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Oral Answers to Questions
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John Pugh (Southport) (LD)
1. What plans he has to reduce the number of London-based civil servants; and if he will make a statement.
The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)
As part of our long-term economic plan to save taxpayers money and to pay off the deficit, this Government have reduced the size of the civil service like for like by 21%—that is after adjusting for machinery of government changes. That has increased productivity and saved the taxpayers £2.4 billion last year alone compared with spending in 2009-10. The reduction includes a substantial cut in the number of London-based civil servants.
Mr Maude
There is a lot of scope for us to get out of properties that we do not need and we have done that already. We have released a huge amount of property into the private sector where it can be used for the purpose of creating jobs, and there is more that we can and will do in that respect.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
Does the right hon. Gentleman agree that an outstanding example of civil service dispersal is the Department for International Development in East Kilbride. As long as Scotland remains in the UK, which I believe it will for a very long time, can such an example be emulated?
Mr Maude
I completely share the right hon. Gentleman’s hope about the United Kingdom, and wish to add my thanks and congratulations to the civil servants at DFID who do such a fantastic job in Scotland. There is scope for civil servants to work in many places other than central London and we will continue to pursue that.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
Although transferring civil servants to other locations and downsizing are necessary, do they not make the whole business of managing the personnel in the civil service much more difficult? Will my right hon. Friend give full backing to the new chief executive of the civil service to strengthen the data held by the Cabinet Office on the skills and capabilities among civil servants so that we do not disrupt the training and career paths of the people on whom we depend?
Mr Maude
As my hon. Friend well knows, the quality of data in central Government that we inherited was not good. It is getting better, but there is much more that needs to be done. The new chief executive of the civil service, who has got off to a terrific start, has a lot of experience in the management of big, complex dispersed organisations from his business background and I am sure that he will want to discuss that further with my hon. Friend.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Is the Minister not aware that there is a great deal of disillusionment in the civil service? Is it not our job in this House to support really good people with the highest level of skills coming into the civil service so that they are happy and motivated in their job? What will he do about morale in the civil service?
Mr Maude
I agree with the hon. Gentleman about the need to support the development and skills of civil servants and to provide them with rewarding jobs. Obviously, the purpose of the civil service is not to provide jobs but to serve the public. I am happy to tell him that morale in the civil service, as measured in the annual people survey, has held up very well—it has certainly not fallen since the last year that his Government were in office—despite the very considerable demands made on it and the downsizing to which I have referred.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
Jobs are lost from rural communities under the shared services project, as has happened at Alnwick. Can we have a more determined cross-Government effort to relocate out of London work, such as archives, that could be done in rural communities?
Mr Maude
The right hon. Gentleman and I have discussed that in the Chamber before, and I completely understand his concern, particularly about the shared service staff in Alnwick. The machinery is not always as simple as it might be, but there is more that we can and should do to ensure that jobs are located in places where they can be undertaken efficiently and effectively with good results for the taxpayer and the citizen.
Ian Lavery (Wansbeck) (Lab)
2. What progress his Department has made on releasing outstanding documents relating to the miners dispute in 1984-85.
The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)
The documents, other than sensitive or personal papers, were released in the usual way under the law that was passed by the previous Government.
Ian Lavery
What have this Government got to hide with regard to the miners strike, because only 30 out of 500 digitised documents relating to the strike were released last week? There was no mention of Orgreave, but there was an admission that the Government tapped National Union of Mineworkers members’ phones. When will the documents that have not been released be released, and will they be released unredacted?
Mr Maude
I really have nothing to add to what I have already said and what has been said on previous occasions. The same considerations were applied to these papers as apply to the release of Government papers generally, which means that those that are personal or sensitive are not released in the normal time scales. I know that there are very strong feelings about this. I was a Member of Parliament for a coal mining constituency during the mining strike, and the mining community was deeply divided during that period. I am well aware of the sensitivities of that period.
Jonathan Evans (Cardiff North) (Con)
Will my right hon. Friend note that the appetite for everything to be disclosed is shared by some Government Members, most particularly because I can recall the unlawful killing of the taxi driver David Wilkie and the recent revelations from the former right hon. Member for Pontypridd that following the event a number of papers at the NUM offices in south Wales were deliberately burnt and destroyed?
Mr Maude
My hon. Friend makes a powerful point. I am a strong supporter of transparency and am proud of what this Government have done to make us the most transparent Government in the world. There is a concern, and that was a very bitter period in our nation’s life, but the normal considerations about the protection of personal papers must be followed in this case as in others.
Mr Dennis Skinner (Bolsover) (Lab)
Is not the whole subject of these papers embarrassing to the Government and to the Minister? At the beginning we argued that 75 pits were to be closed, and the Thatcher Government said at the time that there were only 20. They lied continually in the House of Commons, repeating that figure, and then the Cabinet papers revealed that it was 75 after all and that the miners had been right. He is embarrassed to reveal other papers simply because that Government decided to attack the NUM and Britain’s manufacturing base, and that has been carried on by the Tories ever since.
Mr Maude
I think that the hon. Gentleman’s case would be stronger if at that time he had made the case for the National Union of Mineworkers to have a proper ballot of all its members so that they could decide whether they wanted to be brought out on strike, rather than being bullied and intimidated into it.
Ann Clwyd (Cynon Valley) (Lab)
I was elected in the middle of the miners strike in 1984 and know exactly what happened: we were lied to by those in authority. They said that our pit, Tower colliery, was uneconomic. We kept it going because the miners put their own money into it for another 10 years. There are lots of things that have not yet been revealed publicly, and I think that it is high time the truth came out.
Mr Maude
As I say, the papers have been released, subject to the normal considerations about protecting sensitive and personal documents. Again, I do not recollect—the right hon. Lady and I were elected on the same day and were Back-Bench Members of Parliament during that period—hearing her voice being raised to support a proper ballot of mineworkers on whether they wanted to go on strike at all.
Mr Jim Hood (Lanark and Hamilton East) (Lab)
Why have not all the papers and memos between the Home Secretary, Leon Brittan, and the chief constables and magistrates courts been published?
Paul Blomfield (Sheffield Central) (Lab)
3. What assessment he has made of the implications for his Department’s policies of the findings of the report from the National Audit Office entitled “Follow-up: grants to the Big Society Network and the Society Network Foundation”, HC 840.
The Minister for Civil Society (Mr Rob Wilson)
I welcome the NAO report into the matter, which found that there were no issues with Cabinet Office processes and, as a result, did not make any recommendations. Therefore, I do not feel that there are any wider implications for the policies of my Department.
Paul Blomfield
The Minister clearly must have read a different version of the report. Voluntary sector organisations in my constituency tell me that they are struggling to maintain vital services for the most vulnerable as a result of this Government’s polices, yet the NAO report shows that millions of pounds of public money was wasted on failing projects as a direct result of prime ministerial interference and ministerial decisions taken despite
“concerns raised about financial sustainability and weak performance”.
Is not that truly shocking? When other charities are struggling to survive, how does the Minister justify it?
Mr Wilson
I simply disagree with the hon. Gentleman. I disagree that we should avoid funding new and innovative approaches, despite the risks that come with doing so. I note that according to the Charity Commission, the number of registered charities went up from 162,000 to 164,000 between 2010 and 2014, and the total income of all registered charities has grown from £54 billion to £64 billion in the same period.
Sir Tony Baldry (Banbury) (Con)
One of the lessons for us all to learn is the transformative potential of social enterprises encouraged by the Treasury—social enterprises such as the Cinnamon Network, which does everything from running food banks to helping people when they are released from prison. Social enterprises have the potential to make a real change in our society.
Mr Wilson
My right hon. Friend is exactly right. Supporting social enterprises has been a huge priority for this Government, which is why in the autumn statement the Chancellor of the Exchequer increased social investment tax relief, raising the cap to £5 million. We are the party of small business, but we are also the party of social enterprises.
Lisa Nandy (Wigan) (Lab)
Will the Minister explain why his Department, which is supposed to be responsible for Government transparency, has refused to release any minutes or attendance lists of meetings between his advisers, the Big Society Network and the Society Network Foundation, and why over six months he has refused to answer 76 parliamentary questions on the subject? Some £3 million were wasted, there were two damning reports from the National Audit Office, thousands of charities are in crisis, and the only beneficiary from the big society has been a Tory donor’s bank account. Is it any wonder that the Minister does not want to answer questions about it?
Mr Wilson
As the hon. Lady knows, it has long been the convention in this and previous Administrations that the minutes of ministerial meetings are not routinely released, but all the information pertinent to this issue was shared with the NAO in the course of its investigations. As for the Tory party donors that she mentioned, it is not the case that any of the trustees gained financially from the Cabinet Office funding. The matter has been investigated by the Charities Commission and the NAO twice, and which both found no evidence of what she suggests. Furthermore, the trustees of the charities have invested significant personal resources into them.
Mr Andrew Robathan (South Leicestershire) (Con)
4. What assessment he has made of the use of trade union facility time by civil servants; and if he will make a statement.
The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)
At the time of the last general election there was no proper monitoring of trade union facility time in government. We now have controls in place that have saved taxpayers £25 million in the last rolling year to date, and have reduced the number of taxpayer-funded full-time union officials in central Government from 200 in May 2010 to fewer than 10 now.
Mr Robathan
I am sure everybody in the House believes that employees in whatever sector should be given both the right and the opportunity to be properly represented with their employers, be it by trades unions or others, but the majority of my constituents and, I suspect, the majority of people in this country would still be quite shocked and unhappy to discover that we are still funding public servants, who should be working for the public service, to support trade union activity that has nothing whatever to do with what they are paid for. Will my right hon. Friend bear down on the remaining members given facility time in the public service?
Mr Maude
As I say, the amount of facility time has been reduced significantly. There is a perfectly proper use of facility time for trade union duties in resolving grievances and dealing with disputes locally and effectively, and we support that, but there was also a huge amount of unmonitored and out-of-control, paid-for activity supporting trade unions, including in many cases paying for civil servants to attend seaside conferences of trade unions at the taxpayers’ expense, and that seemed to us to be wrong.
Mr David Anderson (Blaydon) (Lab)
When he carried out an assessment, did the Minister consider speaking to Opposition Members who have experience of being employed under facility time arrangements, where we spent the vast majority of our time helping management to manage the service we were working in, particularly when management was faced with cuts, redundancies and redeployment forced on it by central Government?
Mr Maude
I absolutely agree with the hon. Gentleman that the proper use of a trade union presence and the use of facility time on trade union duties, as defined by law, can be very beneficial, and we support it, but what was going on went way, way beyond that. It was completely out of control, and it was quite right that we should bear down on it by first monitoring it and then reducing it. We have now reduced the amount of money spent on it to less than 0.1% of the pay bill in the civil service, and that was quite right.
Jason McCartney (Colne Valley) (Con)
5. What future plans he has for the National Citizen Service in Colne Valley.
The Minister for Civil Society (Mr Rob Wilson)
Next year will again see NCS programmes taking place in every local authority across England. I know that my hon. Friend has seen at first hand the transformative effect that the NCS has had on participants in and around Colne Valley, where about 500 young people took part in it last year. The NCS will continue to grow this year, and I urge all MPs to visit a programme near them.
Jason McCartney
As the Minister said, I saw at first hand the benefits of the NCS when last year I attended a tea party with Moor End academy students at Astley Grange nursing and care home that brought together many different generations and people from different ethnic backgrounds. Does he agree that the NCS has also been very effective in promoting community cohesion?
Mr Wilson
Yes. Independent evaluations of the NCS have shown that participants feel more positive about people from different backgrounds and have a greater sense of responsibility to their community. The last evaluation also demonstrated that parents believed their children had a better understanding of their local community after taking part.
Mr Gregory Campbell (East Londonderry) (DUP)
Will the Minister agree to hold discussions with relevant Ministers in Scotland, Wales and Northern Ireland to see whether there would be an appetite for extending the National Citizen Service there?
Mr Wilson
Of course we would welcome discussions. This is a devolved matter and it will be for local devolved Assemblies to make a decision on it. We are already pursuing increased numbers in Wales and having discussions there, so further discussions with other countries, including Scotland, would be welcome.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
6. What future plans he has to achieve efficiency and reform savings by digitising Government services.
The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)
As part of our long-term economic plan, we are moving a first wave of 25 public services online. Our future plans are to secure further savings by digitising more public services and moving to a “Government as a platform” model, building common digital infrastructure for services that improves the user experience and saves money by building common services only once.
Stephen Metcalfe
How are the Government working with the private sector and voluntary sector in Thurrock and Basildon to ensure that my constituents have the relevant training to be able to access these services?
Mr Maude
Britain already has a high level of digital inclusion, and it is rising, but we are determined to go further and get more people online. We are working closely with almost 70 organisations from the private and voluntary sectors that are signed up to our digital inclusion charter. I have no details of exactly what is going on in my hon. Friend’s constituency, but I would happily share them with him.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
Digitising public services creates vast amounts of data that can be used further to improve services and accountability, transforming the relationship between citizens and Government—a subject dear to your heart, Mr Speaker. However, each Government Department has a different approach to handling data, and there is total chaos among officials and Ministers about what is allowed, with, consequently, deep distrust among the public. In government, we will instigate a review to set out a coherent and ethical approach to data sharing. Will the Minister join us in committing to the principle that people own their own data and it is for them to say what happens to it?
Mr Maude
I am happy to welcome the hon. Lady to the movement for open data. Under the coalition, the UK Government have become the world leader in open data. There is more that can be done with sharing data, but it is very sensitive and difficult. We are determined not to make the mistake that her party made in government when it had a train wreck in trying to move data sharing too fast. We have a lot of ongoing work on this, and I would be very happy to share the thinking with her.
Douglas Carswell (Clacton) (UKIP)
T1. If he will make a statement on his departmental responsibilities.
The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)
My responsibilities are for efficiency and reform, civil service issues, public sector industrial relations strategy, Government transparency, civil contingencies, civil society and cyber-security.
Douglas Carswell
The Minister for the Cabinet Office stated in October 2010 that public bodies would be made more meaningfully accountable. Specifically, what new mechanisms has he put in place to make public bodies more meaningfully accountable to this House and, indeed, to the public?
Mr Maude
Our concern with public body reform has always been to ensure that accountability is improved. A number of functions have been brought within Government to make them directly accountable to this House through Ministers. A number of other activities have been discontinued completely. The number of public bodies has been reduced by about a third. When we came into office, there were no data about the actual number of public bodies. In addition to increasing accountability, we have also saved the taxpayer very considerable amounts of money.
Julian Smith (Skipton and Ripon) (Con)
T3. Given the recent cyber-attacks on the United States, what strategies are the Department and the Government putting in place to protect Britain and Britain’s corporations from cyber-terrorism?
Mr Maude
This is a very real and live concern. Our cyber-security strategy—I reported to the House on its third year of operation in the last month of the year—has been backed with £860 million of new money. We take this very seriously, but much more will need to be done because the threats are moving on very quickly, as well as the need for the defences.
Lucy Powell (Manchester Central) (Lab/Co-op)
In February 2010, when he was shadow Minister for the Cabinet Office, the right hon. Gentleman wrote to the Cabinet Secretary to complain that in asking Treasury officials to cost Conservative party policy, Labour had
“compromised the impartiality of the Civil Service and used the taxpayer funded service for political attacks.”
What discussions has he had with the Chancellor about special advisers using civil servants to propagate political smears and fiction this week, and has he redrafted his letter to the Cabinet Secretary?
Tim Loughton (East Worthing and Shoreham) (Con)
T4. Does my hon. Friend agree with Lord Winston that Labour’s mansion tax would have a devastating impact on the ability of charities to raise money from legacy giving?
The Minister for Civil Society (Mr Rob Wilson)
Yes, I do. This real concern is shared by many in the sector. Most notably, the Wellcome Trust has voiced fears of the impact it would have on legacy giving. The National Council for Voluntary Organisations reckons that 10,000 charities get legacies each year, to a value of about £2 billion. Lord Winston, who is a widely respected Labour peer, has been joined by Charles Clarke, the former Labour Home Secretary. As they have both added their voices, I hope that the shadow Chancellor will rethink this wrong-headed policy.
Kelvin Hopkins (Luton North) (Lab)
T2. Earlier in this Parliament, Ministers flirted with the possibility of a politicised senior civil service. That danger seems to have receded, but will the Minister now reaffirm a Government commitment to the historic principle of political impartiality in the civil service, specifically in matters relating to the European Union?
Mr Speaker
That is a commentary on the amount of noise. Let us have a bit of order for Mr Adam Holloway.
Mr Adam Holloway (Gravesham) (Con)
T5. Will the Minister update us on the timing of the publication of the Chilcot report?
Mr Maude
I cannot really add to what Sir John Chilcot has said. That independent inquiry is under the control of the inquiry members. I can say that we have responded to every request for extra resources; none has been turned down. I would just add that if the previous Government had launched the inquiry at the time it was requested, it could have been finished and could have reported long ago.
Kerry McCarthy (Bristol East) (Lab)
T8. In the debate on food banks just before Christmas, the Minister for Civil Society kept saying that the reasons for food bank use were complex and overlapping. He would not go beyond that. Will he join me in condemning the Tory councillor who said that the only people who use food banks are those with drug, alcohol and mental health problems, and will he acknowledge that the top two reasons for food bank use are due to the failings of this Government’s welfare system?
Mr Rob Wilson
I think the thing to say about food banks is that I and Government Members commend Britain’s very strong tradition of volunteering and community action, which sees people coming together to support those in need. Food banks are just one example that I come across on a daily basis.
Martin Horwood (Cheltenham) (LD)
Q1. If he will list his official engagements for Wednesday 7 January.
The Prime Minister (Mr David Cameron)
I am sure the whole House will want to join me in condemning the barbaric attack this morning on an office of a magazine in Paris, in which it is reported that 10 or more people may have been killed. While details are still unclear, I know that this House and this country stand united with the French people in our opposition to all forms of terrorism, and we stand squarely for free speech and democracy. These people will never be able to take us off those values.
This morning I had meetings with ministerial colleagues and others, and in addition to my duties in this House I shall have further such meetings later today.
Martin Horwood
I saw the problems at Gloucestershire hospitals last week at first hand after an elderly relative phoned 111 and we ended up waiting more than four hours for her to see a doctor in Cheltenham A and E. Then she was promptly discharged. The local trust seems to be blaming patients for making bad choices, but will the Prime Minister find out why so many 111 calls end in A and E, why trusts such as ours route so many unplanned admissions through A and E and why emergency doctors cannot be provided at night in Cheltenham, all of which seems calculated to make normal winter pressures worse?
The Prime Minister
My hon. Friend makes an important point. In the last quarter, the NHS has faced some unprecedented challenges. There have been more than 5.5 million people going to accident and emergency units, which is an increase of a quarter of a million on the previous year. Gloucestershire has had £3.6 million of the £700 million of winter pressure money that we have produced, and it should use that money to make sure it provides the best possible service it can.
On the NHS 111 service, it is important to see what is actually happening. The number of people using it has almost doubled over the last year. Of those who use it, 27% say that had it not been there, they would have gone to accident and emergency, but in the event of using 111 only 7% are going. So I think it is a good service, but I am sure it can be further improved.
Recognising the pressure on the NHS, I am sure everyone in this House will want to say a thank you to our hard-working doctors and nurses and other hospital staff for all the work they do this winter.
Edward Miliband (Doncaster North) (Lab)
I join the Prime Minister in expressing horror and outrage about the unfolding events in Paris. We stand in solidarity with the people of France against this evil terrorist attack by people intent on attacking our democratic way of life and freedom of speech. We are united in our determination to defeat them.
Doctors, nurses and other NHS staff are doing a valiant job, but over 90,000 people in the last quarter waited on trolleys for more than four hours, at least 10 hospitals have declared major incident status in recent days, and one had to resort to Twitter to appeal for medical staff. Does the Prime Minister agree with me that our NHS is facing a crisis?
The Prime Minister
Our NHS is facing huge pressure this winter, particularly on its A and E units, but the point that it is important to make is this: the NHS is facing this winter with more doctors, more nurses and more money than it has ever had in its history. What is important is that we recognise the pressures that are there and put in place plans for the short term, the medium term and the long term, and that with the massive increase in the number of people going to A and E, any health system in the world would struggle to cope with some of this pressure.
Edward Miliband
In June 2011, this was the Prime Minister’s solemn promise:
“I refuse to go back to the days when people had to wait for hours on end to be seen in A&E…So let me be absolutely clear: we won’t.”
Will he now apologise to patients across the country for having broken that promise?
The Prime Minister
I deeply regret it when any patient does not get a good service, but let us be absolutely clear about the numbers of people accessing A and E. Today, compared with four years ago, over 2,500 more patients are seen within four years—within four hours compared with four years ago. That is what is happening. We knew there was pressure on our NHS, and that is why, over the last year, we have seen 1,800 more doctors in our hospitals, 4,700 more nurses in our hospitals and 2,500 more beds in our hospitals. There is more that we need to do, but let us recognise that the health service in every part of our United Kingdom faces these challenges. We must go on giving it the money, the resources and the people so that it goes on providing a great service.
Edward Miliband
As far as I can see, the Prime Minister is not apologising to patients; he is blaming the patients. The pressures on A and E are not just happening on his watch, but are a direct result of decisions he has taken. When he decided to close almost a quarter of walk-in centres, was it not blindingly obvious that if people could not go to a walk-in centre, it would have a big impact on A and E?
The Prime Minister
We have 1,000 more doctors in A and E, and we are spending £13 billion more on the NHS, when four years ago the shadow Health Secretary said that it would be irresponsible to spend more money. What is interesting is that here we are, question No. 3 on the NHS, and the Leader of the Opposition has no solutions to put forward. That only says to me that while the Government are interested in improving the NHS, he simply wants to use it as a political football.
Edward Miliband
This is about politics—it is the Prime Minister’s politics, and they have failed. No answer on walk-in centres, so let us try him on another decision he has made that has been a cause of the crisis. When he decided to reduce the availability of social care services, so that 300,000 fewer older people are getting the help they need, was it not blindingly obvious that if people could not get the care they needed at home, it would have a big impact on A and E?
The Prime Minister
Again, absolutely no solutions—presumably, if the right hon. Gentleman had any solutions, he would have implemented them in Wales. He raises the importance of social care, and I agree. That is why from 1 April we are putting £5 billion more into social care via the better care fund. Up until now, the Labour party has told us not to introduce the better care fund. I assume that it now supports that important investment.
Edward Miliband
There is one very simple solution: get rid of this useless Prime Minister. No answer on care for the elderly, so let us consider the next thing he did. When he decided to ignore the pleas of doctors, nurses and patients, and plough ahead with his damaging top-down reorganisation, was it not blindingly obvious that if £3 billion is diverted out of patient care, it will have a big impact on A and E?
The Prime Minister
Our changes have cut bureaucracy and saved £4.9 billion. That is why there are 9,000 more doctors, 3,000 more nurses, and 6 million more people getting in-patient appointments—[Interruption.]
Mr Speaker
Order. There is too much noise in the Chamber from both sides of the House. The Prime Minister’s answers must be heard.
The Prime Minister
You can see this as plain as you like: the Leader of the Opposition apparently said to the political editor of the BBC, “I want to weaponise the NHS.” That is what he said, and I think that is disgraceful. The NHS is not a weapon, it is a way we care for our families, it is a way we care for the elderly, it is a way we look after the frail. Perhaps when he gets to his feet he will deny that he said he wanted to “weaponise” the NHS—a disgusting thing to say.
Edward Miliband
I will tell the Prime Minister what is disgusting—[Interruption.]
Mr Speaker
Order. I said a moment ago that the Prime Minister’s answers must be heard. The Leader of the Opposition’s questions must be heard as well. It is very simple.
Edward Miliband
I will tell him what is disgusting—a Prime Minister who said that people could put their trust in him on the NHS. He has betrayed that trust. He is in denial about the crisis in the NHS. This is a crisis on his watch as a result of his decisions. That is why people know that if they want to get rid of the crisis in the NHS, they have to get rid of this Prime Minister.
The Prime Minister
If ever we wanted proof that they want to use this issue as a political football, we have just seen it. If Labour has an answer to the NHS, can it explain why it cut the budget in Wales by 8%? That is where Labour is in charge. All parts of the United Kingdom face a health challenge, but the real risk to the NHS is the risk of unfunded spending commitments bringing chaos to our economy, which would wreck our NHS. That is the risk and that is why the choice at the election will be to stick with the people with a long-term plan, not a Labour party that would wreck our economy and wreck our NHS.
Mr Lee Scott (Ilford North) (Con)
Q2. Does the Prime Minister agree with my constituent, who contacted me at the weekend asking to join us, who said that the only people fit to run our economy are the Prime Minister and the Chancellor? The surprise was that the gentleman was the ex-chairman of Ilford North Labour party.
The Prime Minister
I am sure that that is the first of 4 million conversations my hon. Friend will be having at the coming election. It sounds like this one is going quite well. There is an important point here: there is no strong NHS without a strong economy. With our economy, we can see the deficit cut in half, 1.75 million more people in work and the fastest growth of any major economy in the west. That is the record, and that is what will enable us to fund our NHS, to fund our schools and to provide the public services our country needs.
Mr Jamie Reed (Copeland) (Lab)
Q3. With patients being told to pretend that they are camping, the symbol of the Prime Minister’s NHS is of patients being treated in tents outside accident and emergency. When he promised a bare-knuckle fight against accident and emergency service closures, did he intend to mislead the electorate?
The Prime Minister
All our health services right across the United Kingdom face a challenge. Actually, the English NHS that I am responsible for is performing better than the Welsh NHS, the Scottish NHS and the NHS in Northern Ireland, but the facts are these: compared with four years ago there are 2,500 more people every day seeing a doctor or a nurse within four hours. Why is that happening? Because we put the money in; and when we put the money in, the shadow Health Secretary said it was irresponsible. Presumably that is why Labour cut the NHS in Wales.
Sir David Amess (Southend West) (Con)
I thank the House for that reception, which more than compensates for my having been made neither a duke nor an earl.
Later today, the second edition of the booklet, “The Party of Opportunity” will be launched. Does my right hon. Friend agree with what the former Conservative Prime Minister, Sir John Major, has written in the booklet, which is that national wealth eases poverty, pays for social care and creates jobs? That is exactly what this Conservative-led Government have been doing.
The Prime Minister
My hon. Friend is absolutely right. The first duty of a Government is to produce a stable, strong and growing economy that can fund the defence and the public services we need. On this side of the House, we understand that. On the Opposition Benches, they have learnt absolutely nothing in the past four years. They would borrow and spend and tax, and put us back exactly in the position of crisis and chaos in which we found the country in 2010.
John Robertson (Glasgow North West) (Lab)
Q4. The one thing that was clear about the referendum in Scotland was the amount of young people getting involved, not just in voting but getting out there campaigning and being part of it. Is it not time that we got the rest of the country on board and got votes for 16 and 17-year-olds?
The Prime Minister
The referendum campaign in Scotland did switch a whole lot of people on to politics and political issues, because the question being asked was so important. We have said that we should respect the views of the Scottish Parliament and the Welsh Parliament, and we will devolve powers on voting age. In this House, I am very happy for us to have a vote. Personally, I think the right age is 18, but I am very happy to listen to the debate, to listen to the arguments and to put them forward.
Michael Moore (Berwickshire, Roxburgh and Selkirk) (LD)
For more than 50 years, thalidomiders have been campaigning for justice, particularly from the German manufacturers Grünenthal. Now that more than 150 MPs have signed an open letter to the German Chancellor, would the Prime Minister add this to his busy agenda today so that we might get a decent and fair settlement for all concerned?
