full days in which she had to get up many times during the night to look after that woman. One talks about people being vulnerable, but a lot of old people also get very difficult. This was such a case. But this carer is such a caring person that she would say, “She does not mean to be difficult”. The carer really did her best for this woman.
Having lost that last person, the carer decided she would join a system that the councils use, whereby they are associated with a particular employment agency. I did a lot of phoning to various employment agencies to see which would be a good one to go to. The differences that came up were quite interesting. The important thing was that the workers had to have had training. The noble Baroness mentioned that there is no such thing as a national standard of training. There is none. When you ask the agencies, “What do you mean by training?”, they tell you, “You have got to pay for it,” and the carers pay from £25 to £40 for this. When the workers get the training, it is simply a bit of paper that applies to that particular agency. They cannot use it to go to any other agency. If they want to go to another agency, they have got to do that agency’s training. Someone here who does a lot to help people into employment said to me, “That is the way they lock them into that agency. If they have got to pay for new training, they are not going to leave their place of work, because that is the one that approves them”.
When I asked the agencies what things they trained their workers in, I was told they wanted to be sure a carer knows how to get a patient in and out of the bath, or how to cook a little meal—all the things that are practical. They only ask you in a written question what you would do in an emergency if, say, a person is unconscious on the floor. It seemed very unsatisfactory to me, to say the least.
They asked her to sign on with the company and I asked her to show me a copy of the paper. “They do not give you a copy”, was her reply. I told her to ask for a copy. How would she know what the conditions of work are otherwise? I then asked about travelling between jobs. The answer was that you are sent to client A for an hour and then you are sent to client B, but they might be an hour apart in travel terms. There is no pay at all for the travelling time. I have spoken to local authorities about this in a meeting in one of the Committee Rooms. They said that they should not really be using these agencies unless they know that they are paying proper wages.
Time is running out because I have only six minutes in which to speak, unlike the wonderful speech we have just heard. I come to the most important thing, and it is worth spending the last minute on it. We need a nationally recognised standard of training. The training should not be too complicated or difficult for people to achieve, but it should cover the essentials. Someone with the qualification should be able to go anywhere in the country, and it should be accepted. That would be a great help.
There is a great deal to this subject. I am a retired dentist. No one can just help out in a dentist’s surgery any more. The staff all have to be fully and extensively trained. Every field in care or health requires training that is recognised nationally, and that is what we need in this sector. When we have that, it will mean that we would be able to help the very large number of people who are going to need care in the future.
Lord McKenzie of Luton (Lab)
My Lords, we should thank my noble friend Lady Kingsmill for initiating this debate, but more importantly for her work and that of her team in producing a significant review of working conditions in the care sector. The review was commissioned by Ed Miliband to see what could be done to tackle exploitative working practices in the sector and so improve the quality of care within the existing care budget. The review seeks to do this as well as produce a vision for the longer term that does not have this funding constraint. Like, I suspect, a number of noble Lords in this debate, I have an elderly relative in receipt of domiciliary care, and the messages and analysis in this report ring very true.
Care work is in crisis and care workers need to be treated fairly and to be valued if they in turn are to deliver quality services to their clients. As my noble friend has stressed, care workers are undervalued, underpaid, undertrained and underregulated. This leads to high rates of staff turnover, and for clients, constant changes in carers, erratic timings of visits, missed appointments and no continuity of client engagement. The review has been produced at a time when much else is going on in the world of caring. We are in the era of dramatic cuts to funding for local authorities; demographic change, which the LGA say has run at about 3% of the service budget for the past four years; implementation of the Care Act and the Better Care Fund; the consequences of the Supreme Court judgment that changed the definition of “deprivation of liberty”; and changes in technology that are enabling people to live more safely at home.
The spending pressures on local authorities are having a profound adverse effect on the sector. A National Audit Office report issued just last week sets out the stark facts. Real-terms reductions in government funding to local authorities for the period 2010-11 to 2015-16 amount to 37%. If council tax is included, the reduction is 25%. Moreover, local authorities with the highest levels of deprivation have seen the greatest reductions in their spending power. The NAO report shows that local authorities’ main response to reductions in government funding has been to reduce spending: in the four years to 2013-14, on employees by 15%, and on running costs by 6.7%, although they have tried to protect spending on statutory services for vulnerable people. Notwithstanding this, over the period of this Government, adult social care expenditure is estimated to fall by 8.7%. But those authorities that have been suffering the biggest reductions in spending power—the most deprived—have seen budgeted spend on adult services fall by nearly 13%. Those at the other end of the spectrum have seen a fall of just 1.2%. This is an ugly inequality, which must be addressed.
The Local Government Association’s Adult Social Care Funding: 2014 State of the Nation Report concludes that adult social care funding has been kept under some control through a combination of budget savings, the NHS transfer and at least £0.9 billion of savings by other departments. It considers the medium term to be particularly challenging, with an estimated funding gap over the period to 2020 of £4.3 billion. It also says that the Better Care Fund, to help develop better integration with health, will not provide an immediate solution. These budget pressures are undoubtedly being visited on those who need adult services as well as those who are working in the sector. In 2013-14 there was a 5% decrease in the total number of people receiving services and an increase in the number of authorities tightening eligibility criteria. Delayed discharges from hospitals are at their highest rate ever.
In terms of service levels, as my noble friend’s review highlights, there is increasing use of 15-minute visits, a practice that drives poor-quality care and exploitative working practices. The review stresses that such a limited time means that carers are simply unable to give the human interaction that service users need. We agree with this, and given the opportunity, will work with councils and care providers to bring this practice to an end.
The review also confronts us with the shocking statistic that between 160,000 and 220,000 care workers are paid less than the minimum wage. This is often due to failure to pay workers for time spent travelling between care visits; this can be made worse by incompetent management who are not always familiar with an area and arrange schedules that zig-zag across the town. Equally to be deprecated is the growth in compulsory zero-hours contracts, which create financial instability for carers and an environment in which bad employer practices are likely to be unchallenged.
We have already set out our plans to ban the use of exploitative zero-hours contracts and to improve enforcement of the minimum wage. Fines for non-payment of the minimum wage should be increased to £50,000 and we will champion the living wage through “make work pay” contracts. We have also signed up to the CQC being given an inspection role in the commissioning of care. There are other recommendations in this splendid review which we still have under consideration.
On funding, my noble friend has already shown how there is room to improve workforce planning and commissioning to generate savings. Obviously, the big challenge for the future is to raise standards and save money by the better integration of health and social care. We are committed to a £2.5 billion transformation fund that will cover both the NHS and social care and includes money to pay for 5,000 home care workers.
My noble friend Lady Kingsmill has given us a glimpse of the future and a vision of the professionalisation of care work—a cause towards which we should be proud to work.
Baroness Brinton (LD)
My Lords, I congratulate the noble Baroness, Lady Kingsmill, on securing this important debate. I want my focus to be slightly more positive by picking some of the good examples in the sector, particularly in training and skills, to show that there is a way out of some the problems that the sector faces at the moment. However, I start by reiterating the point made by other speakers: the care sector has some of the most dedicated staff in the UK workforce, who have the incredibly responsible job of helping to look after the most vulnerable adults in our society.