The Prime Minister
I have raised this issue on behalf of a constituent, not only through the European Parliament but with the German authorities, and I shall certainly reflect on what the right hon. Gentleman says.
Anas Sarwar (Glasgow Central) (Lab)
Q5. The price of oil has now fallen to $50 a barrel. While this is good news for motorists, it is bad news for Scotland’s oil industry and thousands of workers. It comes just weeks after Nicola Sturgeon said we were on the verge of a second oil boom and after the independence White Paper said the price would be $113 a barrel. This is a serious issue—jobs depend on it—so will the Prime Minister agree to meet my right hon. Friend the Member for East Renfrewshire (Mr Murphy), a cross-party delegation, industry leaders and workers to see what support can be provided?
The Prime Minister
I absolutely agree with the hon. Gentleman on all three grounds. First, North sea oil is a vital industry for the UK and one of the biggest investors in our country, so we should do everything we can to help it. Secondly, and for that reason, we took steps in the autumn statement to improve the taxation regime for North sea oil. Thirdly, as we said during the referendum campaign, it makes the case that North sea oil is better off with the broad shoulders of the UK standing behind it, because we never know when the oil price is going to be more than $100 a barrel or, as it is today, around $50. It makes the case for the strength of the UK and the utterly misguided nature of the SNP, which thought it could base its entire budget on such a high oil price.
Henry Smith (Crawley) (Con)
Q6. The latest Office for National Statistics figures show that youth unemployment in Crawley is at its lowest level since records began, but of course we need to do a lot more. What further policies are the Government pursuing to ensure that businesses in Crawley and across the country generate even more employment as part of our long-term economic plan?
The Prime Minister
I am delighted to agree with my hon. Friend. The youth claimant count in Crawley has fallen by 42% in the last year alone, and the long-term youth claimant count—long-term young unemployed people—is down by 71%. He asks what more we can do. We are cutting the jobs tax on small businesses and charities by £2,000; we are abolishing national insurance contributions for those who employ under-21s; we are extending the doubling of small business rate relief; we have cut corporation tax, including for small firms; and start-up loans are being offered right around the country, including to those in Crawley, who are taking them up. This Government can claim to be the most friendly to start-ups, entrepreneurs and small businesses this country has ever seen.
Mr Virendra Sharma (Ealing, Southall) (Lab)
Q7. Throughout the Christmas period, NHS staff worked tirelessly to see as many patients as they could, but increased waiting times at GP surgeries have forced more and more people to use A and E. Why does the Prime Minister not accept that Labour’s plan to employ 8,000 additional GPs is desperately needed and would make a real difference to the lives of my constituents?
The Prime Minister
From what I have read over the past 24 hours, Labour’s plan is to tax people in London and spend all the money in Scotland. I look forward to hearing how he explains that to his constituents in Ealing. There is a serious point to the hon. Gentleman’s question. The health service has changed in Ealing: Hammersmith and Central Middlesex hospitals both have GP-led urgent care centres that are open 24 hours a day and are seeing more than 400 patients a day, 99% of whom are seen within four hours; and we also have the expansion of the A and E unit at Northwick Park hospital. We need to ensure that the 111 service is helping to spread the information so that people who need care know where they can best get it.
Martin Vickers (Cleethorpes) (Con)
Q8. The Government have repeatedly highlighted the importance of northern Lincolnshire and the wider Humber area to the offshore renewables sector. Does my right hon. Friend agree that the recent announcement of the establishment of a national college for wind energy, a university technical college in Scunthorpe and further expansion of existing local training facilities cement the opportunities for local people to benefit from the industry, boost the local economy and highlight the importance of northern Lincolnshire to the northern powerhouse?
The Prime Minister
My hon. Friend is a real champion for north Lincolnshire and for Humberside in general. We are determined that this recovery is going to be different from previous recoveries and that we are going to see growth in jobs and investment right across our country. That is why he and others with me have been working hard to bring investment to the Humber, including of course the vital Siemens plant, and why we have seen employment go up and unemployment come down. Because of the local growth deals agreed in July, the Humber local enterprise partnership has over £100 million for local projects, which should create up to 9,000 jobs and allow more than 5,000 homes to be built, so we are determined to see recovery embedded right across the country.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
Q9. I am proud of the NHS in the north-east, but not one hospital trust is meeting the Government’s own scaled back targets for treatment in A and E—not one—yet the Prime Minister prefers to focus on a top-down reorganisation of the NHS, breaking it up for the benefit of his buddies and putting competition before care and profit before people. Does he really imagine we will trust him with our NHS?
The Prime Minister
Let me tell the hon. Lady what is actually happening in the NHS in Newcastle. Since 2010, there are 191 more doctors and 698 more nurses. Last week over 3,000 patients went to A and E, and all but 190 were seen within four hours. If getting rid of the bureaucracy in the NHS, which we did in England, was such a bad idea, why is the NHS in England performing better than other parts of the country that did not take those steps?
David Rutley (Macclesfield) (Con)
Q10. The recent final report of the Alderley Park taskforce highlights how around 300 jobs have been brought to the site in the last 18 months, with a healthy pipeline of new businesses looking to locate there. Does my right hon. Friend agree that this helps to highlight why the Government are right to put in extra growth deal funding to help further strengthen the life sciences sector in the north-west, which is vital?
The Prime Minister
My hon. Friend has been a real champion for life sciences in general and for life sciences investment in the north-west of England, which is an absolutely crucial part of the improvement and expansion of that part of our country’s economy, and that obviously includes Alderley Park. The local growth deal announced last July is going to establish a £40 million joint life sciences fund across Greater Manchester, Cheshire and Warrington, which will support the sector right across the north-west. That will include Alderley Park. This is the first Government to have a proper life sciences strategy, because this is a vital industry for our country’s future.
Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)
Those of us who opposed the Iraq war, for very good reason, and many, many other people outside this place are very concerned about the inordinate delay in publishing the findings of the Chilcot report. May I please ask the Prime Minister: where did this bizarre notion that if it is not published before the end of February, we cannot see it until after the election come from? What about the month of March?
The Prime Minister
In many ways I share the right hon. Gentleman’s frustration: I would love the report to have come out already. Indeed, he and I voted together against the last Labour Government over and over again, saying, “Please can you get on and set up the independent inquiry that’s needed?” If they had got on and set up the independent inquiry, it would have been published, debated and dealt with by now, so I find it immensely frustrating, but it is not a matter for me. I am not able to order the publication of the report. It is independent: it is up to Sir John Chilcot when he publishes his report. He will make the decision, not me.
Julian Smith (Skipton and Ripon) (Con)
Q11. Youth unemployment in Skipton is down by over 70% since 2010. City growth deal funding for the Skipton flood alleviation scheme will unlock a further 500 jobs. Is there anything the Prime Minister can do to make that happen?
The Prime Minister
I will look very carefully at this, because, as my hon. Friend says, not only the claimant count but the long-term youth claimant count has fallen—it has fallen by 50% in his constituency in the last year alone. I know how much his constituents want to see work on the Skipton flood defence project, which is a very high priority for York, North Yorkshire and the East Riding local enterprise proposal. We will make an announcement about this in the coming weeks.
Lisa Nandy (Wigan) (Lab)
Q12. In Wigan recently, my local nurses granted a dying grandma’s fairly remarkable last wish when they wheeled her hospital bed into the car park so she could be reunited for one last time with her much loved horse, just hours before she died from cancer. Those brilliant nurses sum up everything that is great about our national health service, but in a recent poll only 4% of them said they thought the Prime Minister was doing a good job. Can he tell us why?
The Prime Minister
I am full of praise for nurses in Wigan. I think they work extremely hard to provide a good service. I particularly applaud the nurse in Wigan who chased the Health Secretary down the corridor and told him a thing or two about how to run the health service. If we are judged on our record, however, there are 9,000 more doctors and 3,300 more nurses in our NHS because we made the decision to protect the funding of the NHS, which Labour told us was irresponsible.
Mr Andrew Turner (Isle of Wight) (Con)
Q13. Will my right hon. Friend join me in supporting the Perpetuus tidal energy centre, a public-private partnership that will, from the Isle of Wight, give the world its first grid-connected tidal array test facility? This will put the UK at the forefront of tidal energy technology, protect existing jobs and create several hundred new ones.
The Prime Minister
My hon. Friend makes a very good point, because the UK is now the most attractive market in the world for investment in offshore wind and marine renewables. We want to maintain that world-leading position, harness the economic and environmental benefits it brings and see local centres of expertise. From what I can see, the Perpetuus tidal energy centre sounds exactly the sort of exciting initiative we should support.
Heidi Alexander (Lewisham East) (Lab)
Q14. Nearly half of all London ambulances called out to critical cases do not arrive within their target eight-minute response time. Is that what the Prime Minister had in mind when he told us that the NHS would be “safe in his hands”?
The Prime Minister
The NHS would not have been safe if we had followed Labour’s proposal to cut the NHS. We rejected that advice and put more money into it. The London ambulance service has launched a national and international recruitment campaign and has already hired 400 new members of staff. We are providing £15 million of extra money for the NHS ambulance service in London. That is why it met its target in 2013-14, attending over 460,000 patients with life-threatening illnesses. That is what is happening in our NHS because we made the decisions to reform the NHS, cut its bureaucracy and put the money in—decisions opposed by the Labour party.
Sir Peter Tapsell (Louth and Horncastle) (Con)
Reverting to the subject of the Chilcot report, about which I have questioned the Prime Minister in the past, did my right hon. Friend note that our distinguished colleague Lord Hurd said in the House of Lords yesterday that it was an absolute disgrace that it had not been published—a view that I certainly hold? Since it is absolutely well known by the cognoscenti that the report was completed many months ago, who—if the Prime Minister is helpless on this subject—is blocking it? Is it the Cabinet Secretary or Sir John Chilcot, or is it the White House?
The Prime Minister
I say to the Father of the House that I understand that the report is largely finished, but with every report such as this there is a process: we have to write to the people who are criticised and give them an opportunity to respond. This is now the process for all these reports, irrespective of which Government they are launched under. It is known as the Salmondisation process—although I am not quite sure why, as I do not think it has anything to do with the former First Minister of Scotland. It is not within my power to grant the publication of this report. It is independent and under Sir John Chilcot, and the process has to be finished—then the report will be published.
Mr Khalid Mahmood (Birmingham, Perry Barr) (Lab)
Q15. I ask the Prime Minister once again: will he apologise to all those who have suffered and continue to suffer in A and E departments across the country, due to his mismanagement of the national health service?
The Prime Minister
I could not have been clearer. I regret it when every single person who goes to hospital does not get the treatment they deserve, but our responsibility is to put in the money, which we are doing; to provide the extra staff, which is happening; to have a proper plan for joining up health and social care, which we are doing; and then to fund the Simon Stevens plan, which is the right long-term answer for our health service. People around the country will have been able to see that there is one part of this House of Commons working to improve our NHS for all its users, but that another part wants to “weaponise” the NHS—the most disgusting phrase I think I have heard in politics—and treat it like a political football. I know that they will reach the right conclusion.
Paul Burstow (Sutton and Cheam) (LD)
Home care workers do a fantastic job in caring for some of the most frail people in our society, yet more than 200,000 of them are not even paid the national minimum wage. Will the Prime Minister talk to the Chancellor about ensuring that HMRC properly pursues and prosecutes the cowboy care agencies that are exploiting those people?
The Prime Minister
My right hon. Friend is absolutely right. There is far more that we can do to prosecute and chase down organisations that do not pay their staff properly. That is why we are bringing into the Home Office organisations that can help to make that happen. Whether the organisation concerned is the Gangmasters Licensing Authority or, indeed, the National Crime Agency, all the powers are there to enable us to go after those who do not pay the minimum wage when they should.
Alison McGovern (Wirral South) (Lab)
On Monday I listened to residents of Mendell Court, an extra care facility in Bromborough in my constituency, as they told me of their serious worries about social care. For the good of all who need care and all NHS patients, will the Prime Minister go further to integrate health and social care?
The Prime Minister
Through the better care fund we are producing £5 billion, which is money that health authorities and local authorities can spend together. Up to now, the Labour party has opposed that fund and said that it should not be established; but I am afraid it is worse than that. The shadow Secretary of State for Health has been wandering around the television studios today, telling anyone who is prepared to listen that he would increase funding for social care. There is only one slight problem with that. The shadow Chancellor said on the news as recently as 5 January that
“there will be no additional funding for local government unless we can find money from somewhere else”—[Interruption.]
Ah—we are! If Labour Members had waited until the end of the quotation, they would have heard this:
“but we have not been able to do that in the case of local government.”
So there we are: total and utter chaos. One of them is going around saying that there will be extra money, another is saying that there will not be any extra money, and there are £20 billion of unfunded commitments that would lead to total chaos in our economy and a total breakdown in our health service.
Robert Neill (Bromley and Chislehurst) (Con)
Will the Prime Minister update the House on the future arrangements for the upkeep of the Royal Air Force memorial chapel at Biggin Hill, the iconic former Battle of Britain airfield?
The Prime Minister
I can absolutely confirm to the House that that chapel will be preserved for future generations, as we have always recognised its importance and its rich heritage. I think it possible that of all the great moments in British history, the Battle of Britain 1940 stands out as one of the most important times that there have been. So we will protect the chapel, and will do all that we can to protect it for future generations.
Sir Gerald Kaufman (Manchester, Gorton) (Lab)
Will the Prime Minister take action immediately to clear up the shambles at the Home Office? A constituent of mine who applied for a fast-track passport before Christmas was promised that it would be delivered to him by courier on new year’s eve, but has still not received it. As a result, he has had to cancel a trip that he was due to make yesterday, at great personal cost and great damage to his personal life. Will the Prime Minister ensure that that man is able to travel this week, and will he clear up this mess?
The Prime Minister
I shall be happy to look at the individual case that the right hon. Gentleman raises. However, I think that we have made huge strides in dealing with potential passport backlogs, and I think that the Home Secretary is doing a fantastic job.
A and E (Major Incidents)
(9 years, 4 months ago)
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Andy Burnham (Leigh) (Lab)
(Urgent Question): To ask the Secretary of State for Health if he will make a statement on the major incidents that have been declared at a number of hospitals and on A and E performance in England.
The Secretary of State for Health (Mr Jeremy Hunt)
Mr Speaker, I welcome this opportunity to come to the House and make a statement on accident and emergency services.
First, we must recognise the context. The NHS always faces significant pressures during the winter months, but, with an ageing population, we now have 350,000 more over-75s than just four years ago. As a result, we are seeing more people turning up at our A and Es, with 279,000 more attendances in quarter three of this year as compared with last, and a greater level of sickness among those who do arrive, leading to an increase in emergency admissions of nearly 6% on last year. This picture is reflected across the home nations, with A and Es in Wales, Scotland and Northern Ireland all missing key performance standards as a result.
A number of hospitals have declared major incidents over the past few days, in what is traditionally a particularly busy time in A and E. A major incident is part of the established escalation process for the NHS, and has been since 2005. This enables trusts to deal with significant demands, putting in place a command and control structure to allow them to bring in additional staff and increase capacity. It is a temporary measure taken to ensure that the most urgent and serious cases get the safe, high-quality care they need.
The decision to declare a major incident is taken locally—there is no national definition—and we must trust the managers and clinicians in our local NHS to make these decisions, and support them in doing so by making sure there is sufficient financial support available to help deal with additional pressures.
I chaired my first meeting to discuss that support on 17 March last year. On 13 June, we gave the NHS an additional £400 million for winter pressures, topped up in the autumn by £300 million to a record total of £700 million, ensuring local services had the certainty of additional money and time to plan how best to use it.
The NHS started this winter with 1,900 more doctors and 4,800 more hospital nurses than a year ago. This planning and funding has been widely welcomed by experts in the system, including NHS England, NHS Providers, the College of Emergency Medicine and the NHS Confederation. The funding the Government have put in, which is on top of the year-on-year real-terms increases in funding, is made possible by a strong economy, and will pay for the equivalent of 1,000 more doctors, 2,000 more nurses and 2,000 other NHS and care staff including physiotherapists and social workers. It will fund up to 2,500 additional beds, both in the acute and community sectors, and also provide £50 million to support ambulance services.
But the NHS also needs longer-term solutions to these pressures. We are providing £150 million through the Prime Minister’s challenge fund to make evening and weekend GP appointments available for 10 million people, with over 4 million already benefiting. Our better care programme integrates, for the first time ever, health and social care services in 151 local authority areas, with plans starting in April to reduce, on average, emergency admissions to hospitals by 3%. And we have funded the NHS’s own plan to deal with these pressures, the five-year forward view, with an additional £1.7 billion for the NHS in 2015-16 and £1 billion of capital over the next four years to improve primary care facilities.
Mr Speaker, let me finish by thanking hard-working NHS staff across the country for the outstanding care they continue to deliver under a great deal of operational pressure.
Andy Burnham
All over England, the NHS is stretched to the limit—and in places is at breaking point. Staff are working flat-out and we thank each and every one of them for all they are doing, but the situation is now serious and getting worse. Right now, too many vulnerable people are exposed to too much risk, waiting hours for ambulances to arrive, and held in the back of them outside A and E or on trolleys in corridors. This cannot be allowed to carry on. Patients and staff deserve better answers than they have had to date about what is being done to address this issue, and that is why, faced with this complacency, we have again had to force the Secretary of State to come here today.
Fourteen hospitals have declared major incidents. Will the right hon. Gentleman explain clearly what this means for services in those areas? What is the official advice to people living in those areas? Is he providing any central support and advice to those hospitals? If a number of major incidents are declared in the same area at the same time, what contingency plans will be put into place to protect the public? More broadly, what new measures does he have under active consideration to ease pressure at all hospitals?
The Secretary of State mentioned resources. When he allocated additional resources for winter pressure, what assessment was used to determine how much was needed? Clearly, it is not working. Does he now plan to reassess the situation and perhaps allocate more? Ministers keep blaming unprecedented demand, but the question is this: why is there such unprecedented demand? Could it have anything to do with the difficulty in getting a GP appointment, the closure of walk-in centres or the cuts to social care?
Let me turn to ambulance services. There are alarming reports of people waiting hours for ambulances to arrive. This is because ambulances are trapped in queues outside A and E departments. We are hearing that at least one service has implemented a policy of leaving patients at the door of A and E without handing them over to A and E staff. Is the Secretary of State aware of this practice, and is he satisfied that it is not putting patient safety and care at risk?
The last time we had to drag the Secretary of State here, he failed to inform the House that he had approved a proposal to relax 999 response times. So will he today tell the House what the current status of those plans is and whether they are still going ahead this winter? I have real concerns, which I have relayed to ambulance leaders, about making any such change without proper consultation and evidence. There are also reports of police and fire vehicles being used to carry people to A and E. What discussions has he had with police and fire service leaders about this practice? What training or advice has been given to front-line police and fire staff? Is he fully satisfied that patient safety is not being compromised?
Finally, cuts to social care are a root cause of the pressure on hospitals. A record number of elderly people are trapped in hospital beds, and any solution to this crisis must involve councils and a solution for social care. So will the Secretary of State now act on our constructive proposal to hold an urgent summit of all the public services affected—councils, police and fire services—and to develop a co-ordinated plan to ease this crisis? NHS staff deserve it. Safe patient care demands it. When will he deliver it?
Mr Hunt
First, let me thank the right hon. Gentleman for this opportunity once again to go through the plans that we have in place to support the NHS and to reiterate the gratitude of the whole House to NHS staff for what they are doing under huge pressure at the moment. Let me start by telling him where I agree with him. I agree that what happens in the social care system is closely linked to what happens in the NHS. That is why, from June last year, meetings have been happening in 140 local authority areas between the local NHS and local authorities to work out how best to plan for winter. The result of that planning process, which is funded by £700 million of Government support, is extra doctors, extra nurses, extra beds and new plans in every area. I am absolutely satisfied that that money is making a difference. Every day in our A and E departments, 2,500 more people are being seen within four hours than was the case four years ago when the right hon. Gentleman was Health Secretary. The local structures worked last year, and they are working now. Now is the time to get behind them and to support the local NHS.
In a letter that the right hon. Gentleman wrote to me yesterday, he talked about Government failure. This is not the time to play politics—[Interruption.] Perhaps Opposition Members will listen to this. The head of NHS England, Simon Stevens, a former Labour special adviser, said yesterday
“the NHS, the Department of Health and local clinicians have done everything that could reasonably be expected”
to put in place plans over the last weeks. If the right hon. Gentleman will not listen to that, perhaps he will listen to Rob Webster, who runs the NHS Confederation, a representative body of all NHS organisations. He says that we should be grateful for the huge effort NHS staff have put in over the past few weeks and that it is not the time to play political football.
The right hon. Gentleman talked about ambulances, where we are putting in £50 million of support this winter, and some changes proposed by the Association of Ambulance Chief Executives, which he was informed about three months earlier than they came to public light. This is what the AACE said:
“We have been surprised by some of the reaction today given that over the last three months the principles of what we are proposing…have been shared with Labour…and we have received no negative feedback”.
What did the right hon. Gentleman say? He said it was a panic decision to relax 999 standards. There was no panic, no decision, no relaxation of 999 standards; I did what any Health Secretary should do: I simply asked for clinical advice on what would be best for patients. He chose to frighten the public, to scaremonger for party political purpose. Is it not time the Labour party, for once, thought about the impact on patients of the kind of things it is saying in the press?
The right hon. Gentleman then talked, and the Leader of the Opposition has talked, about the causes of these challenges being the reforms this Government introduced in this Parliament. Let me say to him that the one part of the UK that introduced these reforms, England, happens to have the best A and E performance and the one part of the UK that has most set its face against these forms, Labour-run Wales, has one of the worst performances. If he wants to do something about A and E pressures, instead of trying to make political capital in England, he should be getting Labour to turn things round in the one place it does run the health service—Wales. He should be backing this Government’s support for the NHS in a difficult period that has meant more doctors, more nurses, more people being seen quickly, more operations, long-term support and a plan for our NHS; it should not be politics and scaremongering ahead of an election.
Dr Sarah Wollaston (Totnes) (Con)
May I join the Secretary of State in warmly thanking NHS staff, who are stepping up to meet the extraordinary increase in demand for their care and expertise? Will he reassure the House that in meeting this extraordinary, complex challenge, they will not be made to chase targets, as we know that that was distorting clinical priorities in Mid Staffs, and that clinical staff should always feel absolutely confident that they have his support to place clinical priorities first and foremost?
Mr Hunt
My hon. Friend is absolutely right about that, and it is very important. Targets matter, but not targets at any cost. It is worth remembering that, over the four years we were seeing the tragedy unfold in Mid Staffs, it was meeting its A and E target the majority of the time. So it is very important that patient safety is the priority. That is why we have to support NHS trusts when they have major incidents and why we have to make it clear that, although targets matter, trusts need to be sensible and proportionate in their efforts to meet those standards.
Frank Dobson (Holborn and St Pancras) (Lab)
Does the Secretary of State accept the truth of the assertions by A and E doctors and nurses that the call handlers working for the 111 service are referring far more patients to A and E than happened when NHS Direct was staffed by nurses, who exercised professional discretion?
Mr Hunt
It is always important to keep the algorithms used by call handlers—111—under review. I say to the right hon. Gentleman that 111 is part of the way we have been able to relieve pressure on A and E departments. Calls to 111 doubled this Christmas, and 27% of the people who called it said that they had been planning to go to an A and E department but did not do so following the call. That is a very important way of relieving pressure on our A and E departments.
Mr Kenneth Clarke (Rushcliffe) (Con)
Does the Secretary of State share my recollection that five years ago no political pundit of any kind predicted that the welcome ageing of the population and the ending of the 24 hours a day, seven days a week commitment of general practice would produce the quite extraordinary surge in demand that we now have to cope with? Does he therefore agree that instead of wild criticisms of local crises he needs to persist in the short term by providing resources and improving co-operation between social services and health care, and in the long term by implementing the changes necessary in response to demand, as set out by Simon Stevens in his report, which our reforms have enabled NHS England to produce?
Mr Hunt
My right hon. and learned Friend speaks with a great deal of wisdom as someone who has occupied this post and he is absolutely right. All Health Secretaries face pressures of the kind we are going through now and face difficult winters. Winter is always a difficult time for the NHS and, as the Prime Minister said, we need a short-term plan to help—that is what our plan of creating about 5,000 extra front-line clinicians this winter alone is doing—but we must also consider the long-term plan. That involves finding a better way of looking after vulnerable older people other than through A and E departments—that means better care in the community, better support from GPs and better community services—and that is exactly what we are doing.
Barbara Keeley (Worsley and Eccles South) (Lab)
Bolton Royal hospital is one of the hospitals declaring a major incident. The context is as follows. The Little Hulton walk-in centre was closed, when it saw 2,000 patients a month. Salford city council had £100 million cut out of its budget, so 1,000 people this year are losing care packages. I have an elderly constituent who was admitted to Bolton Royal following poor care. It is obvious that those things are causing the problem. When will the Secretary of State take responsibility?
Mr Hunt
We take responsibility and I take responsibility for everything that happens in the NHS. Let me tell the hon. Lady what we are actually doing, because there have been some serious bed capacity issues in Bolton. Bolton has had £3 million this winter to help deal with those pressures, which has included £340,000 to spend on additional beds in the hospital supporting the A and E department and more than £100,000 to pay for additional staff in A and E. Overall, compared with in 2010, there are 114 extra doctors and 571 extra nurses. She should welcome that, rather than trying to make a political issue of it.
Jesse Norman (Hereford and South Herefordshire) (Con)
May I remind the House that the private finance initiative, which expanded hospitals to 100 from zero after 1997, created at least £2 billion to £10 billion, and possibly even £20 billion, of additional costs that could now be used? In Hereford, the hospital is too small because of PFI. I have estimated that £30 million could have been spent on the hospital if contracts had been properly implemented in the first place. That is why my hospital, which declared an incident this week, has been struggling and it is quite wrong to suggest otherwise.
Mr Hunt
My hon. Friend is absolutely right. I congratulate the doctors and nurses who are working very hard in his local hospital and point out that there are a number of historical problems. The £71 billion of PFI debt is one of those and it means that more than £1 billion every year is diverted from the front line. We have done something about the top-heavy management structures and, as a result, across the NHS we have 9,000 more doctors and 3,000 more nurses. It is very important in this debate that we focus not only on short-term pressures but on dealing with the long-term issues in the NHS. That is what we want to do in his area and in every area.
Kevin Barron (Rother Valley) (Lab)
On 9 December, a member of my family was admitted to Rotherham hospital through A and E after a fall at home. She was told two days later by a doctor that there was no medical reason she should be in hospital. She spent her 93rd birthday, on 24 December, in Rotherham hospital and was discharged on Monday of this week, having at last got a care package together. Does the Secretary of State think that the cuts to Rotherham borough council’s social services have helped or hindered the situation?
Mr Hunt
We need to have much better working between the health and social care systems. If the right hon. Gentleman supports that, he should support the better care programme, which from April of this year will see co-operation between the local NHS and local authorities in 150 local authority areas for the first time. Instead, Labour is calling for that plan to be halted.
Robert Halfon (Harlow) (Con)
Will my right hon. Friend thank the staff of the NHS at Harlow Princess Alexandra hospital for their passion and commitment? Although the Government have invested £5 million in our accident and emergency services, issues in nearby hospitals mean that the pressure on our A and E has been immense. Princess Alexandra hospital is one of the busiest by far for attends by bed and one in five ambulances arrives from out of the area. The PAH is now admitting four more patients a day than it was this time last year. Will my right hon. Friend meet me and the chief executive of the Princess Alexandra hospital, and will either he or the Minister responsible for hospitals visit the hospital to see what can be done to help the situation?