The vast majority of the 1.5 million staff do it very well, but sadly the small handful who abuse their clients and our trust are the ones who capture the headlines. My mother had domiciliary care for a decade until she moved into residential care about 18 months ago. I have seen, at first hand, carers and their managers at work. During that time, nurturing relationships have been created and sustained and her carers have travelled with her on her difficult journey. In other visits and meetings outside the family, I have seen some less good practice but also some unusual places—I will come on to the healthcare assistants in geriatric wards and prisons later.
In the main, those services that are excellent are often unseen; problems, many of which seem to be appearing more frequently, are the result—I believe—of pressure from above which comes from two sources. The first is the still very small pool of people prepared to work in the sector, and the second is the funding packages for social care that cause organisations to take short cuts. Some local authorities now offer ridiculous hourly rates to organisations that do not cover travel time, annual leave and training in particular. I am afraid to say that the tri-borough in London is one of those and Bradford is another, so it is not just a London problem. I ask my noble friend the Minister: what can the Government do to ensure that the living wage and the overheads that healthcare organisations ought to be paying should be included in a contract from local government?
I want to reflect briefly on the social care workforce demographics for 2012, which I think is the most recent year for which we have figures, and Skills for Care’s report, The Size and Structure of the Adult Social Care Sector and Workforce in England, because some interesting points come out of them. I suppose it is no surprise that over 80% of the workforce are women but it is worth highlighting that for managers it is still 80% women, which is encouraging and shows that there is not a glass ceiling there. However, that is not reflected in the black and minority ethnic data, which show that 18% of the workers are BME but for carer staff the figure rises to 29%, while for managers it drops quite considerably. Will my noble friend the Minister say what support is being offered to junior BME staff by employers or Skills for Care to help them progress their careers and get through that glass ceiling?
Interestingly, the data also show that 82% of staff are British, 4.5% are from the EU and 13% are from non-EU areas. Given the debate that your Lordships’ House has just had, if UKIP wanted to repatriate non-British workers, we would have an urgent and immediate shortfall of 17.5%, which rises to nearly 20% among front-line carers.
There has been considerable focus on the qualifications of the care workforce over the past 10 years, much of it introduced by the previous Government and continued by the present one, and with some considerable success. There has been the development of the national vocational qualifications—NVQs—at levels 2 and 3, as well as the national occupational standards, where each standard is a unit of care that demonstrates that the worker can effectively look after that particular thing; it might be bathing an elderly patient or working with them to try to bring back some memories. At the higher level there is certainly work on dementia care as well.
One difficulty was that the focus of the previous Government was on NVQ level 3, the equivalent to an A-level, rather than level 2, which left many in the sector concerned about those staff with no qualifications at all. The data show that almost half the workforce are now qualified to level 2, which is great news, and over 15% to level 3, both of which are improvements. But 37% of the workforce have no qualifications at all. We want anyone in a caring role, or who is managing carers, to have the national occupational standard—NOS—qualifications to at least level 2 to guarantee a minimum level of understanding about the care that is being given, and for the safety of the clients and patients. Inevitably, the majority of people without qualifications are direct carers. I ask my noble friend the Minister: what incentives can the Government provide for small businesses particularly to help train their staff, especially those who have no qualifications at all, given that there is an excellent national framework and many employers offer these qualifications?
This raises a further point. The future workforce projections to 2025 show that the workforce will need to grow by 800,000 in the next 11 years. If we do not have training and recruitment plans in hand, we will not be able to provide the skilled workforce we need as our ageing society needs more and more assistance.
To end on a positive note, I mentioned earlier the geriatric ward in a prison, the number of which is increasing. One healthcare assistant I met was just beginning training to qualify as a nurse because her employer realised the benefit of a proper progression pathway. That is the way this business should be going in the future.
Lord Lipsey (Lab)
I, too, thank the noble Baroness, Lady Kingsmill, for initiating this debate and for her excellent report. There is another vote of thanks that I want to give, which on my part is even more heartfelt: I want to thank the 700,000 people working in the residential sector in particular for what they do for our elderly people.
Of course I know that there are a few bad apples in the barrel. The most profoundly frightening statistic that I have come across in some time is one that says that 54% of people fear going into a residential home because they think that they will get poor or even cruel care—that is the newspapers for you. Then I think of St Luke’s Hospital in Oxford, where my 92 year-old mother is. It is a special place. It is not a special place because it is a special building; to call it workaday would be generous. Nor is it in a special place: it is in a suburb of Oxford. It is special because of the people who work there. There is a highly educated and absolutely delightful couple from Botswana; the Nepalese Gurkhas, with whom the home has a connection; the Filipinos; and the eastern Europeans—a staff of people dedicated to care.
The number of care workers in residential homes is going to have to increase by about a third by 2025 to cope with the demands. Where are they going to come from? I understand why our politics is turning the way that it is on immigration—of course I do. However, weight has to be given to the fact that not only are we providing a home for people from abroad but they are providing services that we as a society desperately need—services that there is not, at present pay rates, a huge queue of British people dying to perform.
My point is that in most areas of public life there is quite a lot of controversy about what needs to be done—sometimes partisan and sometimes not. However, the Kingsmill report has to be taken with Camilla Cavendish’s wonderful report, with bits of the Burstow report on the residential sector and the earlier reports that have been mentioned today. They nearly all say essentially the same thing: the pay is too low. The too-low pay may have even come below the minimum wage and does not approach the living wage. Care workers are forced, often illegally, to pay for their uniform and for training and to spend time on duty even if they are not actually working at the time. Training is inadequate and career prospects are poor. It is hard for a care worker to graduate to becoming a nurse. To me, it is quite wonderful, despite all this, that we have a workforce at all, let alone one that is as conscientious as the great majority of it is.
There is total consensus on what is needed. Why does it not happen? The reason is money. I will give three examples. There is a huge shortfall in the amount paid in fees by local authorities for people in residential care—it is way below what would be an economic rate. Laing and Buisson calculated that for 2008-09 the total sum involved was £540 million. Unfortunately, it will not even give a Member of the House of Lords the current figure that it has calculated for use in this debate; I suppose that it makes its money by selling it. The figure is not likely, however, to be any smaller than that, so the fees are already inadequate. There is going to be an additional problem because, when the Dilnot report takes effect, those who are paying for themselves are going to find out what the council is paying for its own residents and they will say, “Why should I pay more than them?”. That will put more downward pressure on the fees, so the homes will not have the money to pay their staff properly.
Secondly, there are huge demographic pressures, with the number of 85-plus year-olds in 2030 likely to be more than twice what it was in 2011. We live longer, which is great for us, but somebody has to pay. Thirdly—and this annoys me, so I will not labour it—it is very distressing that the Government prefer to cut council budgets, even when those council budgets are the only thing that keeps care going, rather than cut their own budgets, because they feel that they would get the blame for that. No money, no improvement for care workers. Indeed, it will get worse. In addition to the cost of all this, we have the cost of Dilnot, which I on the whole support, although it is a much lower priority to pay better-off people a share towards their care than to provide the basic care that the poorest in our community need.
At the end of the day, there has to be more money for care. When that money is forthcoming, there has to be better treatment for the workforce as a key priority. I hope that this debate and the unanimity that I expect to diffuse it will persuade the Government that eventually, however reluctantly, they and particularly the Treasury will have to face up to this unpalatable fact.