Mr Hunt
I am very happy to do that and I am aware of the significant pressures at the Princess Alexandra. I thank my hon. Friend for the way in which he is supporting staff in his local hospital, getting behind local plans. It is a mistake to say that there is always a new national initiative. Lots of people in the NHS have been saying over the past few days that they do not want new national initiatives. They want exactly what my hon. Friend is doing; they want people to support their local NHS and not to turn it into a political football.
Hazel Blears (Salford and Eccles) (Lab)
On Monday evening, the trust of Salford Royal hospital, which, as the Secretary of State knows, is an excellent hospital, declared a major incident. I am pleased to say that the pressure has been dealt with and it has now been lifted, but it is clear to me that many of the thousands of elderly and frail people in hospital have dementia, which means that they stay longer and are readmitted more often. I welcome the better care fund, but it will not be enough. There needs to be a whole systems change to prevent people from being admitted in the first place, with better support and more action by GPs. We need to get on with that urgently.
Mr Hunt
I agree entirely with the right hon. Lady. The better care fund is a first step, but it is only a first step. It is happening from this April, but we have the NHS England five-year forward view, which is the long-term plan to improve community care. I agree that Salford Royal is an excellent hospital. It had £3.5 million to help it deal with winter pressures this year, but it is also a good example of how integrated care between the acute trust and local community services can make a real difference, and it is delivering some of the safest care in the country.
Paul Burstow (Sutton and Cheam) (LD)
May I pay tribute to the accident and emergency staff at my local hospital, St Helier, whom I met on Monday? One thing they made clear to me is that although there is no single cause of the pressures on A and E at the moment and there is therefore no single solution, they want certainty about the long-term plans for NHS funding. Although the down payment of £2 billion announced in the autumn statement was very welcome, will the Secretary of State say whether the Government or any Government in whom he might participate in the future will deliver the additional £8 billion necessary to secure the closing of the funding gap that Simon Stevens identified?
Mr Hunt
When we did the autumn statement last year, we asked Simon Stevens and NHS England how much they needed for their plan next year and they told us it was about £2 billion, so we made that commitment. We also said that that was a down payment on delivering the entire plan, not a one-off payment. I agree about the importance of long-term certainty over funding, but the most important thing in that regard is to have a strong economy that can deliver the money that will support our NHS. It is only Government Members who have shown that they are capable of delivering that strong economy rather than the instability that would come from disastrous economic policies.
Grahame M. Morris (Easington) (Lab)
The Secretary of State and Prime Minister accuse the Labour party of using the NHS as a political football and as a weapon. May I advise the Secretary of State that the NHS is a weapon—a very powerful one—for the treatment of illness and the relief of disease and suffering, and that it is being blunted by this Government and his Department under his stewardship? I met the chief executive of City Hospitals Sunderland NHS Foundation Trust about the NHS crisis and the A and E crisis, and one of the problems he identified was the lack of sufficient staff and the need to recruit locums. What is the Secretary of State doing about recruiting more staff and how many vacancies are being carried?
Mr Hunt
I agree that we need more staff, but the hon. Gentleman should welcome the fact that under this Government there are 9,000 more doctors and 3,000 more nurses. Such an increase was made possible by a reorganisation that took money away from bureaucracy and management and put it on to the front line. What is wrong is for the Leader of the Opposition to say that he wants to weaponise the NHS—turn it into a political weapon. The NHS is not a political weapon; it is there for patients. Labour should be ashamed of trying to turn it into a political football.
Sir Alan Haselhurst (Saffron Walden) (Con)
Is my right hon. Friend aware that the declaration of a major incident by Addenbrooke’s hospital has caused concern among my constituents whose non-urgent admissions have had to be postponed? Is he also aware that the hospital is currently looking after more than 300 people aged over 85, which is in itself a remarkable tribute to the NHS? However, such a figure underlines the fact that we have to give more attention to the integration of health and care issues.
Mr Hunt
I am aware of the problems at Addenbrooke’s. Indeed, the main issue, as my hon. Friend rightly says, is delayed discharges relating to care. The chief executive is running the command and control system and working with the local authority to facilitate the discharges that are necessary and to de-escalate the situation. The hospital has £2.2 million for its winter pressures support and 185 more doctors than four years ago.
Derek Twigg (Halton) (Lab)
The national health service in my constituency is under immense pressure, as are the adult services. It has been known for some months now that the number of acutely ill people coming into hospital has been growing. Has the Secretary of State investigated the reasons for that significant increase, which I am hearing about from the chief executives of the hospitals? If he has, what are those reasons? Is it to do with access to primary care, or problems with adult social services? Will he tell the House now?
Mr Hunt
We have looked into that matter in huge detail. There are probably three broad factors that are behind the increase in demand. One is the ageing population. There are 350,000 more people over the age of 75 than four years ago. The point is that if someone of that age goes into A and E in the winter, there is an 80% chance they will be admitted to hospital and quite a large chance they will stay in hospital for some time. The second factor is changing consumer expectation among younger people who want faster health care—[Interruption.] That is what Professor Keith Willett, the director of emergency care at NHS England, said, and Opposition Members should listen to what our clinical leaders are saying. The third factor is a refusal by NHS trusts to do what they were pressurised to do in the past, which is to cut corners to hit targets.
Angie Bray (Ealing Central and Acton) (Con)
My right hon. Friend will be aware that there have been significant changes to hospital services across north-west London. There is considerable concern from some of my constituents that the closure of A and E departments at Central Middlesex and Hammersmith hospitals has led to some of the increasing pressure elsewhere. Will he tell me whether there is any evidence of that?
Mr Hunt
I am aware that there have been particular pressures at Northwick Park hospital, but I am also aware that a plan is in place in north-west London to have weekend opening of GP surgeries to improve out-of-hospital provision. The pressures that are faced there are like those in the rest of the country—very severe. We are doing everything we can to support the hospitals in that area with our winter pressures plans.
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
The Secretary of State spoke about the algorithms used by 111 call handlers. Does he appreciate that a frightened mother with a sick child is not really interested in algorithms? What she wants to know is that her child can get the medical help that they need promptly. He has told the House that he has been having meetings on this winter crisis since March. Is he not a little bit embarrassed that we now have people queuing to see their GPs first thing in the morning, ambulances queuing outside hospitals, people being treated in tents outside hospitals, and old people staying in hospital longer than they need to because there is a lack of funding and no proper co-ordination between health and social care?
Mr Hunt
Of course I regret any individual incidents where people do not get the care they need promptly. The hon. Lady will know that the solutions to such problems are not always things that can be done overnight. If she looks at the record of joined-up care over the past few years, she will see that this is the first Government to encourage 150 local authority areas to sit down with their local NHS and jointly plan care for the most vulnerable people in the social care system. That is a very big step forward. We are also doing nearly 1 million more operations every year across the NHS. In accident and emergency, the number of people being seen within four hours has gone up by nearly three quarters of a million since the start of this Parliament. That is real progress, but of course there are long-term issues, and we will focus on those as well.
Andrew Percy (Brigg and Goole) (Con)
I congratulate Goole hospital on hitting its target 99.7% of time, and the trust as a whole on hitting its target 93% of the time. I spent my Christmas volunteering in the NHS at A and E and with the ambulance service. Staff repeatedly told me that as first responders what they see are more old and frail people needing to be admitted to hospital. That situation was not helped by 50,000 hospital beds being cut by the previous Government. One way of dealing with the problems would be to move to a community paramedicine model and to use the skills of our ambulance services more. I encourage the Secretary of State to ensure that NHS England is seriously looking at that option.
Mr Hunt
May I congratulate my hon. Friend on the shining example he gives to everyone in this House by being a first responder? I do agree that one thing that we could do in the next year is to integrate better what happens in the ambulance services, out-of-hours GP services and 111. Individually, they are all doing a good job, but they could do a much better job if what they did was integrated.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
Facts are important in this debate. There is now good evidence to show that overcrowding in emergency departments increases mortality and length of stay. Will the Secretary of State ensure that the figures for hospitals are available in the House of Commons on a monthly basis, so that we can correlate spikes following emergencies with what happens to mortality rates? If mortalities increase, the problem is even more serious than we think it is.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
I have just been visiting a much-loved elderly relative in hospital and I have seen what a wonderful job our nurses are doing and the pressure that they are under, but may I tell the Secretary of State that Huddersfield and Calderdale used to have an amazingly good partnership of people in the health service working together. The antagonism now between trusts and commissioning services has destroyed that partnership. All we have now is tension and stress. We no longer have a partnership delivering health care in our country.
Mr Hunt
I agree with the hon. Gentleman about the hard work of the doctors and nurses at his local trust, but the feedback I get from the front line is of closer partnership working than has ever happened before, with the local authorities and the local NHS sitting down together planning what they will do for the most vulnerable older people through the better care fund. I want to encourage that everywhere I can.
Sir Richard Ottaway (Croydon South) (Con)
I join the Secretary of State in praising Croydon University hospital staff who have been working their socks off in recent days, but is he aware that CUH has a recently modernised subsidiary in Purley with a minor injuries unit, which is open only in the afternoons, and an under-used X-ray department? Will he explore with Croydon commissioning group whether those facilities can be used full time, because that would take the load off the A and E department at Croydon University hospital?
Mr Hunt
I am happy to explore that. All these suggestions need to be considered very carefully. That trust has had 40 extra doctors and nearly 300 extra nurses and £4.5 million to help with its winter pressures this year. Perhaps some of that money could be used for that purpose. I am happy to look into it.
Mr David Lammy (Tottenham) (Lab)
As the Minister who introduced the precursor A and E target, may I say that the Secretary of State was right to continue with the target? Making the target work was dependent on NHS Direct, delayed discharges, the integration of social care, and targets in the rest of the hospital, particularly on cancer. He has demolished that whole system. Will he now apologise for the absence of those targets, the problems in delayed discharge and the scrapping of NHS Direct?
Mr Hunt
I am afraid that what the right hon. Gentleman says is simply not correct. We have continued with key operational targets. A number of them are under pressure, but when we look at each of them we see that the reason is that the NHS is treating more people than ever before but demand is outstripping supply. For example, nearly half a million more people visited A and E in the most recent quarter than in the last quarter of the previous Labour Government, and we have 1,000 more doctors in our A and E departments. That tells us that, along with short-term help with these pressures we need a long-term solution, which is what this Government are committed to.
Andrew George (St Ives) (LD)
This is a serious and complex issue, and one of the factors causing it is that many seriously ill patients cannot be admitted to acute hospital wards because there are insufficient beds. In the light of that, I draw the Secretary of State’s attention to an NHS Confederation report from May 2006, “Why we need fewer hospital beds”. I cautioned at the time that it would be unwise to pursue such a policy without first front-loading primary and social care. Will he look at enhancing acute hospital beds until primary and social care have the capacity to help out the acute sector?
Mr Hunt
The hon. Gentleman makes an important point. In fact, I was talking with someone senior at the Royal Cornwall hospital on Monday about the particular pressures there. Indeed, some of the funding that we allocated to the NHS in the autumn statement for next year is designed to do precisely that—to allow hospitals to maintain bed capacity while we ramp up facilities in community and primary care. It is very important to get the timing absolutely right.
Lilian Greenwood (Nottingham South) (Lab)
Yesterday the emergency department at Nottingham’s Queen’s Medical Centre faced such intense pressure that the trust was forced to enact its internal incident plan and cancel planned operations and out-patient clinics. Higher than expected admissions and delays in discharging patients who are well enough to leave hospital have been creating problems for many months. How can we resolve what is now a crisis if the Secretary of State will not even acknowledge that his Government’s deep cuts to social care are undermining the efforts of our dedicated NHS and social care staff?
Mr Hunt
We are doing an enormous amount to support social care. Some £3.9 billion of NHS funds has been given to the social care system over this Parliament, and we have strongly encouraged local authorities to ensure that any savings they have to make are done through efficiency savings, not cuts to front-line services. The hon. Lady’s local hospital has received £11 million in funding to help it through the winter. We are doing a huge amount to support the NHS through a difficult period, and she should support those efforts.
Sir Tony Baldry (Banbury) (Con)
It is obviously important that those who need to be treated in A and E are treated there and that those who do not go to those parts of the NHS where they can be treated best. Does my right hon. Friend agree, therefore, that the initiatives taken by clinical commissioners in Oxfordshire where, for example, they are trying to triage patients essentially at the door of A and E so that those who need to go in can do so and those who need primary care get it, will help reduce pressures on A and E and ensure that people are treated in the right part of the NHS?
Mr Hunt
Those are exactly the kinds of initiatives that can make a big difference—indeed, they are recommended by the College of Emergency Medicine. Of course, the long-term solution is to ensure that people are better looked after at home so that they do not need to end up at the door of a hospital. That is why more proactive care by GPs—we plan to recruit 5,000 more GPs over the next five years—should mean that that becomes less of a pressure point.
Yasmin Qureshi (Bolton South East) (Lab)
The Royal Bolton hospital in my constituency yesterday declared a major incident. As of 1 pm yesterday, there were 53 people in the A and E department, 15 waiting for a bed, some for more than 12 hours, and a number of non-urgent operations were cancelled. I thank the hospital for all its hard work, because there have been problems for the past few weeks. I would like the Secretary of State to deal with the crisis by immediately reopening walk-in centres, because their closure is the reason so many people are going to A and E, and have proper funding given to local authorities so that they can put in place a proper health and social care budget for the elderly and vulnerable.
Mr Hunt
There have indeed been pressures at the Royal Bolton hospital, particularly in relation to bed capacity and intensive care unit capacity. All patients on the wards have been reviewed and discharges have been created—the plan was to discharge between 30 and 50 patients before the end of yesterday. We are doing a lot to support the hospital. It has been given £3 million in winter money, £350,000 to create extra bed capacity and £100,000 for extra A and E staff.
Mr Speaker
Order. A very large number of hon. and right hon. Members are still seeking to catch my eye. As always, I am keen to accommodate as many as possible, but I simply point out to the House that there is a statement to follow by the Secretary of State for Northern Ireland and other business. I therefore appeal to the House to help me to help individual Members. That is to say, prolonged statements prior to questions are undesirable. Pithy and succinct questions are the order of the day, in which important exercise I think we can be led by an illustrious parliamentarian, Mr Philip Hollobone.
Mr Philip Hollobone (Kettering) (Con)
Kettering general hospital is experiencing its busiest winter on record. The three hon. Members for north Northamptonshire, the hon. Member for Corby (Andy Sawford), my hon. Friend the Member for Wellingborough (Mr Bone) and myself for Kettering, are working together to attract extra investment into our A and E. When we go to see the Secretary of State’s colleague, the hospitals Minister, next week, will he encourage the Minister to receive us warmly and favourably?
Mr Hunt
I think that my hon. Friend should always be able to count on being received warmly and favourably. There are particular pressures in Northamptonshire. I am planning to have a conversation with the chief executive of Northamptonshire county council in the next week to see whether there is anything more that can be done to facilitate discharges and relieve the pressure at Kettering.
Mark Reckless (Rochester and Strood) (UKIP)
I greatly welcome the £13.4 million of investment recently signed off for Medway hospital’s A and E department. Does the Secretary of State also understand the hospital’s need for a further £20 million of capital for medical wards around the A and E department to support integrated care and improve the throughput of patients to assist in turning around Medway hospital?
Mr Hunt
I am aware of those proposals, which we will obviously look at carefully. I am also aware that there are big pressures in the A and E department at Medway, but there are also other, more profound issues to do with the leadership at the hospital. The hon. Gentleman should rest assured that we are taking every step possible to try to turn things around.
Sarah Newton (Truro and Falmouth) (Con)
I recently spent a shift at the Royal Cornwall hospital’s A and E department and saw at first hand the fantastic work it is doing. Does my right hon. Friend agree with the clinical team and with Mr Virr, who leads the department so well, that people need to remember that A and Es are for life and limb emergency treatment on the day and that they should consider the excellent alternatives, such as minor injuries departments and out-of-hours GP services, before automatically going to A and E?
Mr Hunt
I commend my hon. Friend for her tremendous interest in the Royal Cornwall hospital and for her campaigning to support its efforts. I spoke with the chief executive earlier this week about the particular challenges with discharging patients. I also spoke with the deputy chief executive of the South Western Ambulance Service NHS Foundation Trust about the dramatic increase in 999 calls this winter. My hon. Friend is absolutely right that the public can help us by ensuring that they use alternatives to A and E wherever possible.
Meg Munn (Sheffield, Heeley) (Lab/Co-op)
When I led an integrated health and social care team 20 years ago, we found that carers no longer being able to care was a key reason why people went into hospital and into care. Will the Secretary of State now look again at the eligibility criteria introduced under the Care Act 2014 and ensure that a much greater number of carers can get support, because at the moment the number is being reduced?
Mr Hunt
Under that Act we introduced national eligibility criteria to try to remove the postcode lottery that had existed previously. We have also introduced new rights for carers that require local authorities to take account of the pressures on them. I think that we are going in the right direction, but I accept that there is always more that can be done.
David T. C. Davies (Monmouth) (Con)
Some 92.6% of patients in England are seen within four hours, as opposed to just 83.8% of patients in Wales. If Labour wants to make this a political football, why does it not play an away game down in Cardiff, where it is in charge and responsible for the disgracefully lower standards that we receive there?
Mr Hunt
My hon. Friend makes his point powerfully, as ever. The rhetoric that we have heard from the Labour Benches today is interesting for its absence when we have debates on Wales. It seems to the public watching this that there is one rule for England and one rule for Wales, and that Labour is satisfied with lower standards in the parts of the country that it runs.
Geraint Davies (Swansea West) (Lab/Co-op)
The NHS is in financial crisis, with more money needed for A and E, yet we are spending £10 billion a year on diabetes because people are consuming twice the daily amount of sugar that they should be consuming—nine teaspoonfuls for men, which is equivalent to a can of Coke, or six for women, which is equivalent to a light yoghurt. Does the Secretary of State agree and will he support my Bill, which is published today, which requires manufacturers to express sugar content in teaspoonfuls on products to empower consumers to make rational choices in order to manage down overall obesity—
Mr Speaker
Order. [Interruption.] Order. These are extremely important matters, but their relevance to the question of A and E was not immediately obvious to me, added to which, unfortunately, the hon. Gentleman—
Mr Speaker
No. I am not debating with the hon. Gentleman; I am telling him. His inquiry suffered from one little disadvantage: it was too long.
Mrs Anne Main (St Albans) (Con)
My right hon. Friend will be aware that the Minister for Policing, Criminal Justice and Victims, my right hon. Friend the Member for Hemel Hempstead (Mike Penning), and I were very unhappy that the A and E was closed and moved to Watford. Since then Watford hospital has had a turbulent time. This morning the chief executive resigned, having got part-way through a process of consultation. May I ask for the consultation to be put on hold until the new chief executive is in place and has their feet under the table? We do not need more turbulence in our hospitals in west Hertfordshire.
Bill Esterson (Sefton Central) (Lab)
One of my constituents wrote to me about her elderly mother who faced a wait of many hours for an ambulance to A and E. My constituent told me that at A and E she saw patients on trolleys backed up through the corridor to ambulances waiting in the car park. Meanwhile, patients were waiting at home, unable to get those same ambulances. She described the scene as “a war zone”. Is it not the case that A and E is unable to cope, the ambulance service is unable to cope, and patients who need to go to A and E are suffering?
Mr Hunt
I agree that there are real pressures in A and E across the system, but it is important to remind the public that even under that pressure, nine out of 10 people continue to be seen, treated and sent home within four hours. That is an extremely impressive record for the people working very hard in our A and E departments.
Chloe Smith (Norwich North) (Con)
The Norfolk and Norwich hospital declared a major incident. Its medical staff say that care is safe. Will my right hon. Friend join me in supporting Norwich NHS staff and their innovative urgent care unit, will he urge Norwich GPs to apply to the access fund, and will he condemn some of Labour’s political leaflets in Norwich which carry fake NHS stories, as told to me by NHS workers?
Mr Hunt
It is important for all parties to behave responsibly when the NHS front line is under such pressure. My hon. Friend might want to remind her Labour opponents locally that in Norwich there are 97 more doctors than four years ago and 145 more nurses, all possible because of a strong economy.
Alison Seabeck (Plymouth, Moor View) (Lab)
Last week 1,631 people visited Plymouth A and E. One in 10 of them waited more than four hours. Staff are showing great dedication and doing extra shifts, but that is not sustainable. Will the Secretary of State please take his head out of the sand and, if he is serious about depoliticising the issue, will he take up the shadow Secretary of State’s offer of a cross-party summit to look at all the issues behind the crisis?
Mr Hunt
I was talking to a doctor at Plymouth last night and I recognise that there are real pressures there and staff are working very hard. The long-term solution is to back the non-party political plan that the NHS itself has put together under the leadership of Simon Stevens—the “Five Year Forward View”. We made the big call in our autumn statement to find £2 billion, which is what he said the NHS needed next year, and I hope Labour will support that. Then we can have the kind of consensus that the hon. Lady asked for.
Paul Uppal (Wolverhampton South West) (Con)
In 2003, a dozen years almost to the day, I accompanied my grandmother to A and E. We arrived at 8 o’clock in the morning. She was not allocated a bed until 9.30 that evening. May I impress upon my right hon. Friend that money alone is not the issue? It is important that we push ahead with the long-term plan and do not adopt a short-term opportunistic approach.
Mr Hunt
My hon. Friend is right. It is important to say that lots of people in the NHS have been asked in the past few days on the media what the issues are, and they have not been saying that it is about money. They have been saying that it is about reforming the structures. That is why, as well as the money that is available for this winter, we need to look at the plans that we can put in place to improve access to GPs, to improve the co-ordination between the health and the social care systems, to deal with issues that prevent people from going to hospital in the first place. That is what this Government want to do.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
Many of my constituents in Feltham and Heston have raised with me their concerns about being able to access GP services, some having to wait weeks and in the mean time having to seek emergency help. Does the Secretary of State now regret the Government’s decision to axe Labour’s guarantee of a GP appointment within 48 hours?
Mr Hunt
If the hon. Lady regrets that, she might want to ask her Labour colleagues in Wales why they also axed the 48-hour target. We do need better access to GPs. That is why we are funding the training of 5,000 more GPs over the next five years. With targets, we must be careful of unintended consequences. When we had that target in place, a quarter of people who asked for an appointment in more than two days were told that that would not be possible, because we found that people played the target. That is why we do not want to go back to that system.
Justin Tomlinson (North Swindon) (Con)
As set out in the College of Emergency Medicine’s 10-point plan to improve A and E, co-location of GP surgeries is key. Does my right hon. Friend agree?
Mr Hunt
I agree with pretty much all the College of Emergency Medicine’s 10-point plan. That has very much informed our approach to helping the NHS over this winter. Co-location of GP surgeries on hospital sites is very helpful, but we also need more proactive care for the most vulnerable older people before they feel the need to go to hospital. That will be at the heart of the changes that we want to see.
Mr Andy Slaughter (Hammersmith) (Lab)
The reason that west London now regularly has the worst waiting times for A and E, with up to 50% of patients waiting more than four hours, is a direct result of the Secretary of State’s decision to close the Hammersmith and Central Middlesex A and E four months ago. These are sick people who need A and E, not GP services. We have GP services at those hospitals. What we need is for him to cancel or at least review the downgrading of the A and E departments at Charing Cross and Ealing hospitals to GP-led emergency centres. Will he at least do that?
Mr Hunt
I say gently to the hon. Gentleman that if we are to solve the problems in his area and others, we should listen to the doctors about the structures that will work best. The structures that we put in place are the structures that doctors advised us to set up. That is why we are supporting them.
Mr Peter Bone (Wellingborough) (Con)
Mrs Bone would like to offer best wishes for the new year to the Secretary of State. The reason she can do this is the excellent health care provided by the NHS in both Kettering general hospital and Northampton general hospital. Locally, the commissioners and the acute hospitals are together working out a plan to deal with accident and emergency. Is not that the way forward?
Mr Hunt
Indeed. I pass on my best wishes for the new year to Mrs Bone. Like many people, she has benefited from superb NHS care. A million more people are having operations every year under this Government, and 700,000 more people are being seen within four hours at A and E under this Government.
Gavin Shuker (Luton South) (Lab/Co-op)
The NHS is a system, which is why cuts to social care and other parts of the system affect A and E. With that in mind, and with 14 hospitals in a state of emergency, will the Secretary of State review the plans that are in place should a winter crisis of cold weather come along at this very vulnerable point?
Mr Hunt
It is interesting that the hon. Gentleman did not want to talk to the House about his own local hospital, which is performing extremely well for A and E. It would be good if more of those on the Opposition Benches talked about the good things that are happening in the NHS, including nine out of 10 people who go to A and E being seen within four hours.
Rehman Chishti (Gillingham and Rainham) (Con)
I thank the Secretary of State for the £13.4 million given to Medway Maritime hospital’s A and E department. Will he assure me that everything that can be done is being done to turn around hospitals in special measures such as Medway, which had the seventh highest mortality rate in 2006 yet nothing was done? Will he also join me in paying tribute to all the front-line staff who do a fantastic job at Medway?
Mr Hunt
I am happy to do that. One of the things that this Government are most proud of is what we have done to turn around hospitals with entrenched low standards of care following the terrible tragedy at Mid Staffs, with 18 hospitals put into special measures and six of them turned around. Despite all the pressure on me and on this Government to hit targets, we are sending out signals to the system, loud and clear, that targets matter, but not at any cost, and that we do not want corners cut when it comes to patient safety.
Graham Jones (Hyndburn) (Lab)
Last weekend at Royal Blackburn hospital’s A and E, which I have been concerned about for quite a while, 18 ambulances were waiting outside. That was revealed not by the NHS but by a whistleblower, who described the situation as “chaos”. Is it happening because there are too many patients putting too much pressure on the NHS or because of mismanagement of the NHS by the Conservatives?
Mr Hunt
It is because of unprecedented demand caused by a range of factors. If the hon. Gentleman looks at the facts, he will see an NHS that is treating more people more quickly, with more doctors, more nurses and more operations than ever before. Sometimes, though, as I said yesterday, people on the front line feel that they are running just to stand still because there is so much pressure. That is why the £700 million in our winter plan and the money we are putting in to back the five-year forward view next year are so important.
Karen Lumley (Redditch) (Con)
Does my right hon. Friend agree that we should not be playing party politics with the NHS in the way that my opponent in Redditch is by putting out leaflets saying that I am systematically voting against the NHS, but that we should be working together with our trusts and partners in ensuring that we get through this problem, as we are trying to do in Worcestershire?
Jonathan Ashworth (Leicester South) (Lab)
The Secretary of State will know that major incident status was declared at Leicester hospitals this week for the seventh time in three months. In the week before Christmas, just 67% of patients at Leicester Royal Infirmary in my constituency were seen within the four-hour target, and clinicians, who are working flat out, expect pressures to increase over the next three months. What is he now going to do to support clinicians in Leicester and get a grip of this situation?
Mr Hunt
I am aware of the situation in Leicester. The hospital has had significant space pressures in its emergency department, and a couple of nights ago it had a high in-flow during one night, but it is absolutely on the case in trying to resolve this. What are we doing? We have put in £9.2 million of winter pressures money to make sure that whatever people decide the right solution is, it is not through lack of resources that they cannot do it.
Chris Skidmore (Kingswood) (Con)
Last Saturday night, while I was visiting my wife’s family in Leicestershire, my baby daughter suddenly became quite ill. Rather than going to A and E, we rang the 111 service and were quickly referred to Loughborough urgent care centre, where we had fantastic treatment; I pay tribute to the staff. Does this not go to show that we need to prioritise new models of urgent care, as set out in Simon Stevens’s review?
Mr Hunt
We absolutely do that. Telephones and the internet provide different ways to get the right advice to people quickly. The 111 service is taking a considerable amount of strain at the moment, and we have put in more money to support it. We are investing a lot more in tele-health and tele-medicine, and a lot more to help GPs who want to give people out-of-hours appointments. In the long run, that is the way we will reduce the kinds of pressures that my hon. Friend talks about.
Helen Goodman (Bishop Auckland) (Lab)
Over three years ago, I raised with Ministers problems about the North East ambulance service that had been pointed out to me by the paramedics, but unfortunately they were brushed aside. My constituent, Violet Alliston, had the terrible experience of her partner ringing for an ambulance three times in the course of an hour before the ambulance came. She then died. This is obviously completely unacceptable. Why will not the Secretary of State look again at the resources he is taking out of the North East ambulance service, the skills base of the call handlers, and the triage system?
Mr Hunt
I am extremely sorry to hear the story that the hon. Lady talks about, and I know that the NHS will investigate it fully. We are not cutting resources to ambulances, though. We have 2,000 more paramedics than four years ago, and £50 million is being put in this winter. Of course, we need to look very carefully into the particular case that she mentions and make sure that any lessons are learned.
Mr Speaker
Order. I really am keen to accommodate remaining colleagues, because I understand the interest in this subject. May I appeal to colleagues to put single, short supplementary questions without preamble? Now, who might be a master of the genre—Mr Richard Graham?
Richard Graham (Gloucester) (Con)
Thank you, Mr Speaker—I will seize the moment.
Part of the long-term solution is attracting and retaining more nurses. Will my right hon. Friend encourage the National Health Executive to allow the university of Gloucestershire to run pre-registration training courses for nurses so that we can attract and retain more local nurses?
Andy Sawford (Corby) (Lab/Co-op)
The Secretary of State will be aware that there are particular issues at Kettering General hospital’s A and E unit. It has improved its performance, but it has been described, to the shock of all the MPs in the area, as the worst seen in the country. We have done an awful lot of work. On Tuesday we are bringing the local health organisations together to the Department. Will he encourage his ministerial colleagues to give the green light to our plan for our area?
Fiona Bruce (Congleton) (Con)
My constituent, Mr J. Hollinshead, rang Ashfields surgery, Alsager, for an appointment at 8.30 am on 2 January. He was given one for 10.30 am, when his doctor referred him for three tests to be done with the practice nurse at 11.30 am, then on to Leighton hospital for an X-ray, and he was home by 1.30 pm. His response: “How good is that?” Is not that a truer picture of the NHS under this Government than the negative messages coming out from Labour Members?
Mr Hunt
I agree that we need to recognise the successes of the NHS, and there are many of those successes. The reason we need to do that—I urge Labour Members to remember this—is that it is very important for the morale of people working in the NHS that we publicly recognise where they are being successful.
Clive Efford (Eltham) (Lab)
Is it not true that this Government set out with a plan to close nine out of 31 A and Es in London, including the one at Lewisham, as directed specifically from the Secretary of State’s office? Does he regret that? What state does he think the A and E services in south-east London would be in if he had been successful, in the face of public opposition, in closing that A and E?
Mr Hunt
First, as the hon. Gentleman knows perfectly well, there were never any plans to close that A and E, and he should desist from scaremongering about what was happening at Lewisham hospital. He should also remember that when this Government came into office—[Interruption.] The plans—
Mr Speaker
Order. First of all, it is unseemly to squawk, and I think it would be accurate to say that what I heard was a squawk. I am not sure if there is a verb “to squawk”, but there was a squawking sound. What is worse, it was unparliamentary language, and I believe that the hon. Gentleman used a word that he will now wish to withdraw.
Clive Efford
I withdraw it unreservedly, Mr Speaker, but the public out there will draw their own conclusions.
Mr Speaker
I am grateful to the hon. Gentleman for his withdrawal and I note what he says.
Mr Hunt
The plans were to continue to have an A and E at Lewisham but to take some of the higher-risk patients to another hospital. Those are the plans that we originally had that have now been changed. What I will say to the hon. Gentleman, though, is that there were problems with South London Healthcare Trust for years and years. This Government dealt with them and sorted them out, and that means that his constituents are getting better care than they otherwise would have done.
David Morris (Morecambe and Lunesdale) (Con)
Will my right hon. Friend join me in congratulating the staff at Royal Lancaster Infirmary on meeting their A and E targets in November? Will he also share my revulsion at the Opposition putting out a leaflet saying that there are all kinds of things wrong with the A and E and that it is going to close?
Kerry McCarthy (Bristol East) (Lab)
The South Western ambulance service came close to declaring a major incident on 27 December, and local hospitals warned of unprecedented demand last weekend. What is the Secretary of State doing specifically to help hospitals and the ambulance service in the Bristol and Avon area to survive the winter?
Mr Hunt
As I mentioned earlier, I have talked to the chief executive of South Western ambulance service about the particular pressures it has faced, such as the 25% increase in 999 calls. We are doing a lot of things, including helping to recruit more paramedics. We have 40 more paramedics starting for the London ambulance service this month, and we are doing what we can to help the South Western ambulance service as well.
Stephen Mosley (City of Chester) (Con)
About a third of the patients attending A and E at the Countess of Chester hospital are from the Welsh side of the border. They choose to go there because they know they will get treated a lot quicker in England than they will in Wales. Why is that the case?
Mr David Crausby (Bolton North East) (Lab)
Before a major incident was declared yesterday morning, 76 patients were awaiting transfer to social care in the Royal Bolton hospital—nearly four wards-full—so when is the Secretary of State going to do something effective about the crisis in social care that is causing mayhem in our accident and emergency department?
Mr Hunt
I recognise the pressures that the hon. Gentleman is talking about, but last year, for the first time, the local NHS and the local authority in Bolton sat down together to plan social care for the most vulnerable people—his constituents—who need such joined-up care and have wanted but not had it for so many years. With the better care programme from this April, we will start to see some real improvements.
Henry Smith (Crawley) (Con)
In 2005, the Labour Government closed the accident and emergency department at Crawley hospital, but services are now returning to the urgent treatment centre. Does my right hon. Friend believe that such centres play an important part in relieving pressure on emergency services?
Mr Hunt
They absolutely do. One thing we must do better is signpost people to the different parts of the NHS, such as walk-in centres, urgent treatment centres, GP surgeries or A and E departments. That is why the 111 service is so important in giving that advice at the earliest possible stage.
Dr Alan Whitehead (Southampton, Test) (Lab)
Does the Secretary of State now regret the cuts inflicted on Southampton social care provision—they were draconian, disproportionate and possibly motivated by political football—given that Southampton city council has been unable to support the Southampton general hospital by moving people into social care and away from accident and emergency? Will he have a word with Communities and Local Government Ministers to get that put right?
Ben Gummer (Ipswich) (Con)
I was at Ipswich hospital this morning to talk to the senior clinical team. They have exceeded their targets in A and E—it is the fifth best performing hospital in the country—and they have done so because of their work. Will the Secretary of State congratulate them, and does he regret the politicking that undermines their incredible efforts in the service of my constituents?
Diana Johnson (Kingston upon Hull North) (Lab)
The Secretary of State said that 14 major incidents have been declared. I am told by a senior front-line worker that many hospitals are declaring internal major incidents—they have done so for some time—because that is more politically expedient and does not get into the press. How many internal major incidents have been declared in the past month?
John Stevenson (Carlisle) (Con)
The Cumberland infirmary in Carlisle is coping and improving. However, to improve more quickly, it needs to conclude the acquisition by Northumbria Healthcare NHS Foundation Trust as soon as possible. Will the Secretary of State do everything he can to help to achieve that, as I believe it will lead to better health care, both in A and E and generally, in Carlisle?
Kate Green (Stretford and Urmston) (Lab)
What is being done to address staff well-being during this exceptionally pressured period? Repeated pressure on A and E—with staff being required, or volunteering, to do extra shifts—does in the end put pressure on staff, and may cause burn-out and risk to patients. What is being done to attend to that issue?
Mr Hunt
There are two things. First, as I am sure the hon. Lady does, I take every opportunity to praise the work being done by staff through a very difficult and challenging period. Secondly, the practical way in which we can most help them is to try to recruit more staff where we possibly can, and to make sure that resources are not a barrier to recruiting more staff. We have about 5,000 more nurses in hospitals compared with 12 months ago, and that has made a difference.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
The Secretary of State stood up and said that he takes personal responsibility for everything that happens in the NHS. Given that his Government undertook a costly and time-consuming reorganisation, does he now regret that people took their eye off the ball in relation to the highly predictable population shifts that have led to the pressure on A and E?
Mr Hunt
I am afraid that that is an example of the politicisation of the NHS that people find so distressing. Those reforms were not enacted in Wales, which is run by the hon. Lady’s party, and A and E performance there is significantly worse. It does not make any logical sense to blame A and E performance on those reforms.
Julie Hilling (Bolton West) (Lab)
Royal Bolton hospital says that it is in crisis because it cannot discharge patients. The Secretary of State says that the hospital and local authority in Bolton are talking to each other, but Bolton council has had £100 million-worth of cuts. What will he do to reverse the cuts in social care that have created the crisis in our hospital?
Mr Hunt
If the hon. Lady is making a criticism, I would ask her what she is going to do, because the shadow Chancellor confirmed this week that he will not find extra money for social care. I will tell her what we are doing. We are merging the social care and local NHS systems to try to stop people being pushed from pillar to post, and to give them the joined-up, compassionate, safe care that we think is an absolute priority. That is happening in Bolton—I have visited facilities in Bolton that are displaying excellent care—and we should support such efforts, not criticise them.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
In January 2013, I raised with the Health Secretary the incident in which an 84-year-old lady had to wait 11 hours for an ambulance. This Christmas, a 101-year-old lady had to wait six hours for an ambulance, and an 89-year-old pensioner also had to wait 11 hours for an ambulance. When do individual incidents of failure become a pattern, and is the Health Secretary himself an individual incident of failure?
Mr Hunt
I take huge interest in individual examples of where things have gone wrong, and that has informed a lot of my approach to the job. Just like A and E departments, when ambulance services get calls, they have to triage them and deal with the highest-priority calls quickest. The calls they get can sometimes be dealt with after a period of hours, but other calls are much more urgent. The important thing for ambulance services is to know that we are backing them with more paramedics, more investment and more ambulances, and that is what we are doing.
Mr Steve Reed (Croydon North) (Lab)
One of my constituents, an 80-year-old woman, collapsed at home over the weekend. She had to wait an hour for an ambulance to arrive, and she then waited 10 hours in A and E before being treated by medical staff. For most of that time she was on a trolley in a corridor. Will the Secretary of State apologise to my constituent? Does he not regret wasting billions of pounds on a top-down reorganisation of the health service, instead of using the money to fund the additional doctors and nurses who could have treated my constituent and thousands of others like her across the country more quickly?
Mr Hunt
Management costs in the NHS doubled under the hon. Gentleman’s Government; under this Government, they have been cut by £1 billion a year, which is paying for 9,000 more doctors and 3,000 more nurses. That is the reality of the NHS under this Government—1 million more people are getting operations every year—and if he really believed in the NHS, he would support and welcome that, rather than criticise it.
Stormont House Agreement
(9 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Northern Ireland (Mrs Theresa Villiers)
With permission, Mr Speaker, I would like to make a statement on the political talks in Northern Ireland, which culminated in the Stormont House agreement on 23 December. When I last had occasion to update the House, after the visit to Belfast of my right hon. Friend the Prime Minister and Taoiseach Enda Kenny, I reported that 10 weeks of talks had so far failed to deliver consensus on any of the key issues. I made it clear that the stakes over the coming days were high, and that without an agreement before Christmas we were unlikely to get so close again for months, or even years.
Further intensive discussions duly took place on Wednesday 17 December and continued on Thursday and Friday of that week. Resuming on Monday 22 December, the negotiations continued overnight, concluding some 30 hours later at around lunch time on the 23rd. At that stage, we presented the parties with a final heads of agreement, reflecting the many weeks of discussion and with the input of both the UK and Irish Governments, in accordance with the three-stranded approach. Key issues covered included the finances of the Stormont Executive, reform of the devolved institutions and the legacy issues of flags, parading and the past. I will take each in turn.
The agreement sets a path for the Executive to put their finances on a sustainable footing for the future, averting the impending budget crisis that was threatening the stability and credibility of the institutions. That includes the implementation of welfare reform, with certain agreed adaptations to be paid for out of the Northern Ireland block grant, alongside efficiency measures and reforms to the public sector. Measures to improve the way the devolved institutions work, including provision for an official Opposition, a reduction in the number of Government Departments and a cut in the number of Members of the Legislative Assembly by 2021 are also part of the agreement. A commission on flags, identity and culture is to be established by June and, based on the party leader discussions in the summer, proposals set out by the Government will open the way for a devolved system of adjudicating on parades, to replace the Parades Commission.
Crucially, the agreement also sets out broad-ranging new structures to deal with the legacy of Northern Ireland’s past. They include an oral history archive, a new historical investigations unit to look at the deaths that occurred as a result of the troubles, and an independent commission for information retrieval to be established by the UK and Irish Governments. All those bodies will be required to operate in a balanced, proportionate, transparent and accountable way, preventing any group or strand of opinion from being able to subvert the process or try to rewrite history.
The new system puts the needs of victims and survivors at centre stage and has reconciliation as a key goal. Consensus on how to deal with Northern Ireland’s past has eluded successive Governments since the Belfast agreement was signed 17 years ago, so the significance of the progress that has been achieved should not be underestimated. The Government have agreed to contribute £150 million over five years to help fund the structures dealing with the past, meaning that the Police Service of Northern Ireland can devote its efforts to policing the present rather than the past. That funding forms part of a wider package of significant financial support from the Government amounting to about £2 billion of additional spending power. That is made up of a combination of new funding and important flexibilities in relation to existing resources, and it is targeted at Northern Ireland’s specific circumstances—the legacy of its divided past, its divided society and its overdependence on the public sector.
Last, but certainly not least, the agreement paves the way for legislation to devolve the power to set the rate of corporation tax for Northern Ireland. A Bill will be presented to the House shortly for First Reading. If the Stormont parties press ahead on agreeing their final budget and on delivering welfare reform legislation, the Government will use all their best endeavours to get the corporation tax legislation on to the statute book before Dissolution. The parties in Northern Ireland have made it clear that they believe that corporation tax devolution can help them rebalance the economy and attract investment, not least because of Northern Ireland’s unique position of having a land border with the Republic of Ireland. I welcome the fact that it is this Government who are delivering that momentous and transformative change, subject to the important conditions contained in the agreement, and I call on the Opposition today to commit to supporting the Bill as a key part of the Stormont House agreement.
The agreement involves compromise on all sides, and it has been widely welcomed. First Minister Peter Robinson hailed it as “a monumental step forward” for Northern Ireland. Deputy First Minister Martin McGuinness called it “a remarkable achievement” and
“a fresh start we need to seize with both hands”.
President Obama said that Northern Ireland’s political leaders have shown that
“there is a way to succeed for the benefit of all”,
and Secretary of State Kerry called their actions “statesmanship, pure and simple”.
Securing an agreement is not the end point—far from it. There is much work ahead on implementation for the Executive, for the UK Government and, where appropriate, for the Irish Government. However, I give this assurance: if the parties in the Executive press ahead on that, the Government will implement our side of the agreement, and we will do it faithfully and fairly. There are no side deals.
In closing, I pay tribute to Minister Charlie Flanagan for his crucially important contribution to the process. I would also like to thank the United States Administration, and in particular Secretary Kerry’s special representative, Gary Hart, for their support. I thank all the officials at the Northern Ireland Office who worked so hard on the process. Above all, I would like to record my appreciation for the leadership and determination shown by Northern Ireland’s Executive parties.
In the Government’s view, the Stormont House agreement represents a genuine and significant step forward for Northern Ireland, offering the prospect of real progress on some of the most intractable issues faced there—problems that have defied multiple attempts to resolve them over the years. This agreement gives the five parties in the devolved Executive the chance to refocus and work together with renewed confidence for a more prosperous, more stable, more united and more secure future for the people of Northern Ireland. I urge them to seize the opportunities it presents to build a brighter future for Northern Ireland, and I commend the agreement to the House.
Mr Ivan Lewis (Bury South) (Lab)
I thank the Secretary of State for advance sight of her statement. The Opposition welcome many aspects of the agreement that she has outlined to the House. It is not perfect, but it is a genuine advance on the stalemate of the past two years. I congratulate the Secretary of State, the Under-Secretary of State and their counterparts in the Irish Government on their painstaking and, I am sure, at times painful facilitation of the talks. I also recognise the contribution of US Secretary of State Kerry’s special representative, Senator Gary Hart.
Throughout the political impasse of the past two years, we have repeatedly called for the Government to play a more active role. We hope that the right lessons have now been learned about the consequences of disengagement for political stability and momentum in Northern Ireland. I am sure the Secretary of State will agree that there is no room for complacency. As we have seen in the recent past, unresolved issues such as parades and flags have the potential to fuel public concern, disorder and, ultimately, political instability.
I want to pay tribute to Northern Ireland’s political leaders for stepping back from the abyss and restoring some level of public confidence in their capacity to move Northern Ireland forward. It should be acknowledged that they face unique challenges in managing the transition from a society scarred by conflict and sectarianism to a more normalised society. However, that acknowledgement does not mean exemption from difficult political choices about priorities, or an expectation of blank cheques from this or any future Westminster Government.
Turning to the agreement itself, we welcome the adoption of a viable budget for the next financial year. It is right that it includes some elements of welfare reform while excluding the pernicious bedroom tax, which an incoming Labour Government will scrap. However, we remain concerned by the Government’s rush to introduce legislation on corporation tax devolution, a decision that will have profound implications for Northern Ireland and the rest of the United Kingdom. We believe that there should be a proper consultation process, including an analysis of the financial impact of significant reductions in corporation tax on Northern Ireland’s block grant, before legislation is introduced in this House.
It is good news that a comprehensive system for dealing with the past has finally been agreed. It is to be hoped that, over time, victims and their loved ones will develop confidence in the integrity of the new architecture and get the truth and justice that they have been denied for too long. We also strongly support the Government’s decision to make new investment available to boost integrated education. That is one of the most powerful manifestations of what a shared future can mean for Northern Ireland.
I have a number of questions for the Secretary of State. What assessment have the Government made of the impact on the block grant if Northern Ireland reduced corporation tax to the levels of the Republic of Ireland? What criteria will be applied to determining whether penalties will be levied by the Treasury next year in connection with welfare reform? What is the time scale for the creation of the new system to deal with the past? What negotiating process will be put in place to deal with unresolved issues such as parades, flags, and other identity issues such as the Irish language? Finally, what process has been agreed to monitor the implementation of the agreement? I am sure the Secretary of State will agree that it is one thing to reach an agreement, but for the sake of credibility, it is incredibly important that that agreement is now implemented.
Mrs Villiers
I thank the hon. Gentleman for his expression of support for much of what is in the agreement, and for his kind comments about the work in which I and Minister Flanagan took part. As ever, I refute his allegation of a period of disengagement. At no stage have this Government been disengaged from Northern Ireland. We have actively worked throughout our time in office, not least in agreeing an economic pact that saw us working more closely with the devolved Executive in Northern Ireland than ever before, in addition to bringing the world’s media to Northern Ireland for the tremendously successful G8 conference.
I welcome the hon. Gentleman’s comments about progress on budget matters. Those on both Front Benches are united on the point that there will be no blank cheques, and the Government have put forward a significant and important financial package, reflecting Northern Ireland’s specific circumstances. I was disappointed to hear his comments on corporation tax devolution, because I think that change could have a significantly transformative effect on Northern Ireland’s economy. Northern Ireland is in a unique position in the United Kingdom, because it shares a land border with a jurisdiction that has a much lower rate of corporation tax. I urge the hon. Gentleman to urge the shadow Chancellor to allow Labour to support that change, which I believe is good for Northern Ireland.
The hon. Gentleman asked about the implications for the block grant. The Azores criteria mean that any future reduction in corporation tax in Northern Ireland needs to be funded from the block grant. Various estimates have been made of what that might look like, but at this stage it is impossible to be certain, not least because no final decision has been made on what the rate would be reduced to.
On the criteria for calculating welfare shortfall payments, the £114 million due in financial year 2015-16 is dependent on progress on implementing welfare reform. The quicker welfare reform is introduced and is up and running, the lower the shortfall payment will be. The time scale on the past is a key point, and the Government are keen to start working with the Northern Ireland Executive on the work needed for those institutions. They will certainly need Assembly legislation and in all likelihood they will also need Westminster legislation, and we are getting on with those matters.
The agreement sets out provision for a commission on flags to be established by June, and it is important that we press ahead with that. There is clearly more work to be done on that issue and on parades, and the agreement provides for further work by the Office of the Legislative Counsel of the Executive, bringing forth options that can then be consulted on for reform of the parading system. The process for monitoring will start with its first meeting between the Executive and the Government by the end of January. The final paragraphs of the main part of the agreement set out a system for monitoring implementation, and that will be taken seriously by the Government. It will, of course, involve the Irish Government, where appropriate and consistent with a three-stranded approach, and we look forward to getting down to work with the Executive on those matters.
Mr Laurence Robertson (Tewkesbury) (Con)
I thank the Secretary of State for providing an advance copy of her statement. What discussions has she had with the parties in Northern Ireland about moving the Assembly and the Executive towards becoming a more efficient decision-making body?
Mrs Villiers
My hon. Friend will find a section in the agreement on that. There is a commitment to draft a protocol on the use of the petition of concern, and to set out more clearly the sorts of issues on which it should be deployed. There are important changes to the way the Executive work, so that Ministers from the smaller parties can get business on to the agenda. There are proposals for reform of the MLA expenses system, and a commitment to a future reduction in the number of MLAs. I am sure that more could be done in terms of institutional change, but the agreement is a real step forward. In particular, I draw the House’s attention to the provision for an official Opposition for the first time in the history of the devolved institutions.
Mr Peter Hain (Neath) (Lab)
I congratulate the Secretary of State and all the party leaders on reaching an agreement, not least in view of the Prime Minister’s astonishingly premature exit from the previous summit, and his lack of engagement, which has been greater than that of any Prime Minister for more than 20 years. How can the Secretary of State be sure that this process will not long-grass the key flashpoint issues of parades and flags? On corporation tax, is she aware of Sir David Varney’s 2007 report to the Treasury, which showed that 95% of businesses in Northern Ireland do not pay corporation tax? That is not a silver bullet; it will leave a £300 million hole, or 3%, in the block grant, if there is equalisation with the Republic of Ireland.
Mrs Villiers
I assure the right hon. Gentleman that the Prime Minister has been closely engaged with this process, and the visit he made along with the Taoiseach was significant in moving things forward. The financial package that he was able to agree with the Treasury was a crucial part of our progress. This Government have delivered significant achievements on some of the most difficult issues that Northern Ireland faces, and that is in large part due to work done by the Prime Minister.
I have acknowledged that there is more work to be done on the difficult issues of parades and flags, and no one would say for a moment that this agreement is the last word. I will be working, as will my officials and colleagues in government, to find a way forward on those matters, and ensure that they are not long-grassed and that we make real progress. As the right hon. Gentleman pointed out, those issues can cause huge disruption in Northern Ireland and poison the political relationships that are crucial to making the Executive work effectively. He says that corporation tax devolution is not a silver bullet. I agree that on its own it will not transform the Northern Ireland economy, but combined with other economic reform, a focus on skills and competitiveness, and economic reform across the board, it can have a significant and transformative effect. That is why I am disappointed that Labour is not supporting it.
Mr Owen Paterson (North Shropshire) (Con)
I congratulate the Secretary of State on her statement, and all parties involved on showing real perseverance through some intractable negotiations. On the past, I pay tribute to all those at the Historical Enquiries Team who produced reports on cases that may have been low profile but nevertheless presented a real agony to relatives and friends of murder victims. I hope that the successor organisation will continue to publish such reports as they are of immense importance to those individuals. Looking to the future, the decision to introduce a Bill on corporation tax is tremendous and a tribute to all parties—the Opposition should remember that all political parties wish for it. Grow NI has overwhelming support from the business community in Northern Ireland, and estimates a cost of £200 million to £300 million if the tax were dropped to the level of the Republic. That is a very small investment in total Government spending of £23 billion in Northern Ireland. What issues does the Secretary of State believe might impede the progress of that Bill on to the statute book before March?
Mrs Villiers
I agree with my right hon. Friend about the importance of reports by the HET. Paragraph 30 of the agreement provides that the historical investigations unit will continue to provide those types of reports to families as part of its work. I pay a warm tribute to the work my right hon. Friend has done on corporation tax. He championed it alongside Grow NI, business groups and Northern Ireland’s political leaders, particularly the Democratic Unionist party, and it is a tremendous achievement that the Bill is now so close to being presented to Parliament. That is a real tribute to my right hon. Friend’s work as Secretary of State for Northern Ireland.
Mr Speaker
Order. The Chair is obviously keen to accommodate everybody, but can I please appeal to each colleague to put one pithy question, not a miscellany of inquiries for which, frankly, we do not have time?
Mr Nigel Dodds (Belfast North) (DUP)
On 15 December, the Secretary of State told this House:
“the north Belfast panel”—
on parades—
“will be constituted shortly.”—[Official Report, 15 December 2014; Vol. 589, c. 1136.]
The Secretary of State knows that we did not negotiate on the issue of parades in the talks and that, of course, the Ligoniel parade was outside the ambit of those talks, but can she tell the House why, eight days later on 23 December, she went back on her word, did not consult the Unionist parties, did not consult this House and has not made any further statement other than to retract and give to Sinn Fein the opportunity to announce that the panel was not going ahead? Why did she do that? Is that not an act of gross bad faith? Is it not something that will cause immeasurable trouble in the days, weeks and months ahead? The festering sort of the denial of human rights to the people of Twaddell is not going to go away. If she does not intervene and do something—it is her responsibility; it is not devolved—it will get worse and worse in the weeks and months ahead.
Mrs Villiers
I fully appreciate how strongly the right hon. Gentleman feels. I am absolutely determined to continue to work with him and with Northern Ireland’s party leaders to find a way forward to ensure that we find a way to resolve the parading impasse. As we have had the chance to discuss, the trouble with the panel was that it did not have enough support. It never had nationalist support. The Unionist coalition that had called for it to be set up in the first place could not produce a public statement in support and had actually broken up—some of the smaller parties had walked out. None of the smaller parties were making the case for the panel publicly, and there was a distinct lack of enthusiasm among the smaller parties. I regret the way the news came out. I have apologised to the right hon. Gentleman for that, but now we need to move forward and find something that will work to try to resolve the impasse in north Belfast.
Mr Andrew Robathan (South Leicestershire) (Con)
I congratulate my right hon. Friend the Secretary of State, the Under-Secretary of State for Northern Ireland, my hon. Friend the Member for South West Wiltshire (Dr Murrison) and all the staff who worked on this. It is a real achievement. My right hon. Friend knows that I am not much given to flattery, but it is a real achievement for which she deserves congratulations. She said that this is not the end. Going forward, will she ensure that those who were perhaps stumbling blocks—I understand Sinn Fein was a little bit difficult about welfare reform—are not allowed to stop this process in its tracks, and that we all work towards an Northern Ireland that is exactly like the rest of the United Kingdom, where people can go about their daily lives without fear, without corruption and without criminality?