Lord Birt (CB)
My Lords, we are all grateful to the noble Baroness, Lady Kingsmill, for, in her words, shining a brighter light on this critical set of interlocking issues. I declare an interest as a business adviser to a fund that invests in care homes as well as in many other sectors.
The care of the elderly is an issue about which we all have strong feelings. Those have been expressed many times already. I shall not easily forget, just a small number of years ago, my own father’s last chaotic and distressing months tumbling from hospital to home, to care home, back to hospital, back again home and, finally, to a hospice. It was a journey for the most part marked by high standards of care but absent any trusted guide whatever. He was but a baton passed clumsily from hand to hand.
A fortnight ago, I spent a morning in a care home and was inspired—others have spoken of this—by the utter dedication and kindliness of the staff there, who meet the whole gamut of human and bodily needs over 24 hours a day, seven days a week. It truly is a challenging set of tasks. Some help patients who have severe dementia, while other patients are,
“sans teeth, sans eyes, sans taste, sans everything”.
Almost all those staff were immigrants to the UK. To echo the noble Baroness, Lady Brinton, and the noble Lord, Lord Lipsey, without these immigrants, whatever would we do? The care and nursing sectors in the UK face severe skill shortages. Major businesses are forced to recruit in huge numbers in the Philippines, Romania, India and other countries for the skills that the UK labour market is simply not supplying. Why cannot we manage our education and skills sector so that it produces skills—they are skills—on the scale that we need?
We would all agree that we want the highest standards in the care sector for our loved ones and finally, no doubt, ourselves. Yet we know from excellent investigative journalism—I am sure that we have all seen it and it is very painful—that standards are not always high. The CQC, quite rightly, is increasingly vigorous and rigorous and it is raising the bar. As a result, staff numbers are increasing and costs are rising. Were the Labour Party to assume office and raise the minimum wage, costs would rise higher still in the sector. Yet around two-thirds of those in care homes are funded by local authorities. Local authorities, as we have heard many times in this short debate, are themselves straitened and have been reducing not raising fees by some 5% in real terms over the past three years.
In the home that I visited—the noble Lord, Lord Lipsey, just made the same point—the local authority was paying fees significantly below the actual cost of providing the very services that it and we would expect. This simply cannot continue. It is not viable or sustainable as a policy. The great majority of care homes are privately owned. The returns for those investing in the sector are dangerously low. The whole system is in extreme financial tension and we lack sufficient incentives to ensure that provision will increase, as the noble Lord, Lord Lipsey, has just said, as need grows, which it will. There appears to be a policy vacuum. Whoever forms the next Government simply must provide a holistic policy and financial overview of the care challenge. That must involve the NHS. Everyone can see that unnecessarily filling a hospital bed is vastly more expensive than providing a place in an appropriate care home.
We need an overview from the Government of how best to provide effective, civilised, seamless care to those in the final stages of their lives, whether at home, in care or in hospital. We need appropriate structures—we do not have them—processes and incentives, a single point of responsibility at local level and the right governance in place to ensure that the system is working as it should and as we would all wish. Finally, we need not only to determine the proper balance between state and private funding but to be clear that, where the state accepts financial responsibility and rightly requires high standards, then in turn it must also will the means as well as the ends.
Baroness Howells of St Davids (Lab)
My Lords, I, too, congratulate the noble Baroness, Lady Kingsmill, on raising this debate and giving a very thorough insight into her report on what is happening in the care field. I have a particular interest in carers because so many immigrants from the early 1950s and 1960s from the Caribbean, when they were invited to come to support the mother country, found work in the caring sectors and were happy to do so. It is no secret that I have been a tireless campaigner for better services for black communities, but today I speak for all citizens of the United Kingdom.
I was very struck in October by a Statement read out in this Chamber by the Parliamentary Under-Secretary of State in the Department of Health. It was entitled Five Year Forward View. This Statement brought to our attention how the proposed plan would make the service better and fit for purpose. The Government claimed to have recognised the challenges facing care and declared that continuing with a comprehensive tax-funded NHS was intrinsically doable and that there were viable options for sustaining and improving the NHS over the next five years.
The Statement also claimed that the challenges of an ageing population can be met by a combination of increased real-terms funding efficiencies and changes to the models of how care is delivered. Much was said of the value of greater integration, of releasing hospital beds by combining primary community and specialist tertiary sectors alongside national urgent and emergency networks. The Statement went on to say that this would give older people in particular the personal care we would all want for our own parents.
That is very laudable, but what has been done? What has happened? When the Statement talked about reducing variations in quality in the wake of the tragedy of Mid Staffs, they were all very grand words. Can the Minister tell the House what has gone wrong? We are told that the economy is doing well, so cash should not be a problem. Did the Government really mean to downgrade the workers who carry out some of the most important work; the sort of work that is meant to have a real impact on those receiving care?
The trade union Unison cites that there are a number of appalling examples of exploitation. Employment rights are not properly observed and bogus self-employment presents a big problem. Employers operate with relative impunity in an unregulated sector. This is not care; it is an abuse in this century not only of those needing care but of those giving the care. They need to be cared for so they can offer good care.
Those who are engaged in caring know what a difficult task it is. They do it because they care. To them, the patient is first but needs time. The report highlights that the sick, elderly and disabled people who rely on care services are increasingly facing a 15-minute visit from carers. What can you do in 15 minutes? If the person is well and healthy you might do something, but if they are not, 15 minutes can never be enough to bathe, dress and feed a patient. Some people may need 15 minutes, but others need a lot more.
I recently met carers who have had nervous breakdowns because of the strain of getting to places on time. Caring is natural, but we need to help. We need not only to train carers but to be aware of their circumstances and to give them more. I urge the Minister to put his weight behind the recommendations of the Kingsmill report. Most of those needing care are those who have paid into the health service. It is not a charity. Those who advocate 15 minutes per patient are those who live inside the radar of the healthy, the employed and the respectable. They have no idea of what it is like to be in the other camp.
Unless you have been a carer you have no idea of what is happening. I cared for my husband for seven years, and I assure noble Lords that the man I married was not the man I was caring for. Being unhealthy, unemployed and treated as not respectable so that any old thing will do is not good enough for citizens of the United Kingdom. Care workers should be treated fairly, and I trust the Minister will revisit the five-year plan because patients and carers deserve better.
This country can do better and must take heed of the report and implement the recommendations as soon as possible. As lawmakers, we are guilty of failing the most vulnerable, those most in need. I say this not because I want to make noble Lords feel bad but because I have seen carers, some of whom have retired from nursing, who have had to take breaks because of the strain of caring. Those who are caring and those who are dependent on them need our help. If not, we are very guilty as lawmakers.
Baroness Chisholm of Owlpen (Con)
My Lords, I thank the noble Baroness, Lady Kingsmill, for initiating this debate and the noble Baroness, Lady Howells of St Davids, for the thought-provoking words we have just heard. This is such an important issue. Our ageing population is growing, which is going to lead to an increase in demand for residential and home care, day centres and meals—but care workers look after people of all ages.