Mrs Villiers
I thank my right hon. Friend for his kind comments. I echo his praise for my hon. Friend the Under-Secretary of State for Northern Ireland, who worked with great assiduousness and devotion on these matters alongside, as my right hon. Friend pointed out, many of the civil servants in the Northern Ireland Office. It is a tremendously important step forward that the political parties together were able to find a compromise on welfare reform. It does involve a top-up from the block grant to reflect Northern Ireland’s circumstances. Agreement on welfare reform was essential to putting together a sustainable budget. The important thing now is for a final budget to be agreed by the end of January and for progress on a welfare Bill passing through to consideration stage in the Assembly before the end of February. Those are the next steps.
Ms Margaret Ritchie (South Down) (SDLP)
I thank the Secretary of State for her statement. Can she possibly give us a little more detail on the specifics for the implementation of the legislation in the Chamber here in Westminster and in the Assembly? What particular legislation will apply to both? In relation to victims and the past, the detail is quite light. Many people will believe that the information sought in relation to inquests by those who have been deliberately affected—the victims and survivors—will not be met, because it falls far short of Haass and Eames-Bradley.
Mrs Villiers
I expect the House to receive news on legislation on corporation tax in the very, very near future. We are working on how the structure of legislation in the Assembly and Westminster on the rest of the package is precisely to be formulated. The procedures for review and monitoring are set out in paragraphs 73 to 75. In relation to inquests and the provision of information to families, it is crucial that we all work on this. The agreement has a commitment to reform. There is an acknowledgement that the current inquest system is not meeting the needs of the families effectively enough and not delivering the Government’s obligations under article 2 effectively enough. That will be a hugely important priority for the UK Government. We hope to work closely with the Department of Justice in the work that it will no doubt be doing on this.
Nigel Mills (Amber Valley) (Con)
I welcome the fact that an agreement was reached, but will the Secretary of State set out exactly how much extra money has been given to the Northern Ireland Assembly to make the deal happen? Does she regret that, yet again, we have shown that if the parties of Northern Ireland hold out for long enough, Westminster will eventually cave in and send more money over?
Mrs Villiers
I can outline the financial package, but it is a fair one. It was not a blank cheque. It recognises that Northern Ireland faces specific problems that the rest of the United Kingdom does not. In outline, it involves £150 million over five years to help to fund work on the past; flexibility to use £700 million of capital borrowing to fund a voluntary exit scheme for four years; a contribution of up to £500 million over 10 years of capital funding for shared and integrated education; £350 million of borrowing for capital infrastructure projects; and the flexibility to use the receipts from asset sales and capital funding to repay the welfare shortfall payments.
Kate Hoey (Vauxhall) (Lab)
I welcome the replacement of the Parades Commission, which in my view has done more harm than good. May I take up the point made by the right hon. Member for Belfast North (Mr Dodds)? There is one parade that is causing huge long-term problems in north Belfast. Will the Secretary of State get involved personally? Will she talk to the Orange Order directly? Will she visit Twaddell avenue camp, as many of us have, and actually talk to the people there to understand why they feel so strongly about this very small amount of road that people are deliberately trying to stop them going back along? Until that is sorted, none of this talk about parades commissions or new bodies will work. She has the power to get this solved.
Mrs Villiers
I assure the hon. Lady that I will certainly be meeting the Orange Order and others who have a very strong interest in these matters. I fully appreciate the huge importance that both sides of the dispute place on them. I have been actively involved, and I will continue to be actively involved to try to find a way forward. This dispute is in nobody’s interests and we need to find a way to solve it.
Stephen Lloyd (Eastbourne) (LD)
I welcome the Secretary of State’s announcement and I pay tribute to all the party leaders, and the Prime Minister, who helped to make it happen. I am disappointed that there was not more progress on the Parades Commission. We have kicked it back to June and to the middle of the marching season, which is going to be rather difficult. I would also like to pay tribute to the decision to have an independent audit on the cost of division. That will be terribly important to help us move forward. My question, however, relates to paragraph 69 and shared and integrated education. The Secretary of State knows there is a world of difference between shared education and integrated education. I would be grateful for her take on what she believes that means and what impact it will have on education in Northern Ireland.
Mrs Villiers
Clearly, there is much work to be done on parades. Whatever had gone into the agreement, there were always going to be decisions to be made on the implementation process. I agree that the proposal to have an independent audit of the cost of division is very important—a point championed in particular by the Alliance party. There is obviously a slightly blurred division between integrated education and shared education, but what they both have in common is that they ensure that the children who go through those schools have the chance to get to know and learn alongside children from other community backgrounds. That is a crucial means of helping to deliver a shared and united future for Northern Ireland. That is why the Prime Minister has given a substantial commitment to supporting integrated and shared education through funding.
Lady Hermon (North Down) (Ind)
With so many people throughout Northern Ireland feeling profoundly disillusioned with the performance of the Northern Ireland Assembly, will the Secretary of State accept that it is imperative that the political parties make the agreement work this time and that they do so with a generosity of spirit? I speak as someone who absolutely loathed direct rule and who is passionate about devolution and ensuring that the Assembly survives and succeeds to serve the whole of Northern Ireland.
Mrs Villiers
I welcome the hon. Lady’s sentiments. She is absolutely right. This is an opportunity for Northern Ireland’s political leaders to make it work. Anyone who thinks the agreement takes us in the wrong direction needs to reflect on the alternative: increasing chaos over the budget and increasing tension over a range of issues. This is an opportunity. There is work ahead of us all to implement the agreement, however, and I hope that everyone in the House will urge the Northern Ireland parties to seize the opportunity and make the agreement work for all of Northern Ireland.
Crispin Blunt (Reigate) (Con)
My right hon. Friend will recall the behaviour of the Democratic Unionist party over the vote on 42-day detention in the last Parliament, the deal for which cost this country about £1 billion. From the numbers she just gave my hon. Friend the Member for Amber Valley (Nigel Mills), it would seem that this latest deal has cost the taxpayers of Great Britain another £1 billion. Does she, like me, fear for the fate of this country if, by some mischance, there is not a clear Conservative majority at the next election and the Administration has to rely on that lot over there?
Mrs Villiers
My hon. Friend will be aware that the Conservatives are campaigning for a majority Conservative Government at the general election, not for coalitions of any sort. I will not comment on the history of the 42-day vote. I am keen to emphasise the crucial role played by First Minister Peter Robinson and the DUP in delivering a significant package of reforms for Northern Ireland.
Naomi Long (Belfast East) (Alliance)
I pay tribute to the Secretary of State and her team and to the Irish and American Governments, who were involved in the talks over a protracted period. On many of these issues, the Stormont House agreement provides a road map for Northern Ireland, particularly around finances, but much deeper reform is needed than simply filling the holes. I also believe in dealing with the past. However, on other key and volatile issues, such as parading and flags, this has simply become a parking garage where things will be left to sit until the difficult period over the summer. What will she do personally to remain engaged on those key issues? It is clear that there is not the will across all parties to come to a mature resolution on them.
Mrs Villiers
I welcome the hon. Lady’s comments and pay tribute to the sterling work done by her and her party in moving things forwards on all these issues through the cross-party talks and in other ways. She is right to describe the agreement as a road map. As ever with agreements in Northern Ireland’s history, this is a further staging post, and the next journey along the road will be implementation. Of course, I will be directly involved in keeping everything moving on implementation. Given the comments we have heard, I will no doubt be spending a lot of time on parading matters over the coming weeks.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
I congratulate my right hon. Friend on her hard work and all the political parties in Northern Ireland on delivering this agreement. However, may I press her for a little more information about how we can rebalance the economy in Northern Ireland? As I understand it, 80% of the economy there is dependent on the public sector. I am keen that there is not a significant impact on taxpayers in my constituency.
Mrs Villiers
On rebalancing the economy, as I have said, the devolution of corporation tax—assuming that the conditions are met—could have a transformative effect. In addition, the economic pact sets out other means to deliver the competitiveness that Northern Ireland needs to rebalance its economy. It will require reform of the planning system—that was proposed in the Assembly, but has not progressed as yet; crucially, a strong focus on skills and education; and measures to reduce red tape, which is why the pact contains a commitment by the Executive to a reduction of red tape. The Enterprise Minister has followed that up with some important work.
Ian Paisley (North Antrim) (DUP)
I welcome the advance copy of the statement that the Secretary of State gave us, but I am rather perplexed at the attitude towards corporation tax of the Labour Front-Bench team. We have worked hard to achieve this, and for it to be delayed would be a shame.
On the financial agreement, the Secretary of State said that she would allow the proceeds of specific agreed asset sales to be retained entirely by Northern Ireland. What are those assets? Will she confirm whether they include the port of Belfast, Translink, the water service and/or Northern Ireland car parks?
Mrs Villiers
It is important that the Executive give proper consideration to those and all other assets of a similar nature, but it would not be right for me to prejudge what sale proposals the Executive might develop. Each asset will be considered in relation to the provision in the agreement’s financial annexe.
Bob Stewart (Beckenham) (Con)
I add my voice to those who are congratulating my right hon. Friend, her team and everyone involved in getting agreement at Stormont House? It is fantastic.
I am pleased that there is to be a new historical investigations unit. Will my right hon. Friend reassure the House that the investigation will continue into what happened to the late Captain Robert Nairac GC and where his body might be located?
Mrs Villiers
I reiterate my sympathies and condolences to Robert Nairac’s friends and family, who must feel the pain of their loss even after so many years. Of course, a process is already in place for seeking the remains of the disappeared, and I do not think it would necessarily be impacted on by the HIU’s work. However, as part of the implementation process, we will work out how it will interact with existing bodies.
I thank my hon. Friend for his kind words about the achievement of this agreement. There were many people who said a Conservative-led Government could not do this kind of thing. Well, they have been proved wrong.
Mr David Anderson (Blaydon) (Lab)
On corporation tax, I am quite happy for the north to adjust its corporation tax to compete with the south, but this is also a Westminster Government, so we need to be clear that doing that will not disadvantage other parts of the UK, including places such as the one I represent.
On the demise of the HET, the Northern Ireland Committee heard just before Christmas that because of budget cuts to the police, the work of the HET, which we thought would end in three years, will not end for nine. We have been told today that there will be legislation in this House and Belfast. When does the Secretary of State envisage the legislation going through and the HIU being put in place? What does she think the time scale for concluding all those investigations will be? Will it be shorter or longer than we thought?
Mrs Villiers
Obviously, the PSNI has made some difficult announcements in recent weeks in seeking to absorb budget reductions, but the funding package and agreement, when implemented, will provide some relief. I hope that means that the work the PSNI indicated would take much longer than it had originally expected can be completed more quickly. We have put forward our proposal, and we hope that the HIU will complete the bulk of its work within five years.
On corporation tax, it is key to recognise that Northern Ireland is different and that there are specific reasons to justify its devolution in Northern Ireland that do not apply to the rest of the UK.
Mr Robin Walker (Worcester) (Con)
I congratulate the Secretary of State on the patience and resolve she has shown in helping the parties reach an agreement, particularly on the milestone of establishing an official Opposition in Northern Ireland, which is an important step forward in the normalisation of politics in the Province.
On the past, it is great that we have seen a degree of agreement between the parties, but does she agree that nothing in the agreement should imply an amnesty for the criminal gangs who preyed on the people of Northern Ireland for so long?
Mrs Villiers
Absolutely not. There are no amnesties in the agreement. This Government do not support such things, and they would not be justified in this instance.
David Simpson (Upper Bann) (DUP)
The Secretary of State mentioned parades a number of times, and those will be a problem in the future. Does she therefore understand the frustration of my constituents at the Drumcree protest, which has been ongoing for 16 years? The panel gave us the possibility of finding a model to deal with that parade, but the rug has again been pulled from under us. Does she understand the complete frustration?
Mrs Villiers
I do, and the hon. Gentleman and I have discussed the Drumcree situation on many occasions. It is important in north Belfast to focus urgently on finding an inclusive process to bring the two sides together. That is why I will be meeting many of the different groups involved in the next few days and discussing these matters with the right hon. Member for Belfast North (Mr Dodds) and the First Minister tomorrow.
Damian Collins (Folkestone and Hythe) (Con)
I congratulate the Secretary of State on her role in securing the agreement. Does she agree that the proposed independent commission on information retrieval should attach the same importance to requesting information from the British Government as is attached to pursuing the cases of the disappeared people who were victims of IRA murders during the troubles?
Mrs Villiers
Certainly, and it is crucial that the work on the disappeared is allowed to continue. Thankfully, it has been possible to find answers in relation to a number of cases. Sadly, many have so far not been resolved, but the good work done by the Independent Commission for the Location of Victims Remains is a good model on which to base the ICIR’s work for the future.
Mr Jeffrey M. Donaldson (Lagan Valley) (DUP)
Let me say to the hon. Member for Reigate (Crispin Blunt) that if he is faced with the choice of the Scottish nationalist party or a Unionist party, he may have cause to think again about the comments he just made.
The Secretary of State will join me in welcoming the progress we have made on dealing with our troubled past in Northern Ireland. She knows the hard work that was put in during the talks to achieve this outcome, which is a victim-centred outcome. However, many of those victims were victims of people operating from the jurisdiction of the Irish Republic; indeed, some were murdered in the Irish Republic. Will she ensure that the Irish Government hold good to the commitment and obligations they have undertaken in the agreement to co-operate fully with all the institutions dealing with the past and release all papers, documents and files held by Irish state forces that will assist in the apprehension of those responsible for those murders?
Mrs Villiers
I thank the right hon. Gentleman for his hugely important work in the cross-party talks and for delivering what I believe is a good agreement overall, although his input on the past has been particularly highly valued. It is important that all participants—the UK Government, the Irish Government and the Executive parties—play their part and live up to the obligations they have undertaken. Minister Flanagan has repeated on many occasions that his Government would co-operate with those institutions; I have every confidence that they will do so.
Mr Gregory Campbell (East Londonderry) (DUP)
I commend the statement and acknowledge the comprehensive efforts made by all involved in reaching the agreement. The Secretary of State alluded to the need to ensure that the process did not become a rewriting of history. Will she go further and indicate to the wider public in Northern Ireland that there has to be a distinction between the genuinely innocent victims in the past who were murdered and butchered, and those who caused that murder and butchery and happened to be caught up in violence of their own hand?
Mrs Villiers
Of course there is a very clear distinction between those two. I know that there continues to be controversy around the way that the law defines a victim, which has been the barrier to taking forward the proposal for a pension for severely physically injured victims. The hon. Gentleman will appreciate that the agreement commits to there being further work on whether we can find a way to enable that pension to be taken forward without raising those problems around the definition of “victim”. It is a difficult issue, but one that we should all continue to try to find an answer to.
Liz McInnes (Heywood and Middleton) (Lab)
Failure to agree on contentious issues such as flags and parading has led to violent protests, as we all know. What additional steps has the Secretary of State taken to ensure that the PSNI has adequate resources to guarantee security for the people of Northern Ireland and the capacity to police public events?
Mrs Villiers
The hon. Lady makes an important point. The agreement will help partly by providing extra funding for institutions that are doing work on the past that is currently done by the PSNI, but the financial annex attached to the financial package also contains an obligation on the Executive to do what they can to minimise reductions in police funding. Given the financial realities, it seems inevitable that there will be reductions in PSNI funding to some degree, but the UK Government would certainly like these to be kept to an absolute minimum, which is why it is in the financial annex to the agreement.
Jim Shannon (Strangford) (DUP)
I thank the Minister for her statement and for all the hard work that she and many others did to achieve the Stormont House agreement. We in the Democratic Unionist party ensured that the bedroom tax would not be implemented in Northern Ireland thanks to the flexibilities and the top-ups that we secured through the Northern Ireland block grant. Sinn Fein, of course, opposed that, but they never turned up in this Chamber to vote against it. However, this time Sinn Fein have joined with the DUP to agree a deal, which means that there is now no obstacle to a revised welfare reform Bill for Northern Ireland. Can the Minister set out the time scale for welfare reform in Northern Ireland and the legislative process through this House?
Mrs Villiers
I thank the hon. Gentleman for his comment. It is a hugely important step that the five parties reached an agreement on a way forward on welfare reform. It is indeed a matter for the Northern Ireland parties that they have applied the top-up in relation to certain matters, including the spare room subsidy, which they are funding through their block grant. It is now vital that progress is made on implementing welfare reform as soon as possible, so that we can press ahead with the rest of the agreement.
Mark Durkan (Foyle) (SDLP)
The Secretary of State will be glad that I will not rehearse the issues of welfare and finance that many of us concentrated on in the negotiations. She is right that we should not understate certain aspects of the agreement. However, it would also be wrong to oversell other aspects, where we have superficially strimmed the long grass, not least in respect of parades. Does she now regret her misadventure in proposing a panel on north Belfast, believing that that would somehow assist the talks, when we now know from the Unionist parties that their position was that, on the expected promise of the panel, they were not going to negotiate on parades in those discussions?
Mark Durkan
We heard it from them today and we heard it from their leaders this week. That is why we had all the nugatory discussions in Stormont House about parades, and therefore ended up with no negotiations on parades, and those who wanted a panel have now ended up with no panel. That is the Secretary of State’s fault.
Mrs Villiers
I pay tribute to the hon. Gentleman and the Social Democratic and Labour party for the work they did on welfare reform and, in particular, the past, where their ideas have been highly influential. I think everyone would acknowledge that there is more work to be done on parades, and that it will be crucial to take that forward for the good of all in Northern Ireland whose lives are potentially disrupted by parades and for those who want to conduct their parades and express their culture in the way they have for hundreds of years.
As for the panel, as I said to the right hon. Member for Belfast North, unfortunately there was just not enough support for it. It was well intentioned, and I still believe that we need to find a way to mediate between the two sides and find an inclusive process that can engage as widely as possible. It became apparent that the panel would not be able to do that. We need to find a way forward, and I will be working with the Northern Ireland Executive and their parties to seek to do that.
Dr William McCrea (South Antrim) (DUP)
The Secretary of State mentioned the establishment of a commission to consider flags and emblems. Does she agree that it is absolutely outrageous that the people of Northern Ireland are not permitted to have their flag, the flag of the United Kingdom, displayed on their driving licences like everywhere else in the United Kingdom—the SDLP is trying to out-green and out-Sinn Sinn Fein—especially bearing in mind that people in Northern Ireland died to keep Northern Ireland a part of the United Kingdom and beat the provos?
Mrs Villiers
These are hugely sensitive issues and these matters have been under discussion in various forums for many years, and the proposal to have a broader civic conversation and debate about finding a way forward is a good one. The hon. Gentleman will be aware that it was first proposed by Dr Richard Haass in the work that he and Meghan O’Sullivan did. We simply do not have all the answers on how all these matters need to be resolved. Including as many people as possible in finding a way forward on these sensitive and crucial questions of identity is an important step towards that.
Sammy Wilson (East Antrim) (DUP)
The additional money made available to Northern Ireland through flexibility and borrowing, and the extra money for the additional institutions, will be welcome. Despite what the hon. Member for Reigate (Crispin Blunt) said in his little Englander outburst, which helps nationalism more than the nasty nationalists of this House do when it comes to the break-up of the Union, this is something that Northern Ireland needed.
The important thing is to rebalance the economy as well. Will the Secretary of State spell out for us what exactly she means when she says that the Government will use their “best endeavours” to get the legislation on corporation tax through Parliament? Does that mean that that might not happen, and if not, why can she not give total clarity that the legislation will go through before the end of this Session?
Mrs Villiers
As I have said before, the reality is that introducing legislation at this stage of a Parliament runs the risk of running out of time for it, in which case we become dependent on the Opposition for getting it through. We will try to speed it through as best we can, assuming that the Northern Ireland Executive do their bit. We had hoped to introduce the legislation in December, in which case we would have been pretty confident of getting it through on time without the support of the Opposition. Given the delay of a few weeks, it is more uncertain. That is why I put the question I did to the shadow Secretary of State, but we will certainly try our very best to get this legislation on the statute book.
Toby Perkins (Chesterfield) (Lab)
I congratulate all the parties involved in enabling the statement to be made and in achieving the agreement, which is a significant step forward for Northern Ireland. The rising inequality and rising child poverty that we have seen under this Government and their hostility to public sector work have had an impact on Northern Ireland, creating a potential breeding ground for paramilitaries and political extremists. Has the Secretary of State had any discussions with the Chancellor about the impact on Northern Ireland of the decisions this Government have taken and of increasing poverty? What is she going to do to support a peaceful future by ensuring that Northern Ireland, and the rest of the United Kingdom, is able to have a more equal future than it has had in the recent past?
Mrs Villiers
I have had many discussions with the Chancellor on Northern Ireland matters. This Government’s economic plan is working for Northern Ireland. There has been significant inward investment and a significant number of jobs created, and the Northern Ireland economy is predicted to grow at a faster rate than the economies of many major developed economies around the world. The economy is turning around in Northern Ireland, which is a result of the work done by this Government.
Points of Order
(9 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text
Fiona O'Donnell (East Lothian) (Lab)
On a point of order, Madam Deputy Speaker. On 4 December in answer to written question number 216656 about cuts to the east coast main line by the new operators Virgin and Stagecoach and the reduction in the number of stops, the Under-Secretary of State for Transport with responsibility for rail franchises, the hon. Member for Devizes (Claire Perry), replied with a list of stations that would receive a reduction of one daily stop. This included Dunbar station in my constituency, and as you can imagine, Madam Deputy Speaker, it caused great upset and distress for many of my constituents. However, today I was contacted by Stagecoach which informed me that my constituents and I have been misled. What assistance can you give me to ensure that the Under-Secretary corrects her answer, provides more accurate answers in future and apologises to my constituents?
Madam Deputy Speaker (Mrs Eleanor Laing)
I am grateful to the hon. Lady for giving me notice of her intention to raise a point of order. Unusually, it seems that she has had better news than she expected. The hon. Lady is well aware that the content of a ministerial answer is not a matter for me, but I am quite certain that if the Minister has inadvertently given a wrong answer, she will take the first opportunity to correct it. I have every confidence that those on the Treasury Bench will convey to the relevant Minister the points that have been made.
Clive Efford (Eltham) (Lab)
On a point of order, Madam Deputy Speaker. During the urgent question on A and E, I challenged the Secretary of State to say whether he regretted the Government’s recommendation to close the A and E at Lewisham hospital, and he accused me of misleading my constituents and therefore of misleading the House. I have in my hand the recommendation of the special administrator’s report, published on 7 January 2013, which recommends closure of Lewisham’s A and E and its replacement with an urgent care centre. Given that the Secretary of State accepted that recommendation and was then forced to rescind it after a judicial review in October 2013, can you give me some guidance, Madam Deputy Speaker, on how I can get the record put straight and bring the Secretary of State back here to correct what he said because I was not misleading the House or my constituents?
Madam Deputy Speaker
I am grateful to the hon. Gentleman for the point of order, but as I said to the hon. Member for East Lothian (Fiona O'Donnell), the contents of what a Minister has said at the Dispatch Box or elsewhere is not a matter for me. He asks how he might draw attention to the facts, but he has just done so. Once again, I am confident that those on the Treasury Bench, from whom I am receiving nods of agreement, will make sure the Minister is aware of the hon. Gentleman’s point. No one wants the record of this place ever to be wrong, and it is important to correct it at the first opportunity.
Kelvin Hopkins (Luton North) (Lab)
On a point of order, Madam Deputy Speaker. On Monday this week, the Prime Minister chose to make only a written statement on the European Council meeting instead of his customary oral statement during which Members can question him on the issues raised. Given the intensification of the eurozone crisis and its implications for Britain, the Transatlantic Trade and Investment Partnership, to which there has been much opposition, and the many other important matters that have been raised, it was vital for the Prime Minister to report to the House in person and submit to questioning from Members, even if on a later day than usual. Will you use your good offices, Madam Deputy Speaker, to seek to persuade the Prime Minister to make his European Council statements orally on all occasions so that all Members have an opportunity to question him personally and in public?
Madam Deputy Speaker
It is kind of the hon. Gentleman to suggest that I might have any influence whatsoever over the Prime Minister. I can assure him that of course I do not. But he does, and it is open to him, as indeed it is to any Member, to submit an application for an urgent question, which Mr Speaker would consider. If the urgent question is truly urgent, the Prime Minister or another Minister would be obliged to come to the House. I can also advise the hon. Gentleman that if he wishes to debate the matter, he can apply to do so through the good offices of the Backbench Business Committee.
Alcohol Labelling (Pregnancy)
(9 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text
Bill Esterson (Sefton Central) (Lab)
I beg to move,
That leave be given to bring in a Bill to require establishment of a statutory scheme providing for clear and consistent labelling of alcoholic beverages as they relate to foetal health and safety and that of pregnant women; and for connected purposes.
Seven thousand children a year are born in the UK damaged by alcohol. That is one in every 100 births. Mild brain damage can be caused to children by even small amounts of alcohol at the wrong time during pregnancy, especially in the early stages when an embryo does not have the protection of a bloodstream. Much scientific evidence suggests that there is no safe limit when it comes to drinking in pregnancy, but sadly not everyone is aware of the dangers. The chief medical officer says:
“Women who are pregnant or trying to conceive should avoid alcohol altogether. However, if they do choose to drink, to minimise the risk to the baby, we recommend they should not drink more than one or two units once or twice a week and should not get drunk.”
She goes on to say:
“There is uncertainty about how much alcohol is safe to drink in pregnancy”.
The CMO also says that if a low level is consumed, there is no evidence of harm to an unborn baby. However, this view is not universally shared.
The National Organisation for Foetal Alcohol Syndrome UK tells us that there is no way to know for sure what impact drinking alcohol might have on an unborn baby. The same point is made by the British Pregnancy Advisory Service. According to NOFAS, a similar amount of alcohol might affect one baby but not another. We know that heavy drinking and binge drinking during pregnancy increase the risk of foetal alcohol syndrome, which is characterised by physical deformities, but there is a lack of consensus on the effects of smaller amounts of alcohol during pregnancy, as is shown by the apparent contradiction between that advice and the advice given by the chief medical officer.
The effects on a child can range from reduced intellectual ability and attention deficit disorder to heart problems and premature death. Many children experience serious behavioural and social difficulties that last a lifetime. In fact, what most of us take for granted is a lifelong struggle for them, and the damage that has been caused cannot be reversed. Not everyone whose mother drinks during pregnancy suffers damage that affects his or her life chances, and this is certainly not an attack on women, but the damage that is done by alcohol to too many children shows the need for action, and it shows that too many of us do not understand the potential risks of drinking alcohol at any point during pregnancy.
In 2007, Lord Mitchell introduced a private Member’s Bill which led to a voluntary system of labelling in the UK, but not all alcohol containers feature a warning, and there is also the vital question of how effective the labels are. The label that is used is only a few millimetres high, and is supposed to show a picture of a pregnant woman taking a drink with a line crossed through the picture to suggest that the woman should not be drinking alcohol. However, many people do not notice the symbol or realise what it is. The fact is that the labels in this country are inadequate, as well as not being universal. However, labels on containers are not the only way in which awareness needs to be increased. In Canada, four to 11-year-olds learn about the dangers of drinking alcohol during pregnancy, which ensures that awareness is ingrained in the minds of the new generation. Posters about foetal alcohol syndrome are displayed in railway stations, airports, surgeries and shops.
I am pleased to see that the Under-Secretary of State for Health, the hon. Member for Battersea (Jane Ellison), is present. During my Westminster Hall debate on 14 October, she referred to the review by the chief medical officer. That review appears to be taking a very long time to complete. I hope that the chief medical officer will listen to the British Society of Gastroenterology, which wants to see a decent-sized warning message in writing rather than just a symbol on labels.