As a former nurse, I know only too well the invaluable service that care workers perform in our communities throughout the country. They carry out some of the most important work in society, caring for those who are elderly, frail, disabled both mentally and physically, and in some cases suffering from addiction problems. Their work is physically and emotionally demanding, often undertaken in unsocial hours. As a nurse, I know that looking after someone can be and is a rewarding experience, but it can also be a deeply emotional, draining and lonely one.
I would like to turn briefly to those carers who perform this vital role unpaid, and how important paid care workers are to this group. As the noble Baroness, Lady Kingsmill, pointed out, across the UK there are more than 1 million paid care workers. But they are in the minority compared to those who do this work for no pay. It is estimated there are 6.5 million unpaid carers; three in five people will take on this role at some point in their lives. These selfless people are estimated to be saving the state £119 billion a year, and they can be anyone of any age who provides unpaid care to family or friends who could not manage without this help. But these carers need care themselves to be able to continue in this role. They are twice as likely to be permanently sick or disabled from their demanding work. Many face depression. There is a clear moral and economic case for supporting carers, and this support usually comes from paid care workers.
Voluntary carers are the first line of prevention. It has been well documented that they experience disproportionately high levels of ill health, but increasing support for them improves their health and well-being, as well as the health outcomes of the recipients. I am proud to be part of a Government who have initiated the Better Care Fund, which is integrating health and social care across health sectors; but we must have a joined-up approach for our voluntary carers and paid care workers. Research shows that providing good-quality support for voluntary carers prevents an escalation of demand on statutory services. Local authorities can reduce spending on care by more than £1 billion per year by spending on breaks, information and support for carers. When support is required, voluntary carers depend on high-quality care for recipients with care needs. They will forego assistance from care workers unless they feel the care received is of the high standard expected.
Anecdotally, I was told about care workers who went from appointment to appointment by bus. They had no access to a car and were frequently up to two hours late, causing distress to the person they were looking after, and, where present, distress to relatives. So it is imperative that paid care workers have the right attitude, are well trained and supported, and given the right tools for their job; that they know the needs of the person they are caring for, and are paid appropriately for their time and not the cheapest rate possible.
Under a new scheme that came into effect from October 2013, it is now simpler to name and shame employers who break national minimum wage law. But cases from the care sector can take longer to investigate than comparable cases from other sectors because of issues around travelling time and on-call pay. I am pleased to see that the Department of Health is clear that social care employers should pay home care workers for travel time between clients. The department is looking to ensure that the statutory guidance that accompanies the Care Act states that local authorities must have evidence that conditions and fee levels are appropriate.
The challenges faced today to give high-quality care are enormous. The care certificate for new healthcare assistants and social care workers is being introduced from 1 April 2015. This surely will go some way in developing the required behaviours, competences and skills, to enable them to provide high-quality, compassionate care.
We all want the most vulnerable in our communities to receive the best possible care, and this will be possible only if the authorities are committed to making sure that the care workers they employ are of the highest standard. For this to be the case they must value them by the training they are given, the information given on the recipient of their care, and the financial reward they receive for their work.
Baroness Andrews (Lab)
My Lords, it is a real privilege to take part in this debate. Like so many other noble Lords, I am extremely grateful to my noble friend for creating the opportunity for us to have this debate but even more so, obviously, for the force and clarity with which she presented the evidence and the recommendations of the report. She said that while writing the report she was shocked. I was certainly shocked when reading it.
This is a report that sets out a long-term and sustainable future for care workers and deals with the historical failures and the immediate challenges. In summary, it graphically describes a largely poor, privatised workforce marked by low status and low wages, who work in intensely personal and stressful conditions, in uncertainty and insecurity, with poor and unco-ordinated training, few national standards, a weak and fragmented regulatory environment, irresponsible procurement and poor workforce planning and management skills. That summary of working conditions could have been written as an account of early industrial Britain, where rights and effective regulation were won, but largely by men and for men. The difference is that we are not dealing with history but very much with the present and with a workforce that is largely female, highly fragmented and comprises a high proportion—70%—of immigrant workers. They are not dealing with machinery or factory processes. As many noble Lords have said, they are dealing with the most frail and elderly and the consistently lonely in our society, many of whom have chronic and complex conditions which require highly skilled under -standing as well as compassion. Many of them are confused and lonely and the visit by the care worker is often the highlight of their day because it is about emotional as well as physical support. When one considers that the visit can be rationed to 15 minutes, it diminishes the carer just as much as the client and is a recipe for bullying conditions as well as for neglect.
Andrew Smith said in a recent debate in the other place that luck and money were only too likely to decide people’s quality of care. My family were very lucky. My mother was looked after by a wonderful collective of Welsh aunties in her residential care home—Cartref Aneurin Bevan—who were not only affectionate but highly skilled and gave all the time that they could to these wonderful elderly ladies and gentlemen. They were typical of the kindness and selflessness that we have always relied on and which, unfortunately, we have always exploited. This report shows that this is no longer sustainable. It has never been sustainable but we have neglected to challenge it. Changing this is not just about finding the money because the crucial failure is the failure to value the sector, to promote and articulate the workers’ skills and to understand that this is the front line of healthcare, not just community care.
This is a notoriously low-paid sector, as the Low Pay Unit recently documented. As we have heard, wages have been driven down by the failure of providers to pay more than 200,000 of these workers the minimum wage, the refusal to pay travel costs and by the fact that a fifth of workers are on zero-hours contracts and there is very little career progression or incentive. What makes the failure to enforce the minimum wage more intolerable—which makes me angry—is that there are mechanisms in place to limit the exploitation of care workers that are simply not being used.
Astonishingly, HMRC, having revealed the extent of the breach of the minimum wage regulations, has stopped carrying out proactive investigations of compliance in home care. One in five councils responding to an ADSS survey did not even know whether their providers paid the minimum wage. The only recourse care workers have is to ring up HMRC’s pay and rights helpline. I am fairly sure that that does not go down well with their employers. So can the Minister tell me exactly what he and his department are doing to galvanise HMRC into doing its simple duty of rooting out this total failure? Will he agree to meet HMRC and BIS to take the concerns in the report forward? Does he agree with me and other noble Lords that we should aim for a living wage and not a minimum wage? All this means that this is a sector that sets records for vacancy and turnover rates. A culture of uncertainty means that thousands of care workers do not know where their next paid work will come from and where clients face a stream of strangers in their houses. The Minister in the other place said that it would not survive without migrant workers, who account for about 17% of the workforce. Perhaps the Minister can say whether he endorses that opinion, which was so clearly expressed.
As my noble friend Lord McKenzie has shown, all the problems have been exacerbated by cruel cuts in funding. Without acknowledging that reality, it is difficult to see how the Care Act, with all its good intentions, and the guidance will bring about the changes that we want to see. In contracts that in reality are bound to be driven by price, how will the guidance be able to enforce the intention that local authorities’ contract terms, conditions and fee levels will not compromise the ability of care providers to pay at least minimum wages? Does the Minister agree that the guidance would be much more effective if it simply said that councils “must” act to end illegal practices rather than “should”? There have been some very good changes—I count the care certificate among them—but without the implementation of the recommendations in this report we will not see the scale of changes that we need to see.
Baroness Wheeler (Lab)
My Lords, I, too, congratulate my noble friend Lady Kingsmill on her excellent report and on securing this debate. At a time when your Lordships’ House will shortly begin focusing on the regulations that will underpin the implementation of the Care Act from next April, discussing now the key role of the social care workforce in bringing about the changes that we want to see in health and social care in the future is both crucial and timely.
My noble friend’s report paints a grim picture of the low pay and working conditions of the 220,000 home care workers in England who are illegally paid below the national minimum wage, and those of residential care staff, day care and community-based staff, who together make up more than 1.3 million of the total social care workforce. This is in the context of the latest data from the Office for National Statistics, which show that in 2014 British workers overall have suffered the sixth straight year of falling real pay, taking earnings back to levels seen in the early 2000s.
My noble friend and other noble Lords have ably covered the key issues raised in the report—low pay, the terrible impact of zero-hours contracts, the impact of staff shortages and high turnover on the quality of care, and the vital importance of improving training and career pathways for social care workers. Like the noble Baroness, Lady Chisholm, I want to highlight the impact that this situation has on carers because, above all, carers need to know that their parent, child or partner are in the good hands of caring, motivated and competent care staff.
We know that, as our society ages and people live longer with complex health needs, the pressure on families to provide care and support will continue to grow. If families are able to take on these caring responsibilities, and often juggle them alongside paid work that is vital to the family budget and other family commitments, then sufficient, reliable, affordable and good-quality care services will be the linchpin that helps them hold it together. Care workers are at the heart of these services in both home and respite care. The skills, suitability, empathy and reliability of staff are at the core of good-quality care. If care is poor because care workers are undervalued, not properly trained, unreliable or stretched too far by their employers, then carers have to step in, often at the expense of their own health, their career, their relationships and their ability to cope.
If you are a carer for people with dementia, autism or mental health issues, for example, high staff turnover is a particular problem because the person you are caring for can become distressed by change or by being looked after by people they do not know. It also takes time for families to build trust with someone new. One respondent to the recent Carers UK survey reported having 22 different care workers in 12 months. As she put it, “They all have to be trained by us to care for our daughter, and it takes hours”.
As noble Lords have said, there is good-quality care out there despite the pressures, low pay and low status. I am myself a carer for a disabled adult with a long-term health condition, and our experience of domiciliary agency care is that it is of a very high standard. We know the majority of the care worker team that comes in for the week, providing essential personal care for my partner, who is paralysed down his left side following a stroke. Our experience is of having a caring service from care workers who seem to have exactly the sort of attitude, empathy and approach to clients, to disability and to me, as a carer, that we so often call for to be the norm across health and social care. Most of our care workers are women in their mid-to-late 20s—mostly a migrant workforce—and they do a great job in difficult circumstances. We have to remember that personal care—washing, dressing, safe care and dealing with continence care—is intimate care and needs respect and understanding on the part of the care worker. That is what is delivered in our case.
However, the flip-side of this, of course, is the long hours and low pay for care workers that have been highlighted today, involving conditions such as non-payment if a call is cancelled—which seems to be one of the most unfair practices since cancellation is not the care worker’s fault—and pressure to carry on from early morning to late at night if there is staff sickness or shortages and nobody else to cover. Keeping consistent staff so that carers know them, providing better training, giving staff more time to carry out tasks and paying staff more are the four most important things that carers highlight in their responses to the Carers UK survey. As one of the respondents commented:
“Employ people you’d want to look after your family and pay them for the important job it is”.
UNISON’s Time to Care report shows the staff’s frustration at not having the time to do the job they want to do, and many are providing unpaid care just to get the job done. As one contributor said:
“I’d always stay and be late for my next client or, if it was my last call, I would still stay and not get paid for it, as I could not leave someone that needed me”.
Good care that meets the needs of the person they look after can improve carers’ ability to work, spend time with their family members, look after their own health and have a life of their own outside the caring role. It means dignity, respect and a better life for the person they care for.
Lord Curry of Kirkharle (CB)
My Lords, I will be brief. Other Peers have spoken eloquently and very adequately covered this subject. I, too, am grateful to the noble Baroness, Lady Kingsmill, for leading this debate. My wife and I have a personal interest in this subject. Our daughter had a severe learning disability; she had to be fed, dressed and toileted. She could not speak and latterly had two full-time carers. Hoists were required to lift her out of bed, et cetera. Sadly, she died last year, aged 42.
In 1990, we formed a business with charitable status in the north-east of England to provide care and support for people with learning disabilities, which I chaired until three years ago. At that time, we merged with a larger organisation, Prospects. It is a Christian organisation and I am currently vice-chair of that company. We employ more than 600 wonderful people to care for people with learning disabilities across the United Kingdom. We provide residential care, domiciliary care with personal budgets, and a range of other services for local authorities.
Our biggest challenge by far is recruiting, retaining and adequately rewarding our staff—our carers. The tragedy is that we compete in a market with the stacking of supermarket shelves. The responsibilities bear no comparison. Having to recruit staff on low wages to care for vulnerable people is an unacceptable model. We want to pay the living wage and fully intend to do so, but not only is the relentless economic pressure on this sector driving providers out of business but it is proving difficult to maintain the high standards we want to provide.
The tendering process adds to that economic pressure. Some of our contracts pay £12 an hour. This is to cover not only salaries, management and overhead costs but food, living expenses and training. The sums just do not add up. In some companies in our sector, staff turnover is 20%. Training costs are huge and recruitment costs are high. Dependency on agencies when staff leave adds to the economic pressure because of the high charges we have to pay for agency staff.
I am not making a political point when I say this: this Government and the next have no alternative but to bear down on public expenditure, but every year longevity and costs increase. We need a different model. I hope that the Minister will give this matter his serious attention. We are stretching the loyalty of some of the most amazing people in our society to the absolute limit.
Lord Kennedy of Southwark (Lab)
My Lords, like other noble Lords who have spoken in this debate, I congratulate my noble friend Lady Kingsmill on securing this important debate today and on the review that she undertook into the working conditions in the care sector, which certainly deserves more attention in the media. The review is an important marker that highlights some of the most pressing issues surrounding working conditions in the care sector and how unacceptable these conditions are. It is for government to take action to deal with the worst excesses. The noble Baroness, Lady Gardner of Parkes, highlighted some of those in her contribution. My right honorable friend in the other place, Mr Andrew Smith, highlighted some of these issues in the Westminster Hall debate held on 14 November—as my noble friend Lady Andrews mentioned.
In my remarks this evening I want to talk about the working poor, the problems that they face and the fact that the care industry has lots of people working in it who can be described as working poor. Maybe some years ago it would have been suggested that poor people are those who are unemployed and have no job. We have also talked about and identified pensioners who are in poverty, but this concept of working poor and the fact that this is growing should be a matter of much regret and shame. My right honourable friend Andrew Smith quoted Winston Churchill, who spoke in the other place in 1909. He said:
“It is a serious national evil that any class of His Majesty’s subjects should receive less than a living wage in return for their utmost exertions … where you have what we call sweated trades, you have no organisation, no parity of bargaining, the good employer is undercut by the bad and the bad by the worst; the worker, whose whole livelihood depends upon the industry, is undersold by the worker who only takes up the trade as a second string … where these conditions prevail you have not a condition of progress, but a condition of progressive degeneration”.—[Official Report, 28/4/1909; Commons; col. 388.]