The president-elect of the British Medical Association, Sir Al Aynsley Green, told me that he thought there should be a much fuller debate about the risks to children from drinking alcohol during pregnancy. He suggested that the Government should examine the evidence from Canada, where education and awareness of the risks are combined with support for children, families and professionals who are dealing with the effects of foetal alcohol spectrum disorders. In the United States and in Canada, labels on all containers of alcohol include the message “Women should not drink alcohol while pregnant or trying to conceive”. In the United Kingdom, symbols are more common than warning messages, and when a written warning is used, it is so small that, like the symbols, it is hard to read. However, improving labelling is only part of the answer. We also need to help the children who are damaged, and those who are trying to support them or live with them.
My Bill is about making sure that all the facts are available, and about avoiding confusing or conflicting advice, whether it comes from the Government or from other sources. The existing labels are inadequate, which is why I am calling for a mandatory system of labelling that is clear, cannot be easily missed, and gives the best advice. That advice must be for women not to drink at all while they are pregnant or trying to conceive. Such a system of labelling should be designed to reduce the number of children who are damaged at great cost to themselves and to society.
I invite those who say that my Bill will make no difference to meet some of the children who have been damaged because their mothers did not know of the dangers and continued to drink. I invite them to talk to carers, to teachers and to NHS staff who are trying to help the children who are struggling to deal with a world in which their brains do not function properly as a result of damage caused during pregnancy. I invite them to say what they would do to reduce the number of children who are damaged during pregnancy as a result of the drinking of alcohol. If improving labelling is not part of the answer, then what is?
To the drinks industry I say, “Consider the content of the labels now, look at what happens in Canada and the United States, and make the necessary changes without legislation.” Some children will continue to be born suffering permanent damage from the effects of alcohol consumed by their mothers during pregnancy, but evidence shows what is needed if we are to reduce the number of children who suffer in this way. So to the Government I say, “Update the guidance, and support my Bill.”
Question put and agreed to.
Ordered,
That Bill Esterson, Rosie Cooper, Tracey Crouch, Nia Griffith, Julie Hilling, Kelvin Hopkins, Barbara Keeley, Tim Loughton, Lisa Nandy, Jim Shannon, Sir Andrew Stunell and Dr Sarah Wollaston present the Bill.
Bill Esterson accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 6 March and to be printed (Bill 147).
Counter-Terrorism and Security Bill
(9 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Diana Johnson (Kingston upon Hull North) (Lab)
I beg to move amendment 7, page 15, line 21, leave out subsection (5) and insert—
‘(5) Before giving guidance under this section, or revising guidance already given, the Secretary of State must lay before Parliament—
(a) the proposed guidance or proposed revisions; and
(b) a draft of an order providing for the guidance, or revisions to the guidance, to come into force.
(6) The Secretary of State must make the order, and issue the guidance or (as the case may be) make the revisions to the guidance, if the draft of the order is approved by a resolution of each House of Parliament.
(7) Guidance, or revisions to guidance, come into force in accordance with an order under this section.
(8) Such an order—
(a) is to be a statutory instrument; and
(b) may contain transitional, transitory or saving provision.”
This would ensure that statutory guidance produced under Clause 24 was subject to an affirmative resolution of each House.
Madam Deputy Speaker (Mrs Eleanor Laing)
With this it will be convenient to discuss amendment 6, in clause 29, page 17, line 29, leave out subsection (7) and insert—
‘(7) To support panels exercising their functions under this section the Secretary of State must—
(a) provide guidance on the exercise of those functions;
(b) provide a list of approved providers for de-radicalisation programmes that may be referred to under subsection (4); and
(c) ensure that the providers listed under paragraph (b) are subject to monitoring.”
This would give a greater role to the Secretary of State in supporting the role of local support panels. The Secretary of State would have to provide guidance (rather than it being optional) and she would also have to provide a list of approved providers for de-radicalisation programmes and ensure they would be subject to monitoring.
Diana Johnson
Let me begin by expressing my horror at the terror attack that took place in Paris today. I am sure that the thoughts of the whole House will be with the family and friends of the victims of that attack, and, of course, we all stand in solidarity with the French people at this time.
Part 5 of the Bill contains measures to counter extremism in communities and to deal directly with vulnerable individuals. As Ministers will recall, it was the last Labour Government who introduced both the Prevent agenda and the Channel programme, and we remain absolutely committed to supporting and, indeed, strengthening both policies. Obviously the Government reviewed Prevent when they came to office, and it is important for us to view the measures in the Bill in the context of the changes that they introduced. I think that those changes are a rather mixed bag, and I am not sure that they were particularly successful.
Both Prevent and Channel require a partnership between central Government and local agencies, and amendments 7 and 6 are intended to ensure that the Government support local bodies in the delivery of both programmes. While we agree that Prevent should involve local delivery, it seems to us that the recent problems stem from central Government. There has been a marked decline in Prevent’s funding, which has fallen from £17 million a year to just £1 million. Some of that clearly resulted from a conscious decision, but there also appears to have been mismanagement. Every year £5.1 million has been allocated for local delivery, but I understand that over the past four years more than 60% of it has gone unclaimed.
In Committee, I raised a number of concerns about the delivery of Prevent at national level, and about the monitoring and support supplied by central Government to local agencies. I am sure that the Minister for Security and Immigration, the hon. Member for Old Bexley and Sidcup (James Brokenshire)—although I am pleased to see the Under-Secretary of State for the Home Department, the hon. Member for Staffordshire Moorlands (Karen Bradley) in the Chamber today—recalls that I spoke at length about my concern about the performance of the Department for Education. I do not want to go through all that again, but I think that the Government’s role should be formalised in the Bill so that we know what is expected of them.
Bob Stewart (Beckenham) (Con)
Does the hon. Lady agree that this provision should relate not only to public bodies? If an individual believes that someone is likely to become radicalised, it really should be incumbent on that individual to tell someone about it so that something can be done. It is not only bodies such as schools that should have responsibilities in this area; individuals should, too.
Diana Johnson
The hon. Gentleman makes the important point that we all have a responsibility in this area. My concern, however, is about the specific responsibilities being placed on local authorities and other public bodies under the Channel programme. We must make sure that we get this right, which is why I am focusing on why the first stage of the programme is not being placed on a statutory basis but the second stage is so being placed. I wonder whether that is the best way of doing it. I take the hon. Gentleman’s point, however.
Only when a person has been identified as at risk will the provisions in clause 28(3) kick in. That subsection allows a chief officer of police to make a referral to the local support panel that has been set up by the local authority. My first concern is with the level of expertise that those panels must have, and that is where amendment 21 comes in. As provided for in the Bill, local support panels will have to assess the individual’s risk of radicalisation and tailor a support panel to address the risks. The issues involved are complex and varied.
The current guidance cites 22 vulnerability indicators that could lead to a Channel referral. The panel must weigh up those factors and tailor a support package, which could have any number of elements. In some areas, however, the panel will be addressing issues that it has never faced before, such as sectarian hatred, which can be exacerbated by poorly provided support. That is why we feel that the Home Office needs to support local panels by providing an approved list of support providers who are able to give the specialist interventions needed to address the specific issues facing the individual.
This is a crucial stage of the Channel process and it should be recognised in the Bill. My understanding is that the Home Office is already doing this work to some extent, and I welcome the Minister’s commitment on Second Reading to continue to do it, but as we are putting the obligations of local authorities into the Bill, I think we should also be placing the responsibilities of central Government in the legislation. That could be particularly important for local authorities that are making referrals for the first time. I have repeatedly asked for the number of occasions on which each local authority has made a Channel assessment and referral, but unfortunately my requests for that information have been repeatedly refused. However, there must be many parts of the country that have never had to deal with issues such as these before.
This Government have repeatedly claimed to be stepping up efforts to stop Prevent funding going to organisations that are radicalising people, but that cannot be done unless the Home Office takes a lead in vetting those bodies. Under clause 32, the Home Secretary may indemnify Channel providers, so it is accepted that the Home Office has a role in that regard. It therefore seems reasonable for it also to have a role in assessing and vetting providers and ensuring that they are fit for purpose. These are really important issues. I know the Minister shares the commitment to making sure this Bill is as good as it can be and to getting Prevent and Channel right. I therefore hope she will realise that the support the Home Office is providing on Prevent and Channel needs to be reviewed again and improved, and that the guidance that has been issued as a consultation document can be improved in many areas. I hope she will feel able to accept the amendments.
The Parliamentary Under-Secretary of State for the Home Department (Karen Bradley)
Today’s events in Paris are yet another shocking reminder of the threat we all face, and our thoughts and prayers are with the families, friends and colleagues of the victims. I echo the comments of my right hon. Friend the Prime Minister in condemning that barbaric attack, and I am sure the whole House stands united with the French people in our opposition to all forms of terrorism.
Part 5 of the Bill and schedules 3 and 4 deal with an important area of our counter-terrorism work: preventing people from being drawn into terrorism. That was subject to a long and insightful debate in Committee, and I recognise and welcome the deep interest many right hon. and hon. Members have in the area. The shadow Minister made a number of points about the Prevent programme in general, and I wish to address those before dealing with the specifics of the amendments.
The hon. Lady made a point about funding for Prevent, so let me make it clear that this Government are committed to the Prevent programme: £40 million has been allocated for Prevent spending in 2014-15, and the spending has been £36 million in 2011-12, £35 million in 2012-13 and £39 million in 2013-14. She knows as well as anybody that the spending is not just done by the Home Office and that that is spending across government, including by local authorities, the Department for Communities and Local Government and the Home Office. It is worth saying that the Prime Minister announced on 25 November that an additional £130 million was being made available for increased counter-terrorism work, which includes Prevent activity. With that funding, we will introduce a clear legal obligation on our universities, prisons, councils and schools to play their part in tackling extremism. The new funding being made available will also include additional resources for programmes to prevent radicalisation.
The hon. Lady asked about the Prevent projects. We have delivered more than 180 community-based Prevent projects since 2011, and we are currently supporting more than 70. Prevent local projects have reached more than 45,000 people since early 2012. All our current Prevent projects are focused on the current threat, including Syria and Iraq. In the 2013-14 financial year, Prevent local co-ordinators in our 30 Prevent priority areas worked with more than 250 mosques, 50 faith groups and 70 community groups. In addition, since the revised Prevent strategy was issued in June 2011, we have trained more than 120,000 front-line public sector workers to identify and support those at risk. We are currently rolling out new updated training, through the Workshop to Raise Awareness of Prevent—the WRAP training programme—now in its third iteration. We have seen a significant rise in the number of referrals to the Channel programme, which provides tailored support to people identified as being at risk of radicalisation; the Association of Chief Police Officers reported a 58% increase in the past year. Since April 2012, there have been more than 2,000 referrals to Channel, and hundreds of people have been offered support.
Let me now deal with the amendments. Amendment 7 is a repeat of an amendment first tabled in Committee, which was taken to a vote. It concerns the guidance that the Secretary of State may issue to specified authorities that are subject to the new duty to have due regard to the need to prevent people from being drawn into terrorism. Under clause 24, the specified authorities subject to the duty must have due regard to such guidance in carrying out that duty. Amendment 7 would require that the guidance may be issued only subject to parliamentary approval. In Committee, hon. Members were clear that an amendment of this type was not required, at least not at that stage. Clause 24 already provides that the Secretary of State must consult before issuing guidance and, as my hon. Friend the Minister for Security and Immigration announced to the House by written ministerial statement on 18 December, that consultation has already begun.
The shadow Minister asked about the draft guidance on which we are consulting. It is draft guidance, and we will be holding regional consultation events to explore further examples of best practice with those who will be subject to the duty. The consultation exercise also includes an opportunity for people to comment via the gov.uk website, or by e-mail or post. It is aimed at all those who will be subject to the duty, as well as the public at large.
This public consultation provides sufficient opportunity for interested parties, particularly those who will be subject to the Prevent duty, to scrutinise and influence the guidance. The guidance will benefit from extensive consultation and expert input, and I trust that the final guidance that is published will be all the better for having had this period of formal public consultation. The draft guidance, which we are currently consulting on, sets out, over 40 pages, the type of activity we expect specified activities to consider when complying with the duty.
The starting point for all specified authorities will be an assessment of the risk in their area, institution or body. Where a risk has been identified, they will need to develop an action plan to address it. Staff training and working together with other partners will be key themes.
Let me give some examples of what we expect a specified authority to consider when complying with the duty. Local authorities should ensure that publicly owned premises are not used to disseminate extremist views. Higher education institutions should have policies and procedures in place for the management of events on campus and for the use of all university premises that apply to all staff, students and visitors. Further education providers should have policies in place relating to the use of IT on their premises. Schools and their governors should make sure that they have training to give them the knowledge and confidence to identify children at risk of being drawn into terrorism, and know where and how to refer children and young people for further help.
The health sector should ensure that training is provided to front-line staff to ensure that where there are signs that someone has been or is being drawn into terrorism, the health care worker can interpret those signs correctly and is aware of and can locate support for them. Prisons should offer support to an individual who is vulnerable to radicalisation or move them away from an individual of concern, and those at risk of radicalising others should face the removal of privileges and segregation from others. The police should support individuals vulnerable to radicalisation, for example, through the Channel programme and support partner organisations to deliver Prevent work.
Those are just a few examples, and the shadow Minister asked about childminders. Carers in early years have a duty of care to the children in their care similar to existing safeguarding responsibilities. We are not expecting childminders or nursery workers to carry out unnecessary intrusion into family life, but we expect them to take action where they observe behaviour of concern. It is important that children are taught fundamental British values in an age-appropriate way. For children in early years, that is about learning right from wrong and challenging negative attitudes and stereotypes—for example, if a child makes anti-Semitic remarks.
Bob Stewart
If someone, perhaps a childminder, has a worry about a threat and reports it, are they guaranteed anonymity? Is a system in place to guarantee that people are not found out, including when reports are fallacious?
Karen Bradley
I thank my hon. and gallant Friend for his comments. I understand that anonymity would be provided to people coming forward in that circumstance.
The shadow Minister asked about areas with low risk. The guidance sets out very clearly that we are looking for a risk-based approach, but areas need to understand the local risk. This is the starting point, and we are clear that the type and scale of the response will vary. She also asked about the number of Prevent priority areas. The Government have changed our method for prioritisation of local authority areas since 2011 and it is now based on assessment of the risk of exposure to radicalisation in specific areas rather than on simple demographics. The prioritisation also takes into account activity that we have seen by terrorist organisations and terrorist sympathisers. The process is regularly reviewed and activity is currently focused on 30 local authority priority areas where the risk of radicalisation is identified as being higher. Those priority areas received funding for a dedicated Prevent co-ordinator and are able to bid for funding for targeted local projects to work with communities and partners. There are also a further 14 supported areas where we support projects only.
Diana Johnson
I thank the Minister for going through the answers to my questions in such detail. The impact assessment says that 90 local authority areas are at high risk, the consultation document identifies 50 priority areas and the Minister is now talking about 30 areas and an additional 14 areas. These numbers all seem a bit confused to me. Will she say the exact number of Prevent priority areas the Government are concerned about?
Karen Bradley
If the hon. Lady will give me a few moments, I will come on to that point.
We do not believe that it is crucial for the guidance to be subject to additional parliamentary approval because we are conducting a wide-ranging consultation and, although the specified authorities must have regard to the guidance, they are not required to follow it in all cases. That is not an uncommon approach for statutory guidance of this nature and we set that out in detail in the delegated powers memorandum published with the Bill. However, I recognise the need for these issues to be properly considered, and that is why my hon. Friend the Minister for Security and Immigration made clear in Committee our intention to await the conclusions of the Select Committee on Delegated Powers and Regulatory Reform before giving further consideration to whether we should make any changes of this sort. I hope that the hon. Lady will agree that that is a sensible approach and will be content to await the report of that Committee. On that basis, I invite her to withdraw the amendment, so that we can return to the issue in the other place.
Let me now turn to amendment 6, which would amend clause 29 to require the Secretary of State to issue guidance to support panels in carrying out their functions. The amendment would also require that the panel had sight of the list of approved providers for deradicalisation programmes and that the providers were subject to monitoring. As my hon. Friend the Minister for Immigration and Security explained in Committee, Channel is a multi-agency programme that provides support to people identified as vulnerable to being drawn into terrorism. It has been in operation in all areas of England and Wales since 2012. In Scotland, the relevant programme is known as Prevent Professional Concerns. It is the Government’s hope and intention that these provisions should also apply to Scotland and discussions with the Scottish Government are ongoing.
As the hon. Lady asked about the devolved Administrations, I want to confirm that we are speaking to the Scottish and Welsh Governments about how the duty should be implemented in those Administrations and consulting on how we should make the guidance appropriate to bodies in Scotland and Wales, particularly because the different legal system in Scotland might mean that we need to implement things differently there. As part of the process, we are consulting them on how the duty should be monitored and enforced.
Diana Johnson
It is very helpful to hear the Minister set that out, but once agreement has been reached with the devolved Administrations, will there be a further period of consultation on the guidance, so that local authorities and other bodies can comment on what has been agreed between the Governments?
Karen Bradley
I am not sure that that is how we envisage it happening, but we are consulting and working very closely with the devolved Administrations to ensure that we take into account their views and get this right for them.
The hon. Lady asked about the number of priority areas under Prevent, so let me clarify. There are currently 30 Prevent priority areas, and we anticipate that that will rise to up to 50 in the next financial year. The impact assessment allows for up to 90 priority areas, should the need arise.
The hon. Lady asked about referrals to Channel relating to the far right and whether the Channel programme targeted only Muslim radicalisation. Like Prevent as a whole, Channel covers all forms of terrorism and extremism related to terrorism. It does not target Muslims and anyone can refer a person of any age, ethnicity or faith background to Channel. A significant number of people who have started receiving support through Channel were referred for far-right concerns. ACPO has reported that around a quarter of Channel referrals relate to the far right.
The hon. Lady has expressed concern about the expertise that panels must have and has retabled the amendment that we considered in Committee. Clause 28 includes provision for the Secretary of State to issue guidance to support panels in carrying out their functions. I can assure the hon. Lady that existing guidance is being updated in consultation with relevant persons, including those who deliver on the ground such as panel chairs. My right hon. Friend, the Home Secretary, will issue this guidance before the provisions are commenced.
Local panels assess the individual’s risk and, if appropriate, develop a support package. It is the job of the panel members to provide advice in respect of their areas of expertise, and to arrange, where agreed, support interventions from their services. Interventions that are delivered by such statutory partners are subject to existing monitoring arrangements.
In respect of theological or ideological support, the police representative will recommend to the panel the provider most suited to the case. The list of approved providers for such support is already made available to key members of the panel.
Safeguards and measures are in place to monitor the support providers—I hope that that reassures the hon. Lady—and they are all bound by a service level agreement with the Home Office that sets out the terms and conditions of their appointment, including conduct. In addition, the police, as part of their co-ordination role, regularly review progress made against any interventions commissioned. Any misconduct or quality concerns will be treated seriously by the Home Office, with the option of terminating an agreement with a provider.
On this basis, I hope that the hon. Lady is reassured that amendment 6 is unnecessary. I invite her to withdraw amendment 7, so that we can return to the parliamentary scrutiny of the Prevent guidance in the other place.
Diana Johnson
I am grateful to the Minister for going through my questions in such detail. On amendment 7, I am surprised that the Government are not willing to agree that both Houses should have the opportunity to scrutinise the final version of the guidance, which we have not yet seen. I note what she said about keeping the matter under consideration. I am sure that the matter will be returned to when the Bill goes to the other place. On that basis, I will not seek to divide the House on amendment 7. I therefore beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 3
Specified authorities
Karen Bradley
I beg to move amendment 13, page 47, line 10, at end insert—
“A person carrying out a function of an authority mentioned in section 1(2) of the Local Government Act 1999 by virtue of a direction made under section 15 of that Act.”
This amendment would add the authority specified to those subject to the duty contained in clause 21 and would make the relevant entry consistent with the corresponding entry in Schedule 4.
Mr Deputy Speaker (Mr Lindsay Hoyle)
With this it will be convenient to discuss Government amendments 14 to 17.
Karen Bradley
In respect of the duty to have due regard to preventing people from being drawn into terrorism in clause 21, the Government have tabled a number of corrective amendments to the list in schedule 3, which specifies the authorities subject to the duty. The amendments will ensure that the intended specified authorities are subject to the duty.
Amendment 13 would add:
“A person carrying out a function of an authority mentioned in section 1(2) of the Local Government Act 1999 by virtue of a direction made under section 15 of that Act.”
This appears in schedule 4, as regards Channel, and should also appear in schedule 3. The effect will be to ensure that where local authority functions are transferred, for example to commissioners if an authority is failing, the duty will apply to them too.
Amendment 14 will add the principal of a secure college to the criminal justice section of schedule 3. That will ensure consistency with schedule 4. Amendment 15 will remove an unnecessary entry. An institution
“within the higher education sector within the meaning of section 91(5) of the Further and Higher Education Act 1992”
will also be a qualifying institution within the meaning of section 11 of the Higher Education Act 2004, which has its own entry.
Amendment 16 ensures that the privately funded higher education providers are listed in schedule 3 as intended. They are covered in schedule 4, as regards Channel, but are at present missing from schedule 3. The draft guidance published for consultation has been drafted as though they are included in schedule 3. Amendment 17 corrects an inadvertent error by removing reference in schedule 3 to police authorities.
Diana Johnson
Very briefly, I was surprised that there was reference to police authorities when they were abolished by the Government some time ago. I guess that that is what comes when Bills are hastily drafted. I have one question for the Minister, which relates back to the issue of Scottish bodies that will be covered by the Bill. Currently, they are not listed anywhere. When will we have a list of the Scottish bodies that are covered?
Karen Bradley
I thank the shadow Minister for her question. If she will forgive me, I will have to get back to her on that point at a later date.
Amendment 13 agreed to.
Amendments made: 14, page 47, line 16, at end insert—
“The principal of a secure college.”.
This amendment would add the authority specified to those subject to the duty contained in clause 21.
Amendment 15, page 47, leave out lines 20 to 22.
This amendment would remove an unnecessary entry. An institution within the higher education sector within the meaning of section 91(5) of the Further and Higher Education Act 1992 would also be a qualifying institution within the meaning of section 11 of the Higher Education Act 2004 (which has its own entry).
Amendment 16, page 48, line 25, at end insert—
(b) courses of a description mentioned in Schedule 6 to the Education Reform Act 1988 (higher education courses).”.
This amendment would make the relevant entry consistent with the corresponding entry in Schedule 4.
Amendment 17, page 49, leave out lines 5 and 6.—(Karen Bradley.)
This amendment removes references to police authorities which no longer exist.
Clause 36
Privacy and Civil Liberties Board
Diana Johnson
I beg to move amendment 3, page 22, line 14, leave out subsection (1) and insert—
‘(1) The Secretary of State shall by regulations made by statutory instrument establish a body to—
(a) provide advice and assistance to the persons appointed under—
(i) section 36(1) of the Terrorism Act 2006;
(ii) section 31(1) of the Terrorist Asset-Freezing &c. Act 2010; and
(iii) section 20(1) of the Terrorism Prevention and Investigation Measures Act 2011.
in the discharge of their statutory functions.
(b) review the operation, effectiveness and implications of the Anti-Terrorism Crime and Security Act 2001, the Counter-Terrorism Act 2008, [this Act] and any other law or prerogative power to the extent that it relates to counter-terrorism;
(c) consider whether such legislation contains appropriate safeguards, is proportionate and remains necessary;
(d) review intelligence-sharing guidance and practice to the extent that it relates to counter-terrorism and the functions of the Board;
(e) make recommendations to any public authority about the exercise of its statutory functions relating to the prevention of terrorism;
(f) undertake inquiries relating to counter-terrorism when invited to do so by the Home Secretary, the Treasury or the Secretary of State for Northern Ireland, or on the initiative of the Board;
(g) encourage good practice in the prevention, investigation, detection and prosecution of terrorism;
(h) provide advice and assistance to Government on the development and implementation of policy relating to the prevention of terrorism.”.
This expands the remit of the body to match that which is described in the Government’s Terms of Reference for this body.
Mr Deputy Speaker (Mr Lindsay Hoyle)
With this it will be convenient to discuss the following:
Amendment 2, page 22, line 22, leave out
“Privacy and Civil Liberties Board”
and insert “Counter Terrorism Oversight Panel”.
This would rename the body created by clause 36.
Amendment 4, page 22, line 25, at end insert
“in accordance with the Code of Public Appointments”.
Amendment 5, page 22, line 32, at end insert—
“(i) the information-gathering powers of the board;
(j) reporting requirements, and the formulation of and consultation on an annual work plan; and
(k) the access to such relevant classified material as may be required in order for the board to undertake its functions under subsection (1);”.
This increases the points that have to be included in regulations brought forward by the Secretary of State to include information gathering powers, formulation of an annual work plan and relevant to classified material.
Diana Johnson
These amendments relate to part 7, which confers powers on the Secretary of State to establish a body to be known as the privacy and civil liberties board. While most of the Bill introduces new powers, part 7 introduces checks on those powers. It is worth mentioning at this stage that no level of general oversight will ever negate the need for proper judicial oversight of the specific use of these powers, which until yesterday the Government unfortunately were fiercely resisting.
Labour has always said that strong powers need strong checks, which is why we support the principle of a new oversight body. It is also why we tabled amendments to the Justice and Security Bill when it went through Parliament to increase the powers of the Intelligence and Security Committee and why we have consistently called for a bigger role to be given to the intelligence and surveillance commissioners.
Although the creation of a new body is good in principle, what is actually set out in the Bill does not match the name “privacy and civil liberties board” or what the Government set out in their terms of reference, and it does not introduce what we think is needed. That is why we have tabled amendments 2 to 5. The problem is that the Bill determines nothing other than the name of the body. The name evokes the idea of a body with a wide remit to work on privacy and civil liberties issues in the UK, a body to safeguard human rights, a body similar to the Joint Committee on Human Rights created by the Labour Government, but that is not actually what is provided for in the Bill.
The terms of reference published by the Government suggest a body that will support the independent reviewer of terrorism legislation in providing oversight of counter-terrorism legislation in the UK and investigating its operations. Broadly, we think that what is contained in the terms of reference is very sensible and that it would provide both capacity and openness to the oversight of counter-terrorism policy. It would also address some of the issues relating to the capacity of the independent reviewer of terrorism legislation that the current incumbent, David Anderson QC, identified earlier this year—I went through some of that in detail in Committee.
However, what we see in the terms of reference does not match what we see in the Bill. The third version of the board is the one provided for by clause 36, a body that the Home Secretary may create in future if she wishes. In future she may decide on the body’s procedures, membership, work plan and the publishing of its reports. If the body is created, it will have very limited statutory remit and powers. We do not think that is good enough, so amendments 2 to 5 address what we see as the Bill’s shortcomings as currently drafted.
Amendment 3 would ensure that the panel or board will have a remit that includes all the key counter-terrorism issues. Specifically, it includes the terrorism statutes, which the independent reviewer is currently precluded from investigating. Unlike the independent reviewer, we do not envisage a remit that is overly prescriptive or requires annual reviews of certain pieces of legislation. Amendment 3 would also give the board a role in undertaking specific inquiries in certain circumstances, to make recommendations to public authorities, to review intelligence-sharing guidance and to encourage good practice in the prevention and investigation of terrorism.
Bob Stewart
On classified information, all the information will be very sensitive, so presumably whoever is considered for appointment to such a board will be vetted and security cleared to receive such information. Is that assumption correct?
Diana Johnson
No doubt the Minister will be able to confirm that. My understanding is that the level of information and intelligence given to the board will mean that its members will have to undergo appropriate vetting to make sure that they are suitable. Perhaps the Minister will comment on that.