Things have without doubt improved since 1909, but there are unfortunately numerous examples such as those referred to in this debate where bad practice exploits workers and people are treated very badly, and it is the duty of government to protect workers from this exploitation. I would say that the Government will have to be a little more proactive in this area to convince me that this is something they are truly committed to delivering on.
Returning to the point I made about the working poor, this sector employs the vast majority of people in the private sector or in the voluntary sector, amounting to about 76% of the total workforce of approximately 1.15 million, with nearly two-thirds working in private establishments. It is a matter of much regret that the sector has high levels of non-compliance with the national minimum wage, to which my noble friend Lady Andrews referred, and I hope that the noble Earl will tell us what will be done to make good this terrible wrong.
The growth in zero hours contracts in this sector, to which my noble friend Lord McKenzie of Luton referred, is generally encouraging exploitation of workers and making life difficult and unstable. Some people may like the ability to fix their employment hours week by week or day by day but I contend that it is a significant minority. According to the latest report by the Joseph Rowntree Foundation, insecure, low-paid jobs are leaving record numbers of working families in poverty, with two-thirds of people who found work in the past year taking jobs for less than the living wage—and a large number of those jobs will be in this sector.
The living wage is calculated at £7.85 an hour nationally and £9.15 in London, which is much higher than the legally enforceable but still breached minimum wage of £6.50 per hour. While not all these issues are in the noble Earl’s area of responsibility, I hope that he can see the perfect storm of people working in a sector where the majority of staff are on low wages, the problems that that can bring in not being able to provide an income to be able to look after yourself and your family, and the reliance on the benefits system. We should add to that the housing crisis, where we have low-paid workers who are not able to get a foothold on the property ladder and are unable to get into social housing, so they are forced into the private rented sector. Then we have banks refusing to lend to people, so access to affordable forms of credit is more difficult or not available at all. People are pushed into more expensive and unsuitable forms of credit and, as I said earlier, we have the perfect storm, because these things come together: they are not in isolation.
The care worker being exploited by an unscrupulous employer and not paid even the minimum wage will be the same person who is struggling to make ends meet. They will be the same person who goes to the bank and is unlikely to get the financial products they want at an affordable price. They may also, through desperation, purchase financial products that are totally unsuitable: payday loans, logbook loans and other unsatisfactory rip-off products. They are also more likely to live in an area that does not have an abundance of free cash machines—they will pay to get their own money out—and are more likely to live in poor accommodation.
As I said, not all of those things are in the noble Earl’s immediate area of responsibility, but as a member of Her Majesty’s Government I am sure he will agree these are serious matters that a joined-up and collective approach by government needs to address. In conclusion, I look forward to the noble Earl’s response, and that of my noble friend Lord Hunt of Kings Heath.
Lord Hunt of Kings Heath (Lab)
My Lords, I, too, pay tribute to my noble friend Lady Kingsmill for her speech and for her report, which were both profound in their analysis of the crisis in care work and of what needs to be done. As she said, we know that people who receive care are very vulnerable. The fact is that the current situation means that in many cases they are not being treated with the care and attention that they deserve. All too often, their only source of support, care workers, are, as my noble friend said in her report,
“exhausted, unable to plan their own lives through insecure contracts, and unable to spend enough quality time with the person in receipt of care”.
As she says, they are invisible,
“under-valued, under-paid and under-trained. They don’t have the status of Nurses. They don’t have the status of Child-Minders. The sector is subject to weak regulation”.
The noble Baroness also said:
“The low status of Care Work and poor treatment of workers has led to a vicious downward spiral into one of the most difficult sectors for workers, with widespread exploitation”.
It is clear that the demographics that we face mean that the challenges in the care sector are going to grow. Our population is projected to continue ageing. The number of people aged 80 and over in the UK is projected to more than double to 6 million by mid-2037. As the noble Baroness, Lady Brinton, said, we will need 800,000 more people in the workforce to attempt to cope with the extra demand that is bound to be placed on the care sector. She, my noble friend Lord Lipsey and the noble Lord, Lord Birt, made the telling point about our absolute reliance on people from other countries to provide many of the care workers whom we need. That reliance will clearly continue, but we could do more to grow our own workforce. However, we will not do that without tackling the fundamentals identified by my noble friend.
I very much agree with my noble friend Lady Howells. She said that recommendations made by my noble friend Lady Kingsmill are eminently sensible and doable, including introducing a licence to practise for care managers—indeed, for all care workers. How many times have we called for the regulation of care workers in your Lordships’ House? Surely the noble Earl, Lord Howe, will be able to tell us that the Government now recognise that this is something that has to be done.
We need to enforce the national minimum wage and encourage the living wage. My noble friend Lady Andrews asked the Minister about HMRC’s weakness in monitoring and investigating cases where workers are paid less than the minimum wage. We look forward to a response. However, the point that I put to the Minister is that it is not just that workers in this industry do not receive what is due by law, but, because HMRC is not being proactive, we are essentially penalising the good companies—such as that of the noble Lord, Lord Curry—for doing the right thing. That is why it is important that HMRC must have a much more aggressive role.
My noble friend Lady Kingsmill says that we should ban exploitative zero-hours contracts and the 15-minute care slots, introduce a care charter, improve training standards and progression and, overall, improve the oversight and regulation of working conditions. All those things are surely right. We should also listen to my noble friend Lady Wheeler and the noble Baroness, Lady Gardner of Parkes, who focused on the role of social care personal assistants who are directly employed by service users. We would all recognise that personal budgets have a lot going for them, in giving people who are being cared for more control over their own lives. Many of them do the right thing, but Unison has shown, on a number of occasions, evidence of personal assistants being exploited by the people who have the budgets. We need to see some action in that regard.
We cannot talk about the plight of care workers without talking about funding. Many noble Lords referred to funding issues in local government and they are surely right to do so. My noble friend Lord McKenzie pointed out that local authorities are not just hugely challenged financially but are seeing their statutory responsibilities grow. Those of us who debated the Care Bill for many hours will understand that it is in this very sector that local authorities are going to see statutory responsibilities grow considerably, starting in the next few months. It is particularly worrying that the local authorities that are under the greatest pressure face the greatest reduction in spending power, due to the changes in formula that the Government have introduced.
My noble friend Lord Lipsey has challenged us to go beyond simply talking about local authority funding to thinking about the whole situation of the future funding of care. The noble Lord, Lord Curry, also drew attention to that. As we are shortly to debate many statutory instruments relating to the implementation of the Care Act, we are bound to come back to some of the fundamentals of funding long-term care in the future.
The noble Earl has never really responded to the point raised by my noble friend. It is a matter of a year or so until self-funders discover that they are subsidising people funded in homes by local authorities. We have yet to hear an answer from the Government about how the system will cope when people realise that they are paying much more than what a local authority pays for a similar service. As the cap operates, it will soon become apparent to them that the cap is not £72,000 at all but much larger. The cap will be based on what the local authority pays, but the self-funder will have to pay much more than that to reach the £72,000 cap. We are in for some interesting debates on that over the next few weeks. There is no doubt that the issue of funding will have to be tackled. There is also no doubt that part of the answer has to lie in a much more integrated approach between health and social care and the integration of budgets, which this side of the House is very much committed to.
It is not just a question of funding, however. My noble friend was right to say in her report that, if you look at the evidence of a weak and fragmented regulatory environment, irresponsible procurement practices by local authorities and poor workforce planning and management skills within care providers, there is still much that can be done that is not a question of resources. Through its leader, Ed Miliband, my own party has recently said that a Labour Government will legislate to give employees the legal right to a regular contract if they are working regular hours; to refuse demands that they must be available over and above their contracted hours; and to compensation when shifts are cancelled at short notice. We are also pledged to make CQC inspect the commissioning of care. I think that that answers the point raised by the noble Baroness, Lady Chisholm, about ensuring that local authorities check up on employment practices relating to care workers.
As my noble friend Lord Kennedy said, my noble friend Lady Kingsmill has done a noble service in shining a light on a hugely important question. We owe a huge debt to those working in the care sector—those paid to work there and those who volunteer. Despite the lousy conditions, every day many of them go the extra mile, as many noble Lords have mentioned. Surely the better we appreciate and support the contribution of the care workforce, the better the care will be. My noble friend has done a signal service to this nation with the report that she has produced and I hope very much that the Government will respond positively to it tonight.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)
My Lords, I begin by congratulating the noble Baroness, Lady Kingsmill, on securing debating time for this Motion and on her opening speech. I thank all noble Lords for their excellent and thoughtful contributions.
I say immediately that working conditions in the care sector are very important for the well-being of our nation. We know that there are issues of concern and the Government are taking action. The White Paper, Caring for our Future: Reforming Care and Support, and the Care Act set out clearly what care and support system we want to achieve. Everything we want to achieve will depend on the competence, commitment and sensitivity of care workers. The positive relationships that are formed with people needing care are essential to providing good care.
The Department of Health is committed to ensuring that there are the right numbers of people with the right skills, knowledge and behaviours to deliver the quality, compassionate care that people need. We know that the recruitment and retention of care workers is fundamental to this. In that connection, I listened with great care to the noble Lord, Lord Curry. We published the recruitment and retention strategy in May 2011 in conjunction with Skills for Care, which worked to address the issue of how we attract and retain more people in social care. A refreshed recruitment and retention strategy was launched in September this year. Skills for Care leads the DH recruitment and retention working group, which will progress the implementation of the recommendations in the new strategy.
We have done three things straightaway. We have doubled the number of social care apprenticeships starts; we have launched a new care ambassadors service; and we have launched and piloted a values-based recruitment toolkit for the sector. Our aim is to continue this important work by supporting employers.
Registered managers, referred to in the noble Baroness’s report, have a vital front-line responsibility, and it is imperative that they are supported and do not feel isolated. We have worked closely with the National Skills Academy for Social Care to launch a national programme of support for registered managers.
The noble Baroness, Lady Kingsmill, proposed that we should introduce a licence to practise. I am afraid I need to make it clear to her that we do not think that a licence to practise is necessary or desirable. The idea of compulsory statutory regulation can seem an attractive means of ensuring patient safety, but our view is that regulation is no substitute for a culture of compassion, safe delegation and effective supervision. Putting people on a centrally held register does not guarantee public protection. Instead, the key is for employers, commissioners and providers to make sure that they have the right processes in place to ensure that they have the right staff with the right skills to deliver the right care.
Systems and processes are already in place to provide public assurance, including Care Quality Commission registration requirements and the Disclosure and Barring Service, which are being enhanced with the new chief inspectors. Under the leadership of the Chief Inspector of Adult Social Care, the CQC has put in place specialist inspection teams that subject care providers to more effective scrutiny and result in a rating that celebrates outstanding care as well as identifying where there are problems. Therefore, I cannot agree with the noble Baroness’s contention that the CQC’s requirements are somehow weaker than they were.
Better skills and training are an important part of raising standards overall. Camilla Cavendish told us that social care support workers and healthcare assistants do not have consistent training and do not have a clear status or standard job titles. I can tell my noble friend Lady Gardner that we are on track to introduce a care certificate for new healthcare assistants and social care support workers from 1 April 2015. This means that there will be specific standards for the training of new care workers.
My noble friend Lady Gardner expressed concern that employers and agencies train only for their own organisations and my noble friend Lady Brinton asked about the support that exists to enable staff to build their qualifications. Skills for Care has produced a range of training materials that are recognised across the sector. I mentioned the care certificate that we are introducing. In general, I would say that we are committed to working with employers to ensure that this part of the workforce receives high-quality and consistent training to enable them to deliver the best standards of support and care to patients and service users.
My noble friend Lady Brinton asked specifically about BME staff. The department has worked with the National Skills Academy for Social Care to produce training and development support for BME staff to enable them to progress to higher levels within the sector. As regards incentives for small businesses to train staff, which my noble friend also asked me about, small social care businesses are able to apply to Skills for Care for funding to help train their staff. The department provides £12 million to Skills for Care for this very purpose. However, it is incumbent on small businesses to ensure, like bigger enterprises, that their staff are appropriately trained and competent to carry out their role.
The noble Baroness, Lady Kingsmill, called for a care contract to be held between local authorities and care providers setting out working conditions and employment law. The statutory guidance to the Care Act which we launched recently is clear that when local authorities commission services they should make sure that care providers comply with national minimum wage legislation. The statutory guidance is also clear that, in most circumstances, very short home care visits are not appropriate to deliver intimate care needs. In addition, new fundamental standards will come into force next year. These new standards cover staffing and will allow the CQC to prosecute those providers that are responsible for the most serious failings in care. The CQC has an enormously challenging task in transforming its approach to the regulation and inspection of providers of social care.
We are also asking employers and employees working in care to sign up to the social care commitment, pledging to improve the quality of the workforce. My noble friend Lady Brinton once again asked what can be done to improve rates of pay in the sector, a concern also raised by the noble Lords, Lord Lipsey and Lord Kennedy. Under the Care Act, local authorities will be required to shape their whole local markets to ensure that they are sustainable, diverse and offer high-quality care and support for people in their local area. The Act is clear that a local authority’s own commissioning is a key driver in shaping the market. Ultimately, local authorities, not the Government, are responsible for the commissioning of services. However, when commissioning, a local authority must ensure that it promotes a sustainable market that delivers high-quality services for all local people. The department has developed statutory guidance to support local authorities to meet these new duties when commissioning and we are working with the Association of Directors of Adult Social Services, the Local Government Association and other partners to develop a set of commissioning standards which will, again, help local authorities to improve in this area.
The noble Lord, Lord Lipsey, asked specifically what we are doing to make sure that local authorities pay fair fees, while the noble Lord, Lord Birt, drew attention to the disparity in some instances between the actual costs of care and the fees paid by local authorities. We are clear that local authorities should have regard to the cost of care when setting prices. The Care Act sets out a duty on local authorities to have regard to the importance of sustaining the market as a whole, as I mentioned earlier, to meet the needs of local people. That will include where the local authority commissions services itself, considering the impact of how it contracts with individual providers, including the price it pays in fees. Contracting is of course a local matter, with fees paid to providers best left, in our view, to local negotiations in an open market that reflects local conditions.