The amendments would give the board a proper remit, with members appointed on merit, procedures for agreeing a work plan and access to the relevant information. Finally, amendment 2 would give the board a name that matches the role that we envisage for it—the counter terrorism oversight panel.
Mr David Heath (Somerton and Frome) (LD)
The hon. Lady is making good points about the role of the panel, but does she not think that the name she suggests increases confusion? She and I want judicial oversight of the operation of the Bill and other counter-terrorism Acts. To call the board an “oversight panel” invites confusion because that is not precisely its role.
Diana Johnson
We have argued throughout our discussions that we want proper judicial safeguards where appropriate, especially in relation to the provisions of the early parts of the Bill. I am not sure I agree with the hon. Gentleman about the proposed name of the panel causing confusion. The current name, the privacy and civil liberties board, does not describe its role. The name is problematic. We have suggested an alternative. If it can be improved, I am happy to consider that, but we think the name proposed in the amendment best serves us at present.
Diana Johnson
Perhaps the matter can be discussed further in another place. “Counter terrorism oversight panel”, the name that we have suggested, best describes the role that we envisage for the body.
As I have stressed, these amendments do not seek to do anything radical. They aim to ensure that the legislation matches what the Government have previously committed to do, and they ensure that what is in the Bill goes some way to addressing the concerns raised by the independent reviewer of terrorism legislation. The amendments are not overly prescriptive; they leave plenty room for the detail to be spelled out in secondary legislation, but they would ensure that that secondary legislation was meaningful as it related to the provisions of the Bill. I hope the Minister will seriously consider accepting the amendments.
Karen Bradley
I am grateful to the hon. Lady for tabling the amendments.
Our debate has built on the one held in Committee where there was broad support for the principle of creating the privacy and civil liberties oversight board. The Bill introduces a comprehensive package of measures to disrupt people’s ability to travel abroad to fight, reduce the risks they pose on their return, and combat the underlying ideology that feeds, supports and sanctions terrorism. As my right hon. Friend the Home Secretary has made clear, these powers are essential to keep up with the very serious and rapidly changing threats we face. Of course, as that threat evolves, we need to consider and update our legislation accordingly. However, it is also right that at this time, in the light of the increased threat level, and as the legislative landscape changes, we consider the oversight arrangements that we have in place for UK counter-terrorism laws to ensure that we are getting the balance right between responding to these threats and the protection of privacy and civil liberties.
The United Kingdom already has a very effective and transparent system of independent oversight and scrutiny. Few, if any, other countries in the world manage as well as the UK the balance between the need for powers that must necessarily be exercised in secret and the need to provide reassurance to the public about what is being done in their name. However, we should not rest on our laurels. During the passage of the Bill that became the Data Retention and Investigatory Powers Act 2014, which received Royal Assent in July, the Government committed to establishing a board that would provide additional assurance to the public.
Clause 36 provides the Secretary of State with a power to create a privacy and civil liberties board, which will support the independent reviewer of terrorism legislation, currently David Anderson. The increased demand for a review of particular aspects of counter-terrorism legislation means that this is a substantial task for one individual to undertake. David Anderson himself has been clear that there is a need for reform of the independent reviewer role. The board will be chaired by the independent reviewer. It will assist, advise and undertake particular duties in support of the independent reviewer’s statutory functions, and expand the capacity and breadth of experience available in our oversight arrangements.
Diana Johnson
What is the reason for the name of the board, because it does not seem to fit with the role that the Minister has described? “Privacy and civil liberties board” goes much wider than that.
Karen Bradley
I assure the hon. Lady that I will come to that point.
Clause 36 provides for the making of regulations that would set out the detail of the board, including provisions about composition, functions and appointment. These regulations will be subject to the affirmative procedure. We can debate, as we are, the precise details of the board’s composition and functions, but, as my hon. Friend the Minister for Security and Immigration noted when the Bill was in Committee, no one took issue with the principle that establishing such a board would build on the already strong oversight arrangements that exist in this country. I am pleased to say that since that debate took place, the Government have published a consultation paper on the composition, functions and remit of the board. It can be found on the gov.uk website, and copies have been placed in the libraries of both Houses.
I encourage all right hon. and hon. Members, as well as those from outside Parliament with an interest in these matters, to participate in the consultation exercise. We hope that it will elicit a large number of replies covering a wide range of views. The results of the consultation exercise will certainly influence the terms of the regulations. Those regulations will be subject to the affirmative resolution procedure and will cover all the key questions about the board’s composition, remit, powers and functions. Those responding to the consultation will be free to express an opinion on all relevant questions relating to the board. That is why I do not believe that amendment 5 is necessary.
Amendment 3 deals with the board’s functions. As my hon. Friend the Minister for Security and Immigration explained in Committee, the board will fully support the independent reviewer. In doing so, it will provide much needed capacity to allow the reviewer to consider a wider range of areas than it is perhaps currently possible for one individual to undertake. It is therefore right that we ensure that the board’s statutory functions and objectives are in line with those of the role it is designed to support. Should the statutory role of the independent reviewer change in future, we would need to ensure that the board’s role fully reflected that change.
On amendment 4, one of the issues that the consultation covers is the appointment of board members, including those to whom that task should fall and whether there are any prior qualifications that board members should have. It might emerge, for example, that there is strong support for the notion that each board member should represent a particular interest group or category and that that interest group should have a say in the appointment. My hon. and gallant Friend the Member for Beckenham (Bob Stewart) asked whether members will be vetted. It will clearly be important that any individuals appointed to the board are provided with an appropriate level of security clearance. The independent reviewer is cleared to see classified information, and if necessary the same will apply to the board members.
Diana Johnson
Has the Minister given any thought to whether it would be appropriate for Members of Parliament or Members of the House of Lords to serve on this body?
Karen Bradley
I will return to that point in a moment.
I am sure that we will want to ensure that all appointments are made in accordance with best practice, but it seems to me that it would be premature unduly to prescribe the process until we have decided exactly how appointments are made. I think that that applies in this case.
Amendment 2 would change the board’s name. We have been clear that the primary objective of the board is to offer further assurance to the public that careful, independent scrutiny is being given to the UK’s counter-terrorism powers to ensure that, in the face of the threat to the UK, we are getting the balance right and that our legislation and policies have due regard for civil liberty and privacy concerns. The board’s name properly reflects that purpose, and I see no reason to change it.
I am pleased to say that there is no great disagreement within the House on what we are seeking to do. Given the threats that the UK faces, it is a sad necessity that we need a suite of counter-terrorism powers. My right hon. Friend the Home Secretary said in Committee:
“I have always taken the view that without our security we cannot enjoy our civil liberties”.—[Official Report, 15 December 2014; Vol. 589, c. 1229.]
To return to the point about Members of Parliament, we have no firm views on that question. We are currently consulting on the board’s composition, and we will take all views expressed into consideration.
Karen Bradley
My right hon. Friend has clearly given considerable thought to that matter. We will of course consider all points of view when we look at the responses to the consultation, and the point will be considered at that stage. Does the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) wish to intervene? [Interruption.] He was going to make the same point.
Given the exceptional nature of counter-terrorism powers, it is right that they should be subject to proper oversight and scrutiny. This country has been very well served by the very distinguished individuals who have been independent reviewers, not least the present incumbent, but it is right for us to keep our oversight arrangements under review and be prepared to change them when required. It is worthwhile creating a new board to support the work of the independent reviewer, providing greater capacity in this area and giving the public greater assurance that in framing our legislation we are striking the right balance between privacy and civil liberties.
As I have said, the Government have published a full public consultation inviting comments on the proposals. We will seek to act on the points made in response to the consultation, which covers the composition and functions of the board. I believe that will address most of the issues covered by the amendments. Accordingly, I invite the hon. Lady to withdraw amendment 3.
Diana Johnson
There is a question about the board’s name, and I hope that that will be considered in the other place. I am interested to hear about the consultation on its membership. On the basis of what the Minister has said about this group of amendments, I will not press them, but we will want to return to them in the other place. I beg to ask leave to withdraw amendment 3.
Amendment, by leave, withdrawn.
Clause 38
Power to make consequential provision
Karen Bradley
I beg to move amendment 12, page 23, line 24, at end insert—
“( ) Before making regulations under this section the Secretary of State must—
(a) if the regulations contain provision that would fall within the legislative competence of the Scottish Parliament if included in an Act of that Parliament, consult the Scottish Ministers;
(b) if the regulations contain provision that would fall within the legislative competence of the National Assembly for Wales if included in an Act of that Assembly, consult the Welsh Ministers;
(c) if the regulations contain provision that would fall within the legislative competence of the Northern Ireland Assembly if included in an Act of that Assembly, consult the Department of Justice in Northern Ireland.”
This amendment would require the Secretary of State to consult the relevant devolved administration before making consequential provision by regulations under clause 38 if any of that provision would fall within devolved competence.
Mr Deputy Speaker (Mr Lindsay Hoyle)
With this it will be convenient to discuss amendment 1, page 23, line 31, at end insert—
“(4A) The Secretary of State must consult with Welsh Ministers before making provisions under subsection (1) so far as relating to any Measure or Act of the National Assembly of Wales.
(4B) The Secretary of State must consult with Scottish Ministers before making provisions under subsection (1) so far as relating any Act or instrument of the Scottish Parliament.
(4C) The Secretary of State must consult with the Northern Ireland Executive before making provisions under subsection (1) so far as relating to any Act or instrument of the Northern Ireland Assembly.”
This would ensure that the Secretary of State could not amend legislation from the Scottish Parliament or Welsh Assembly or Northern Ireland Assembly without first consulting with the Scottish or Welsh Governments or the Northern Ireland Executive.
Karen Bradley
Amendment 12 involves an important point of principle. It concerns the power to make a consequential amendment to existing legislation, including legislation made by the devolved legislatures. Such consequential amendments would themselves be reserved, as the Bill clearly legislates on the reserved matter of counter-terrorism. It is possible that a consequential amendment made under this provision might alter a piece of legislation enacted by a devolved legislature. In cases where that is done for a reserved purpose, proceeding without consultation is clearly permissible under, and properly respectful of, the devolution settlement, although in practice the Government would of course raise the issue as a courtesy with the relevant devolved Administration.
The issue would be different were any consequential amendments made under the Bill to fall within the legislative competence of the Scottish Parliament, the Welsh Assembly or the Northern Ireland Assembly. Amendment 12 would require the Secretary of State to consult the relevant devolved Administration before making consequential provision by regulations under clause 38 if any part of that provision fell within the competence of the legislature in question.
I should reiterate that we do not expect there to be any requirement to make such consequential provisions, and in practice, the Government would always consult the devolved Administrations should such a circumstance arise. I trust that amendment 12 will provide reassurance to right hon. and hon. Members, and to the devolved Administrations themselves, that the proper consultation will take place if required. On that basis, I ask the hon. Member for Kingston upon Hull North (Diana Johnson) not to press amendment 1, and I ask the House to agree to amendment 12.
Diana Johnson
It is very nice that the Government have tabled amendment 12, as it is effectively the same amendment that the Opposition tabled in Committee to ensure that there is proper consultation with the devolved Administrations if the Home Secretary introduces changes. We are pleased that the Government have seen the sense of what Labour suggested, and that we can claim a victory on ensuring that there is full consultation. I am happy not to press amendment 1, because Government amendment 12 is exactly what we were trying to achieve.
Pete Wishart (Perth and North Perthshire) (SNP)
As we discuss counter-terrorism for a fifth day, our thoughts are very much on the appalling murders in Paris today. It was not only an appalling attack on journalists and a newspaper office but an attack on free speech, and today all of us can say, “Je suis Charlie”. Given those sickening events, it is pretty hard to discuss counter-terror measures today, but we live in a democracy and we will discuss them. We will not let any terrorist attack deter us from our influence on the matter or how we approach our business.
We are eternally grateful for amendment 12, because it is the beginning of a recognition of Scotland’s distinct responsibilities for measures under the Bill. The Bill asks that we be consulted on competencies for which we are actually responsible. It is not consultation that the Minister requires, it is our consent. We are responsible for delivering those competencies in the Scottish Parliament. We are responsible for education and health, we have a distinct legal system, and we are responsible for the judiciary. The Scottish police force, Police Scotland, is accountable to the Scottish Parliament. We have our own institutions and our own set of responsibilities and competencies. Yes, we are grateful that the UK Government are going to pick up the phone and consult our Ministers, but it is our consent that they require when passing measures under the Bill.
We will agree with the Government on most measures, and I am sure we will get on perfectly well, but we take a different and distinct approach on a number of issues. Of course we do—we have a different culture in Scotland. We do not have the same size of ethnic communities as there are south of the border, and we have a different and distinct approach to community relations. We see and deliver some things very differently from the UK Government.
The vast platform of the Prevent strategy will be administered in Scotland by Scottish public bodies, responsible to the Scottish Parliament and under the guidance of Scottish Ministers. Consultation—great. Thank you ever so much, Home Secretary, for being prepared to consult Scottish Ministers, discuss things with them and maybe even ask their views, but what we need is to give consent. If we are to be realistic about the devolution settlement and the range of responsibilities we have, and if we are talking about the respect agenda, that consent is required. Consultation is certainly not good enough.
Our approach to Prevent is different, of course. We see it more through the lens of safeguarding, with an emphasis on keeping people safe, community cohesion, participative democracy and ensuring that action is consistent with the needs of, and risks to, all our communities.
Bob Stewart
I cannot see any difference between that and what is proposed in the Bill. Those are exactly the same measures that everyone in this country wants to see instituted.
Pete Wishart
I am grateful to the hon. Gentleman, but there are differences. They may just be nuances to him, but we take them particularly seriously in Scotland. For example, we work with key sectors in Scotland, such as the NHS, further education, the Prison Service and local authorities. Prevent also benefits from input from Police Scotland’s model of community engagement and from the strength of the relationship between various arms of the community and all the public services in Scotland. The key point is that we perhaps look at the cultural context differently.
What we are keen to do in Scotland—and we have had a great deal of success—is ensure that a sense of Scottish citizenship is given as quickly as possible to new immigrants, particularly from south Asian communities. That has been incredibly successful. We talk about the “bhangra and bagpipe” culture in some of our larger communities, especially in Glasgow, and we are particularly proud of that. Believe it or not, most Scottish Asians supported Scottish independence because they saw from their historical experience, and from being a colonial power or being part of the empire, that independence was not a scary issue. They were able to join us to ensure that such transformative change—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I have given the hon. Gentleman quite a bit of leeway, but now we have got on to independence. This debate is about consultation, but I think it has stretched a little further than that. As we know, Third Reading is coming up, but at the moment we are dealing just with the amendment.
Pete Wishart
I am grateful, Mr Deputy Speaker. We need consent, rather than consultation, because things are so different in Scotland, and we have responsibility for those bodies. Such issues must surely be up to the Scottish Parliament, and not just through consultation. Consultation is great and there is nothing wrong with it, but this is about ensuring that we have consent. We will not oppose the measure today—it is great that we will get that consultation. We enjoy debating with the Home Secretary. She is always welcome in Scotland, and we enjoy making sure that her views are known. Consent is fine, but we need to ensure that such matters are the responsibility of the Scottish Government and that we make those decision: not consultation, consent.
Karen Bradley
I will not detain the House for long, but I thank the hon. Member for Kingston upon Hull North (Diana Johnson) for her comments and for agreeing not to press her amendment. It is a shame that the hon. Member for Perth and North Perthshire (Pete Wishart) was not in the Chamber earlier when we had a relatively lengthy discussion about the devolved Administrations, and the consultation and work to ensure that the Prevent programme works appropriately in Scotland. I like to think that we have more in common than we have differences.
Issues relating to policing and counter-terrorism are clearly reserved matters. Consultation, not consent, is the appropriate requirement in relation to these issues, and that is respectful at all times of the agreed devolution settlement. I am pleased that the hon. Gentleman will be supporting the Government amendment, and I am glad he agrees that we must ensure that the Bill becomes an Act.
Amendment 12 agreed to.
Third Reading
Queen’s consent signified.
The Secretary of State for the Home Department (Mrs Theresa May)
I beg to move, That the Bill be now read the Third time.
Earlier today we heard about an appalling attack on the office of a magazine in Paris. Twelve people are reported to have been killed, and a number injured. We do not yet have full details of the attack, but I reiterate the Prime Minister’s comments in the House earlier today, and we stand with the French people at this time for freedom of speech and democracy, and against terror. Our thoughts and sympathies are with the families, friends and colleagues of the victims.
Last month we also saw deadly and callous attacks in Sydney and in Peshawar, Pakistan, where it beggars belief that terrorist gunmen should carry out the horrific and targeted murder of children at a school. In 2013 we saw the first terrorist attacks on the streets of Britain since 2005, when Fusilier Lee Rigby was brutally murdered by Islamist extremists, and Mohammed Saleem was stabbed to death by a far right extremist. There can be no doubt that the terrorist threat we face is grave and relentless. It is a threat that takes many forms and causes suffering in many countries.
I have always been clear that we need to keep our terrorism laws and capabilities under review, and ensure that the police and intelligence agencies have the powers they need to do their job. That is why the Bill is so important. As I told the House on Second Reading, Parliament must have sufficient opportunity to consider the Government’s proposals, and I believe that the House has had that opportunity. We have had full and frank debates on the measures in the Bill, and the timetable has allowed us to consider all the amendments that were tabled. The Bill, and the powers within it, have benefited from robust scrutiny by the House.
We are agreed on the need for these powers. I am grateful to the shadow Home Secretary and her colleagues on the Opposition Front Bench, the right hon. Member for Delyn (Mr Hanson) and the hon. Member for Kingston upon Hull North (Diana Johnson), for their constructive approach throughout. I pay tribute to the right hon. and hon. Members who have contributed to the debates in Committee and on Report, and, in particular, to a number of members of the Intelligence and Security Committee: the right hon. Members for Salford and Eccles (Hazel Blears) and for Knowsley (Mr Howarth), my right hon. and learned Friend the Member for North East Fife (Sir Menzies Campbell) and my hon. Friend the Member for New Forest East (Dr Lewis). Each has brought considerable knowledge and expertise to the proceedings, but all contributions have ensured that our debates have been enlightening and valuable. I thank the members of the Panel of Chairs who presided over the Committee of the whole House, and the officials, Officers and staff of the House, and those in the Office of Parliamentary Counsel, who have enabled the House’s expedited consideration of the Bill.
In the past two days, we have again had a full and detailed discussion of the Bill on Report, with many excellent contributions from all parts of the House. The Bill will strengthen our existing powers, so that we can disrupt the ability of people to travel abroad to fight, and to control their ability to return here. It will enhance our ability to monitor and control the actions of those in the UK who pose a threat, and it will help us to confront the underlying ideology that feeds, supports and sanctions terrorism.
During the Bill’s passage through the House, we have considered the powers in part 1 of the Bill relating to temporary restrictions on the travel of those seeking to engage in terrorism-related activity overseas, and on those suspected of involvement in terrorist activity abroad who wish to return to the UK. We have considered the safeguards that should circumscribe the use of the powers.
Sir William Cash (Stone) (Con)
My right hon. Friend will be aware of the amendment I moved yesterday regarding the question of jihadists of British origin who decide that they wish to return to the United Kingdom, even though they have repudiated allegiance to it and sworn allegiance to another state or entity. Will my right hon. Friend at least be good enough to say that she would be prepared to consider the amendment when the Bill goes to the House of Lords?
Mrs May
I recognise that there will be those who wish to return to the United Kingdom. The measures we are taking on the temporary exclusion orders are about ensuring that those who wish to return and have been involved in terrorism-related activity may return on our terms. They will be determined on a case-by-case basis.
On other matters, in particular safeguards, as the Minister for Security and Immigration, my hon. Friend the Member for Old Bexley and Sidcup (James Brokenshire) made clear to the House yesterday, in the light of the views of David Anderson QC, as well as of many right hon. and hon. Members, the Government have committed to look very carefully at judicial oversight of the temporary exclusion order power. We will return to this issue in the House of Lords.
The House has also debated the duty on a range of authorities, as at part 5, to have due regard to the need to prevent people from being drawn into terrorism. If we are to counter poisonous extremist ideology and prevent vulnerable people from becoming radicalised in the first place, we must ensure that we have the necessary provisions. I appreciate the considerable interest that has been shown in how the duty will work in practice, and trust that the draft guidance, on which we are currently consulting, has helped to address the concerns raised by a number of right hon. and hon. Members.
We discussed the nature of the privacy and civil liberties board, which will support the independent reviewer of terrorism legislation. I reiterate the point made by the Under-Secretary, my hon. Friend Member for Staffordshire Moorlands (Karen Bradley), who has responsibility for modern slavery and serious and organised crime, that we are consulting on this proposal at present and it is right that this consultation should conclude before the final detail of the board is agreed.
The House is aware that the need for this legislation is significant and pressing. Our security and intelligence agencies tell us that the threat we face from terrorism is now more dangerous than at any time before or since 9/11. The appalling conflicts in Syria and Iraq continue, with ISIL solidifying its hold on much of the region. More than 550 people from the UK who are of interest to the security services are thought to have travelled to the region since the start of the conflict, and we estimate that about half of those have returned. Some have become disillusioned and simply wish to reintegrate into British society, but others pose a significant threat and in recent months the police have arrested and prosecuted a number of these people. The Bill will help us to counter that threat.
The powers in the Bill should be used only when it is necessary and proportionate, and their use will be subject to the appropriate level of safeguards and oversight. The Bill represents a considered and targeted approach that strikes the right balance between civil liberties and security, but we must not delay. The threat from terrorism is ever present and evolving. We are in the midst of a generational struggle, and we must ensure that the police and the intelligence agencies have the powers they need to keep us safe. The Bill will help them to do that, and I commend it to the House.
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)
I join the Home Secretary in supporting the Third Reading of the Bill and in condemning the disgusting attack in Paris today. The details will continue to emerge over the next hours and days, but we know that 12 people have been killed and others injured, and I am sure the whole House will agree with the words of the French President, Francois Hollande, who said it was
“an exceptional act of barbarism committed against a newspaper”.
He said that France would be firm and strong in facing down these threats and punishing the attackers.
The whole House, the Government and every party stand in solidarity with the people of Paris and France, and our thoughts and prayers are with those who have lost their lives, their families, their friends, their colleagues and those across the city and the country who will feel this terrible loss. We have experienced terrorist attacks here, and we have stood firm with other countries that have endured such attacks—the Home Secretary rightly referred to the heartbreaking attacks in Pakistan, as well as those in Australia and Canada—and we will stand with other countries again against the hatred of the killers. We will stand up for our democratic values and never let terrorists win.
We have seen, too, the strength of the response from the French people: the “Je suis Charlie” response; the determination not to be cowed or afraid; the determination to stand together. We will stand with them. Those who died or were injured include journalists, writers, cartoonists and police officers, and the editor-in-chief of Charlie Hebdo has said:
“I don't understand how people can attack a newspaper with heavy weapons. A newspaper is not a weapon of war.”
As we know, the free press we defend here in Britain, and which is defended across Europe, is vital to the freedom of speech that democracy depends on.
Our thoughts and tributes should also be with the police and security services in France and here in Britain who run towards danger when terrorist attacks take place and who put their own lives at risk as they do so. As we discuss the Bill, we should also pay tribute to our security services and police, who will be working even now with the French authorities to provide any international intelligence that could help France catch these vile killers and bring them to justice. While we know not yet the details of those responsible, we know that the killers do not represent Islam or reflect the faith of millions of French and British Muslims. Muslim leaders in Paris and Muslim community groups and organisations in Britain have been among the first to condemn this appalling attack.
We debate the Bill in the knowledge of the threats that can affect any country and at a time when the terror threat has grown. We have said for some time that more action is needed against terrorism to ensure that the police, security agencies and other organisations have up-to-date powers to act and that we have up-to-date safeguards to protect the liberty and security that terrorists and extremists seek to undermine. That is why we have supported the Bill and called for stronger action to deal with terrorism, alongside stronger safeguards so that we defend those democratic values too. That requires both strong and proportionate powers to act, and oversight—the checks and balances—to defend the very freedom of speech that terrorists have attacked today, as well as the liberty and democracy that extremists want to undermine.
The Home Secretary has talked about the additional challenge from the Syrian conflict. More than 500 people are suspected of having travelled to Syria, and half of them have returned to the UK, which changes the challenges we face here in Britain. Over the past few days and weeks, many of the measures in the Bill have been subject to detailed debate in the context of the Syrian conflict.
As the House reaches the conclusion of its consideration, I thank again my hon. Friend the Member for Kingston upon Hull North (Diana Johnson), my right hon. Friend the Member for Delyn and my hon. Friend the Member for Sedgefield (Phil Wilson) for their efforts, as well as all those who have been involved in scrutinising the Bill. More needs to be done to prevent young people from being radicalised or drawn into extremism in the first place. We hope that putting Prevent on a statutory footing will help to strengthen it. We will continue to probe in the other place how that will work in practice, including through a role for Parliament in debating future strategy.
On TPIMs, the Home Secretary knows that we have called for some time for the Government to bring back the relocation powers that were abolished a few years ago. We are glad that she has finally done so. It is clear that the police and the agencies had concluded that TPIMs were no longer useful in their previous form. I hope that this Bill will change that and make them useful again in the extreme cases where prosecution has proved too difficult but the threat remains.
The police also need to be able to take swift action to stop someone believed to be trying to leave the country to join ISIS. If troubled parents ring the police because they are worried that a son or daughter has gone, they do not have time to invoke the royal prerogative to remove someone’s passport. However, we still believe that more checks and balances are needed to ensure that these important powers cannot be abused. We hope that that will be debated further in the other place. We agree, too, that action is needed to enable the police and security agencies to manage the return of those who may have been drawn into the conflict and ensure that they do not pose a risk to the British public if they return. Where possible, people should be arrested and prosecuted for crimes committed. TPIMs may be required in extreme cases where no prosecution is possible, and everyone returning should be expected to engage with the Channel de-radicalisation programme.
The Home Secretary has changed the policy very substantially from the original pledge by the Prime Minister to exclude people from Britain—we believe she has been put in a difficult position by those announcements. However, we remain concerned that the policy has been designed to fit an announcement, rather than to fit the needs of security, and that it is still unclear how it will work. We believe it will benefit from serious further scrutiny in the other place to ensure that it does not become too complex and bureaucratic, and instead can achieve the aims that she has set for it. We also argued from the start that more judicial oversight and safeguards were needed. I welcome the acceptance by the Home Secretary after the debate on our amendments yesterday that judicial oversight is needed for temporary exclusion orders. We look forward to seeing the Government’s proposals, as well as the debates on them in the other place, to ensure that the appropriate method of judicial oversight is used and that it is tried and tested.
Finally, we have supported, though sought to clarify, the important power to retain IP addresses—which had the support of the Joint Committee that considered the previous draft Communications Data Bill—and in particular the contribution that that can make to tackling online child abuse, as well as international terrorism.
Today’s vile attack just across the water brings home to us the threats that we have to address, the need for vigilance and the need for us in Parliament to ensure that we defend and protect our democratic values. That means that we need to scrutinise any counter-terrorism legislation in great detail. We need to take seriously our responsibilities in this House to protect both the liberty and the security of which Britain has always been proud from extremists of any kind. On that basis, we support this Bill and its Third Reading and look forward to the further debates that will take place in the other place.