My noble friend Lady Chisholm spoke powerfully and knowledgeably about the role of unpaid carers. I would say to her that the Government fully recognise the role of unpaid carers, who do an invaluable job in providing care for their loved ones. My department agrees that unpaid carers need support in the form of breaks. There are examples being provided by local authorities and charities, but as my noble friend knows, the Care Act is ushering in a significant new set of rights, effectively putting—for the first time—their needs on an equal footing with those of the individuals they look after.
We agree with the noble Baroness, Lady Kingsmill, that low pay can be a concern for some working in this sector. It was a concern also raised with particular emphasis by the noble Lords, Lord McKenzie and Lord Curry. The Government do not directly employ care workers, but let me be clear: non-compliance with the national minimum wage is not acceptable. That is why we are working across government on enforcement activity. I can tell the noble Baroness, Lady Andrews, that HMRC is responsible for ensuring that staff receive the minimum wage and it takes that role seriously. It has set out the action it has taken in the care sector in a report published last November. While the CQC does not itself enforce national minimum wage legislation, where its inspections uncover evidence that suggests the employer may not be paying the minimum wage, we would expect the commission to pass that intelligence to HMRC for its consideration. HMRC is continuing to carry out enforcement action in the social care sector. It will investigate all complaints made by care workers that their employer is not paying them the national minimum wage. Between April 2011 and March 2013, HMRC undertook a targeted enforcement exercise in the care sector. The work investigated complaints relating to 224 employers. Evidence of non-compliance was found in nearly half the cases and resulted in payments of more than £1 million in arrears to care workers.
I can tell the noble Lord, Lord McKenzie, and the noble Baroness, Lady Andrews, in particular that we are taking a tough approach to naming and shaming any providers who do not comply with our national minimum wage laws, with a more robust scheme now in place for cases opened after October 2013. Cases involving care workers often take longer to investigate than comparable cases in other sectors for a number of reasons, but we anticipate that the first examples of care providers to be named under the new scheme will appear in the next few months. Social care providers who have not paid the national minimum wage previously will be required to pay workers the money owed to them, to pay a penalty for failing to meet their legal obligations, and to change their practices to ensure future compliance.
The terms and conditions of employment for social care workers are essentially a matter for local employers within the existing requirements of employment legislation. However, it is important that the Department of Health continues to work with local authorities to ensure that the providers they commission services from have a high-quality workforce with fair terms and conditions. That brings me to zero-hours contracts. These contracts, when used responsibly, may be appropriate in some circumstances and can offer flexibility and opportunities to both the employer and the individual. The Government are committed to ensuring that zero-hours contracts are used fairly and have included provisions in the Small Business, Enterprise and Employment Bill banning exclusivity clauses in employment contracts that do not guarantee any hours. The Bill was introduced into Parliament on 23 June. Following feedback from stakeholders on the ban on exclusivity clauses, the Department for Business, Innovation and Skills is consulting further on how to prevent unscrupulous employers evading the exclusivity ban.
The noble Lord, Lord McKenzie, spoke powerfully about 15-minute visits. Short care visits are not normally adequate for the needs of service users. We know that care workers find 15-minute appointments demotivating because they are unable to complete their tasks within the time and develop meaningful relationships. We will continue to learn from the best employers and commissioners about how this situation can be improved. A focused peer challenge that will use elements of the commissioning standards will be piloted with two reviews by ADASS and the LGA in the coming months. We agree that in most cases very short visits are incompatible with high-quality care and the Care Act sends a clear message: commissioning services without properly considering the impact on people’s well-being is unacceptable.
However, it would be inappropriate to introduce a blanket ban on 15-minute home care visits since they may be appropriate in certain circumstances; for instance, when checking medication has been taken. A more fundamental culture shift towards a focus on outcomes through guidance and support is, we think, the way forward. Ultimately, local authorities are responsible for the commissioning of services, as I have indicated, but we agree, as does ADASS, that inappropriately short home care visits should be discouraged.
My noble friend Lady Brinton asked about the repatriation of foreign workers. I will need to write to her about that. Turning to a point raised by the noble Baroness, Lady Kingsmill, in relation to Southern Cross, the new Care Act establishes the CQC as the financial regulator for the largest social care providers. It will look at the finances of these providers and, where financial failure is likely, it will warn the affected local authorities to ensure that there is no gap in care services. The regime will not prop up failing providers but ensure continuity of care services for those affected, which surely is the most important consideration.
In response to some of the remarks made by the noble Lord, Lord Birt, with which I agree for the most part, it is worth reflecting that an effective market has been operating in social care for the best part of 20 years. Increasingly, private providers and third-sector organisations have provided services. They have done so effectively but, as in any market, some providers leave and others join. Exits can happen for any number of reasons but what we do not want to see is the kind of disruption to the market that the Southern Cross debacle could have led to had it not been managed successfully.
Delivering high-quality care is dependent upon a range of factors and uppermost is having a workforce that has the right attitudes, values, skills and qualifications. I hope that noble Lords will accept from my remarks that we have a programme of work in hand that is aimed at improving working conditions. We are working across government to tackle non-compliance with the national minimum wage. We are also making it clear that commissioners of services should ensure fair pay, terms and conditions and compliance with the national minimum wage when commissioning services, and we are ensuring set standards of training are introduced. These are surely the key pillars on which to ensure an attractive and fulfilling career can be built for this vital sector of the workforce.
Lord McKenzie of Luton
I apologise for interrupting the Minister. Is it the Government’s view that in determining whether or not the national minimum wage has been paid, the time spent travelling between client visits should be included?
Earl Howe
It is certainly our view that the time spent travelling between assignments should be paid-for time. But that, as I have indicated, is a matter for the local commissioners to ensure is borne out in contracts; it is not something that we as a Government can enforce. However, it is something that will be looked at very carefully in the ways that I have described.
Baroness Kingsmill
My Lords, I am delighted by the response to this debate. I did not expect that there would be as many speakers as there were, and I am very grateful to those who have stayed late and made such valuable contributions. I have had a number of tweets; I happen to know that people are watching this debate and many of them are going to be very pleased by the universal support, encouragement and appreciation that have been given to social workers.
Although every speaker has spoken warmly of the contributions that those care workers have made, the fact is that we are exploiting their dedication and commitment. We are looking at a group of workers who through their commitment and dedication have invited their own exploitation. We all know what needs to be done. My noble friend Lord Lipsey pointed out that there have been many reports prior to my own that have said more or less exactly the same thing in different words. We know what needs to be done. We know how to fix it.
I tried extremely hard in my report to make recommendations that were not going to have serious financial impacts, because we are all very much aware of the limitations on government spending, both for this Government and probably the next. But the fact remains that there is a case for priorities and we are not making a priority of these most vulnerable people. I am very grateful to other noble Lords who pointed this out.
Truthfully, this is a dysfunctional market. It was interesting to hear the noble Earl talk about the functioning of the market, but the fact is that it has all the characteristics of a dysfunctional market. I sympathise hugely with the noble Lord, Lord Curry, whose efforts to create a proper working environment for the care workers in his employ are being increasingly frustrated by his inability to recruit and retain proper staff.
Although, as I say, I tried to keep my recommendations to those that would cost little money, the fact is that we need more money. We need more money and the only source of that money is the Government, so we must find a way of finding that.