Mr Heath
Like the Home Secretary and the shadow Home Secretary, I think it is quite impossible to contribute to this debate without starting with the grim events in Paris and the attack on Charlie Hebdo. It is beyond any acceptable behaviour—of course we know that—but as the hon. Member for Perth and North Perthshire (Pete Wishart) said earlier, it goes beyond terrorism, in that it would appear to be an attack precisely on free speech. I hope and trust that at the end of the day it will be proved that the pen is mightier than the sword—that people’s ideas cannot be defeated with bombs and guns—because that is what the counter-terrorism fight is all about. As the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper) and the hon. Gentleman said, I hope that every Member of this House will be able to repeat: “Today, je suis Charlie aussi.”
It is normal on these occasions to welcome a Bill, but I do not think that I can welcome a Bill that deals with such a continuing problem. I can say only that it is a grim necessity. We should not welcome the fact of ever reducing our traditional rights and liberties other than to protect the rights and liberties of others. That is what we are, sadly, about today.
One occasionally meets people who will say that the threat is imaginary and is something somehow dreamt up by politicians in order to build their empires. I do not believe that that is the case for one moment. As someone who was on Capitol hill on 9/11 and at Aldgate station on 7/7, I do not need to be told that there is a real threat from terrorism in this and other countries—so frequently that is the case.
The test is not whether there is a necessity to deal effectively with terrorism, but whether the instruments that this House puts in the hands of the Executive are proportionate, effective and actually increase our capacity to fight terrorism rather than make the situation worse. I am, I am afraid, a veteran of far too many debates on counter-terrorism legislation over the years; other right hon. and hon. Members around the Chamber today are in the same position. I have supported some such Bills; some I have opposed; of some I have been deeply critical. I have always opposed the Home Office—I am talking about the Home Office rather than the Home Secretary—when it appears to have been more involved in legislative incontinence than getting to grips with what works and what is effective.
However, where the necessity is there, where the checks and balances are sufficient and where we ensure that every single action taken by the Executive can be reviewed and checked to see whether it is reasonable and appropriate and based on good evidence, this House has a responsibility to act on behalf of people in this country. When this Bill eventually returns from the other place, the issue of judicial oversight over the earlier parts of the Bill will be a key point for me. I hear the arguments about judicial review—that it is a retrospective and partial review—but I do not believe that that is sufficient to the task of ensuring that any Executive do not act on occasions in an excessive or peremptory way. That is why the courts have to be involved. I had this argument many times with the then Government during the last Parliament. Sometimes they accepted the arguments; sometimes, sadly, they did not.
Mr David Winnick (Walsall North) (Lab)
Fortunately, our democracy continues—despite the horror in Paris and what has happened here. I hope my intervention will not be misunderstood, as it is part of democracy. Why did the hon. Gentleman and his colleagues not support judicial oversight yesterday? Why wait for the provisions to go to another unelected place?
Mr Heath
I listened carefully to what the Minister had to say and I am confident that the Home Secretary has clearly got the message that the Government need to table amendments in the other place, which will return to us and will then, I hope, be approved by this House. I believe that to be a perfectly appropriate mechanism. I would have preferred to have had Government amendments yesterday, but there were not any on this issue. I was saddened that we had not yet reached the point at which the Government accepted the arguments, but I believe that they now do accept them. If they do not, I suspect there will be a majority in the other place that will impose a judicial oversight amendment in any case. We would then have to debate not a Government proposal, but one concocted by colleagues in the other place. Provided that such a proposal is not grossly inappropriate, I will support it when it returns to us. I am sure I am not alone in that, and I know that the Home Secretary is looking at this very carefully. I am genuinely grateful to her and her colleagues for the fact that they have engaged with that argument.
There are still issues to be resolved. We had what was almost a semantic debate, but one that I think was important in the context of the Bill, about the difference between temporary exclusion and managed return. I feel that we are on a journey in that respect. Some people would say that the language amounts to the same thing, but I think that “managed return” better expresses where we need to be.
I have a concern that was not expressed on Report. The Bill requires the Home Secretary to issue a permit to return “within a reasonable period”. I hope that that “reasonable period” will be constrained enough to prevent people from being in limbo for a long time. They will need to know what they must do to ensure that their return is managed appropriately, and that must be arranged promptly and timeously if it is to be effective.
In a sense, however, those issues are peripheral to the main thrust of the Bill. As I have said, I cannot welcome a Bill many parts of which I would not wish to see in place, but I do not live in a perfect world. I live in a world in which the events that happened in Paris today happen not only here, but throughout the globe. We have to recognise that, and we have to deal with it. I hope that we shall reach a point at which we will no longer have to legislate in this way because people will no longer behave in the way that has become so common in recent years, but, sadly, we have not reached that point yet.
Keith Vaz (Leicester East) (Lab)
It is a pleasure to follow the hon. Member for Somerton and Frome (Mr Heath), who is standing down at the next election. We shall miss his wise words and the eloquent way in which he put the case for engagement and against terrorism. I join him, and both the Home Secretary and the shadow Home Secretary, in condemning the events in Paris. We know that the community in Paris and in France as a whole—along with the community here—utterly condemn what has happened. We hope that people of good will in that country and in the rest of Europe will come forward and ensure that we recognise the great strengths of diversity and the importance of understanding different cultures and religions, while isolating those who wish to undermine the values of our society.
I commend those on both Front Benches for the way in which they have dealt with this difficult Bill and for the progress that has been made. I, for one, thought that it would not be possible for the Bill to complete all its House of Commons stages by now, but it has done so. I think that the Opposition’s constructive approach—matched, I hope, by the Government’s approach in the form of a pledge to table amendments in the other place—will enable us to be a House united in our condemnation of terrorism and a House united in the method by which that is achieved.
As I have said before, however, I do not think that legislation is enough. The hon. Member for Somerton and Frome was right to say that we do not welcome Bills of this kind. We would rather not have them, because we would rather not have terrorism. We need legislation because it enables us to provide a framework for the incredible people who work in the police and the security services and who do things that we could not possibly even imagine doing. They are on the front line, dealing with such problems, every day. But what we must do, both in government and in opposition—what every Member has a responsibility to do—is ensure that communities are fully engaged in the fight against terrorism.
I am not saying that the communities are not engaged. They condemn those who wish to undermine our values. When we frame legislation, however, we use words such as “prevent” as though communities were able on their own to prevent what is happening. I think language is extremely important, and that is why I prefer the language of engagement. It should be “engagement, engagement, engagement”. We should be constantly working with communities. We cannot tell them to inform the authorities that someone is behaving in a way that causes them concern. Mothers will be fearful of reporting on their children, because when one woman did so, her son was sentenced to 12 years in prison. Following that case, women will believe that if they try to prevent their children from going abroad, those children be sent to prison for years and years with no prospect of rehabilitation.
These are complex and difficult areas therefore, and although we want these issues reported, we need a counter-narrative to make sure that, whenever the terrorists go on to the internet and prosecute their case for violence, we have an alternative. The people who run our internet services therefore need to do much more. The Prime Minister spoke about the dark net, and I contacted Google as I was very keen to get into the dark net, to try and see exactly what was going on in there, and Google told me, “It’s called the dark net because we can’t get into it.” That is the problem. There are areas on the internet that even the most sophisticated and clever people in our security services are not able to penetrate. That is how the terrorists and those who support their cause have been able to prosecute their case.
We need to get the internet providers to do much more. They need to take down more sites. They need to be more vigilant. They should not wait for complaints; they should act with speed and efficiency. That is clear. It has been clear to the Home Affairs Committee, and I pay tribute to my hon. Friend the Member for Walsall North (Mr Winnick) for all the work he has done; he is particularly eloquent on these issues when we look at counter-terrorism and conduct inquiries into these matters.
The problem has moved from the madrassahs and the schools and, I have to say to the Home Secretary, from the universities to the prisons and on to the net. So the old days when we could find the imam who was preaching the cause of terrorism have gone. There is now one-to-one radicalisation. Those who go into prison may become radicalised while there, and, unfortunately, they are not monitored sufficiently when they come out. That is what the Select Committee found in our last report. They then radicalise other people. With the best will in the world and the best resources put forward by the Government, it is very difficult to isolate people who are in prison if they are mixing with others who have different views and if they want to blame somebody else for their plight.
That is why, rather like the Jesuits, we need to deal with this at a much earlier stage. The counter-narrative needs to start much earlier. If we fail to do that, we will, in a sense, allow a whole generation to believe some of the stories that are recurring in certain parts of the country. That is why we commended the work of Google and its work with Abdullah-X, who informed us in his broadcasts that peer group pressure leads to people deciding to give up their way of life in this country and suddenly choosing to go and fight in Syria or in another country. They give up everything—the love of their parents, the support of their families and all their friends—because they believe they are fighting for a better cause. We cannot sit by and wait for that to happen.
As my right hon. Friend the Member for Salford and Eccles (Hazel Blears) keeps telling us, the counter-narrative must begin now. We must be as aggressive as we can be now. We cannot wait for any more people to go. Ten years ago, Members could stand in the House and the Home Secretary could come to the Dispatch Box and not fear the fact that 500 British citizens had left this country to go and fight abroad. The figure was much less then.
The figure now is much higher in France and the rest of Europe than it is here. Thankfully, our numbers are lagging behind those of the rest of Europe. Taken as a whole, however, this is a real problem and it is getting worse. That is why the Select Committee has said on numerous occasions that what we need is a firm international platform to deal with counter-terrorism. This is done bilaterally at the moment, and we suggested the expansion of Interpol, with all the good work international organisations such as Interpol and Europol do, and that there should be an international platform involving countries of good will. We cannot allow every country into this, because we cannot be sure about every country, but those who are on the right side—if I can put it like that, in a diplomatic way—should work together on an international platform to identify those responsible.
We talked about the need to support countries such as Turkey. Turkey is an international hub: it is where people go before travelling on to Syria to carry on with their fighting. It is essential that we use all our resources to deal with these issues, but unless we work with families and communities as equals, we simply will not win this battle. We cannot prevent someone who is the subject of an order from going into a mosque, putting on a burqa and disappearing. We have to tell communities—no, “tell” is the wrong word; we have to work with communities and try to persuade them to come forward.
In France, there are ways of reporting these things, just as there are here. There, they have the “green line”. Here, we have the anti-terrorist hotline. When parents in this country are having a discussion at breakfast about the possibility of their child going off to fight in Syria, they do not sit around saying, “I think we should ring the anti-terrorist hotline.” Of course they do not want to report their children for terrorism. We need to look again at the language of effective reporting, so that we can encourage people to report their suspicions without fearing that their family unit could be destroyed. Every member of the Muslim community I have spoken to condemns what is happening out there in Syria. They condemn the people who are going out there to fight. I remember listening to a father being interviewed on BBC television. When he was told that his son had died abroad, he did not even know that he had gone to fight. Families sometimes do not know these things.
We need to ensure that there is effective monitoring, not only of those who come out of prison but of those involved in these activities. The Government and the Opposition work closely together to bring forward orders under prevention of terrorism legislation. Whenever Ministers come to the Dispatch Box to say that they want to ban this or that organisation, there is unanimity in the House that that should happen. It is quite right that the Government should be supported in that way, because they have information that we do not have. However, the ability of organisations to change their names and the ways in which they engage in terrorism is a cause for concern, and we need to be careful about that.
On exclusion orders, I understand why the Government are seeking to exclude people. I understand the logic and the reasoning behind the proposals; the Home Secretary appeared before the Select Committee in December and told us why she thought they were important. However, the practicalities will provide problems, which is why it is important that we assess what the Government are doing in the near future. There will not be time to do that before the general election, but it will be worth assessing how the provisions are working.
I recently met a delegation from Pakistan, which has its own severe troubles. The delegates were interested to hear about the Home Secretary’s exclusion orders. They asked me and my colleagues what we thought would happen if Pakistan decided to exclude any of its citizens who had been involved in these activities and prevent them from returning to Pakistan. Once those people were in Europe—and in the United Kingdom, in particular—we would be lumbered with them. If other countries decide to do what we are doing, there could be real problems. We would have to keep here certain people we would prefer to send away. International co-operation and bilateral conversations are therefore absolutely critical.
I support the Bill. Many of the recommendations that we have made in the past seven years are in it, at least in part. Like the hon. Member for Somerton and Frome, I wish that this could be the last counter-terrorism Bill that the House had to consider. I will be fighting the next election, and I hope that I will be returned to the House by the electors of Leicester East. If they want me back here and I am returned, I anticipate seeing more counter-terrorism legislation being introduced. I would be very much against having more, but if we have to have it, we have to have it. I hope, however, that we will look at the practicalities involved, so that when we put this kind of legislation through the House, we carry communities with us and ensure that the proposals are as practical as possible.
Sir Peter Bottomley (Worthing West) (Con)
Gérard Biard, the editor- in-chief of Charlie Hebdo, the satirical magazine which has been attacked, has said:
“A newspaper is not a weapon of war.”
The fact that it has been attacked is an example of how some people object to what others say and do. When I stopped being a Minister in Northern Ireland, I became associated with New Consensus and then New Dialogue, which after each IRA outrage would say, “This is not being done in our name.” That was a way of not going back to the 1970s. When there were terrorist bombs and outrages, people would start to hate the Irish, but by the 1990s most of the Irish were saying, “This is not being done in our name.” We probably need to find a way of letting people—not moderate Muslims but those who are just not violent—express the same thing. We have to say to the French, as others have, “We are with you.” The word “solidarité” is one we can take into English; we can stand in solidarity and suffer in solidarity, just as many people did with us on 7 July 2005.
I did not want to add to the debate on Third Reading, because I have not taken part in the Bill’s earlier stages, but I wish to say that we need to be careful about taking action that drives more people into believing that extremism works. We have to support those who have the responsibility for gathering information and trying to take action. It is worth putting on the record that the anti-terrorism hotline, which can be found by any internet search, is 0800 789 321. People may say to themselves, “I don’t know if this matters”, but when specialists get the information, or talk to someone, they can take things in and make the judgment. If anyone finds something suspicious or odd, it is far better to ring that number and provide the information to the authorities.
Mr Winnick
In expressing our horror about what has occurred in Paris, some understandably ask how it is possible that it could take place. They ask how it is possible that journalists could be gunned down in the way they have been because of what has been written or because of cartoons. The answer is simple: we are dealing with murderous psychopaths. If hon. Members are puzzled or mystified by how such an outrage could occur, I simply ask them to remember what the Nazis did and remember the millions of people murdered for one reason only—not their politics and so on, but simply their racial origin. We are dealing here with people with a Nazi mindset, who consider it an obligation, as the Nazis did, to take lives. I am glad that the House has had an opportunity today, both in Prime Minister’s questions and now, to express our deepest sympathy with the loved ones and relatives of those who have been murdered.
During our consideration of this Bill I have expressed reservations on a number of occasions, and those remain. I am pleased about what has happened on judicial oversight or intervention—it does not matter which way one wants to put it, but we are talking about court involvement—in respect of temporary exclusion orders. For one reason or another, the Government have come rather late to accept that, but if they have accepted it and this will go through the Lords, that is all to the good. It is unfortunate that it could not have been decided in the elected House of Commons, but if a Home Secretary decides otherwise, there is little we can do about it.
I praise the remarks made by my right hon. Friend the Member for Leicester East (Keith Vaz), who has set out clearly many of the problems we face in Britain in dealing with this terrorist danger. I simply say that what has happened in Paris has demonstrated, yet again, that we are not alone. Britain is not the only democracy to face an acute terrorist danger. Far from it: other democracies, and counties that are not democracies, also face it.
One has only to look at the horrors that have been happening in Nigeria or in Kenya, for example. Reference has been made to 7/7, when 52 people were murdered in London and many were seriously injured. I was in the United States on a private visit when 9/11 occurred and that evening took part in a rally. I was staying with people in Philadelphia and notices were put up during the day on churches, on other places of worship and in community places, and we decided that we would go and show our support for the United States and our solidarity against the terrorists. We were pleased to do so and I spoke as a private British citizen—not as a Member of Parliament, which I had no authority to do—and expressed the solidarity of this country with the United States in combating terrorism.
We must recognise that the terrorist danger will not go away in the near future. It will outlive me, although that is not saying a great deal. The danger of terrorism will remain; I wish I could come to another conclusion, and I very much doubt that the security authorities think differently. It will be a problem and a danger for years to come and it is no use our trying to deny that or to minimise the amount of time involved in trying to deal with the issue.
I am concerned about how far we will be able in this House and in the future to maintain our democratic rights and privileges—all that we consider so important and that have been built up over centuries—while at the same time taking every possible measure to safeguard our citizens. Every Home Secretary who comes to the Dispatch Box with a new Bill says the same thing. We say the same thing in the Labour party, whether we are in opposition or government. We try to reach the right balance. The fact that I am a critic of many of the measures that have been introduced does not alter the fact that I obviously accept that a balance must be reached. I recognise that there is an acute terrorist danger, as shown by all that I have been speaking about, so it would be foolish to say otherwise.
What concerns me is covered to some extent by what was said by the hon. Member for Worthing West (Sir Peter Bottomley). The danger is that we will take measures that might well be necessary or essential but that could antagonise the very community we want to ensure remains on board and our ally, made up of our fellow citizens. What gives me satisfaction, and my right hon. Friend the Member for Leicester East was absolutely right on this point, is the fact that the overwhelming majority of Muslims not only in Britain but in France and in other countries loathe and despise the terrorism that is supposedly carried out in their names in the same way as we do. That is a great asset. It is understandable and we would not expect otherwise, but we must be very careful about the measures we take to safeguard our citizens so that they do not undermine that support and give the terrorists the sort of ammunition they would like. All the indications are that terrorism will have very limited support in this country, as shown in what occurred after 7/7, when all the Muslims I spoke to in my constituency—my right hon. Friend referred to those in his constituency—condemned it in the strongest possible terms, as I would have expected. In the same way, we have done that in the House of Commons.
The challenge in the coming years, as I have said, is to protect our democracy and protect the rule of law as we understand it while at the same time trying to ensure the safety and security of our citizens so that the crimes and atrocities that occurred on 7/7 and in Paris today are not repeated.
Pete Wishart
It seems a bit odd to be having the last word on this Bill after we have spent five days debating and discussing it. May I congratulate the Front Bench and shadow Front Bench teams on the consensual way in which they have approached these issues? We have significantly improved this Bill from its early conception, but it was perhaps a tad over-optimistic to have five full days of debate on it. On some days, the Chamber has been a bit like the Mary Celeste on a foggy day—perhaps Members are counter-terrored out. We have had a number of these Bills over the past few years, and no doubt, as the right hon. Member for Leicester East (Keith Vaz) has said, we will see many more in the future. We will come back to this issue time and again, and we will have to deal with it year on year. I can already see that we will have another such Bill early in the new Parliament when we reconvene in May.
I do not want to add anything more to what I have already said about the events in Paris this afternoon other than that I hope we have learned something from those appalling events and that we approach and respond to them proportionately. In the past, the temptation has always been to have a knee-jerk response. Indeed this idea that something must be done is a characteristic of so many of the Bills that we have debated over the course of the year: we must be seen to be doing something, to be strong and to be acting. I hope that there is not that kind of response to the events in Paris. We have seen it so many times in previous counter-terror Bills. We have seen the response of a Labour Government—ID cards, the possibility of 90-day detentions and control orders. Let us try to be more imaginative this time around, and respond to the attack in a proportionate way.
At the heart of all such Bills—we have seen it with this particular Bill—is attention. We need to ensure that our citizens are safe and secure and that we pay attention to civil liberties and the freedoms that we enjoy in a democracy. I see many veterans of previous counter-terror Bills in the Chamber. They know what it is to wrestle with the problems. There is this clear balance that we have to strike between our civil liberties and the measures that are needed to keep our citizens safe. Does this Bill achieve that? I do not think so. Again, we have mucked about at the edge of our liberties. We have sacrificed some of the freedoms that we have the right to enjoy in a democracy. As we go forward, we must ensure that we get absolutely right that balance between what we expect as citizens of a democracy and the measures that Governments must take to keep us safe.
This Bill came alive when we discussed the Prevent measures and the radicalisation in our communities. Some of the things that this Government are doing are right, especially the way that they have tried to engage communities. They want to ensure that communities have the resources, ability and capacity to try to tackle the problem themselves. That is the right thing to do.
We have failed in some of our measures and debates to recognise why people get involved in these terrible activities. Nobody is born predisposed to be a jihadist or a terrorist and to do appalling things. Something happens along the way that makes people respond in a particular way. It might be ultimate frustration or a feeling that no other means can be used to exact political change. Something happens, and we have failed to understand some of the features that determine the development in some people’s minds. I hope that in the future we can look at this matter a bit more carefully and clearly. We must also take our share of responsibility for shaping the environment. It would be good if we could acknowledge some of the terrible decisions that we have taken in this House. I am talking about those things that may have provoked some of the responses that we have seen internationally. The war in Iraq, for example, was illegal. If we are looking at any sort of starting point or trajectory for things to escalate in the way that they have, we have to come back to this clear issue. We set that framework up and must start to accept our responsibility for shaping that environment.
I am disappointed that exclusion orders, which are a key feature of the Bill, have been left to be determined by the unelected House of Lords. I think that we, as Members of Parliament who are elected by our constituents, have a duty to consider these things ourselves. We had the opportunity to put that right yesterday. The public expect us to deal with these issues and make the decisions ourselves, not to leave it to the other place, whose Members are not elected, to sort it out behind the scenes, particularly on something as important as counter-terrorism and security. I hope that when the Bill comes back to the House we will have an opportunity to debate exclusion orders properly. We will look at what the Government are offering on temporary exclusion orders and will be able to make some sort of progress.
There are many things in the Bill that I do not like, such as the balance it strikes with our civil liberties, which I think is wrong, as it is in most of these Bills. However, we will not oppose it. When we return here in May, hopefully with about 30 or 40 Scottish National party Members, I am sure that we will revisit the matter. Let us make sure that in future we do not rush such legislation through at breakneck speed. We must take our time on these weighty and important matters, which deserve proper scrutiny. Let us deal with them properly. One thing that we will certainly be doing is coming back here to discuss this once again.
Question put and agreed to.
Bill accordingly read the Third time and passed.
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Hairdressing
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Nia Griffith (Llanelli) (Lab)
I am very pleased to have secured this debate and to have the opportunity to explain why we need to extend the current system of state registration of hairdressers, which is voluntary, to make it compulsory. Nowadays, people living in our sophisticated and complex modern-day society assume that the goods and services they buy, particularly on the high street, are in fact regulated. Most of us make the assumption when we go to the hairdressers that we are being treated by people who are suitably qualified, and much of the time we are.
I was quite shocked, therefore, to find out that in the UK a person does not need any qualifications at all to practise as a hairdresser. In other words, the industry is unregulated. Of course, the majority of hairdressers have appropriate qualifications, work to a high standard and take great care of their customers. However, currently there is nothing to protect the consumer from the unscrupulous or the incompetent, and that is what worries me.
I believe that as a society we have a duty to protect people from the unscrupulous as far as we can, so I want to ensure that a service as commonplace as hairdressing is properly regulated so that we and our families, our young people and our children are properly protected. That becomes even more relevant when we consider the wide range of different types of treatment now available. Hairdressing can involve using sharp implements and styling instruments, as well as a range of powerful chemicals that can inflict third-degree burns. That is frightening and it is not acceptable that we do not require any statutory registration of the people using those substances and implements on our heads, our hair, our skin and close to our eyes, our ears, our face and our brains.
Sometimes we can be our own worst enemies. Before we use certain colouring on our hair, we should have a skin test and wait a couple of days to see if there is any allergic reaction, but we are impatient and tend to want everything instantly. Scrupulously careful hairdressers tell me that they sometimes lose customers because they insist on a skin test, but the customer is too impatient to wait for the result and goes to a salon which does not require the test. When things go wrong, it can be very distressing for the person concerned and ultimately, if medical treatment is needed, it is likely to be the NHS—that is, the taxpayer—who picks up the bill.
I pay tribute to the Hair Council, formerly the Hairdressing Council, for the work that it has done to highlight the issue of compulsory state registration of hairdressers and barbers. I know, for example, that just in this place there is much greater awareness of the issue among MPs than there was just a few years ago. I pay tribute to the hon. Member for Morecambe and Lunesdale (David Morris), who introduced a ten-minute rule Bill on the subject. I thank the training, hairdressing and barbering industries for taking a lead and demonstrating how seriously they take the professionalism of their industry. I have had valuable conversations with the hairdressers in my constituency, who tell me that they are concerned to maintain high standards and to ensure that new recruits to the industry also perform to high standards.
Hairdressing and barbering are industries that we in the UK are very proud of. They are sectors of key importance to the economy, contributing some £2.6 billion to the UK economy and employing nearly 250,000 people across 55,000 businesses. Even in the current tough economic climate, we can walk down any high street or through any town centre and find several hairdressing salons or barbershops.
Alison Seabeck (Plymouth, Moor View) (Lab)
I, too, have written to all the hairdressers in my constituency, seeking their views about regulation. My hon. Friend is right. They want to be seen as responsible and do not want to cause anybody damage when they visit the salon. Does my hon. Friend agree that partly because of the recession and partly because of the increase in the number of people who are self-employed, an increasing number of people are providing hairdressing services in people’s homes, over which there are no checks whatever? That causes me concern.
Nia Griffith
Indeed. My hon. Friend is right. For a hairdresser working as a sole operator in a home where there is nobody to point out to them that they have done something wrongly, it is even more important that they are properly qualified and that the person employing them has some validation of that. We would check whether a plumber was properly registered; that is far more important in respect of our own body.
Alison Seabeck
The protection of hairdressers is also important, to ensure that they are protected if anything goes wrong.
Nia Griffith
Indeed. Insurance companies will have a vital role to play. If there is compulsory state registration, insurance companies will expect professionals to comply with the law and to mention any changes in circumstance. It will be in hairdressers’ best interest to be registered and to be properly insured.
In our town centres, it is often the hairdressing shops that pull people in, which can be welcome. With competition from internet shopping and out-of-town shopping, anything that increases footfall in town centres can be useful to the neighbouring shops, not just the hairdressers and barbers.
Habia, the Government-approved standards-setting body for the industry, estimates that hairdressing and barbering account for nearly 1% of the entire UK economy. They also make up a huge percentage of new start-ups. Habia estimates that 41% of hairdressers are self-employed, and 93.5% work in a workplace employing between one and 10 employees.
I must emphasise that the vast majority of these businesses are respected. The hairdressers are highly competent and have worked long and hard to train to a proficient and qualified standard. However, as always, some do not fall into this category and damage this good reputation. To prevent this, the Government of the day introduced the Hairdressers (Registration) Act 1964, which created the Hairdressing Council and provided its current constitution. Under the Act, a person can apply to be state registered in the same way as doctors, nurses and dentists. The only difference is that it is completely voluntary to belong to the UK register of qualified hairdressers—a status that can be achieved either through qualification or six years practising as a hairdresser. Ideally, every hairdresser and barber should be state registered, which would eliminate those who practise with no qualifications or experience whatsoever. The problem with the Act is that it does not have any power to safeguard the consumer with a framework of minimum qualification standards and compulsory state regulation of the industry—it is entirely voluntary. The campaign by the Hair Council, which I fully support, would allow for compulsory registration of all hairdressers and barbers.
Let us be honest: we have moved on a long way since 1964. If we want to be reminded of what teenage boys looked like in 1964, we just have to go on to the internet and look for the sleeve of the Beatles’ LP, “A Hard Day’s Night”, and that will give us a good impression. Most of us will remember that hairdressers were about the short back and sides for boys, with schools complaining if hair touched the collar. We knew that our mothers or grandmothers went for a perm now and again. Of course, nowadays there is a whole range of treatments and people have such a variety of different opportunities for things to do with their hair. Dangerous chemicals are used routinely. Without proper training and qualifications, there is no guarantee for customers that they might not be burnt, injured or permanently physically disfigured by the inappropriate use of these chemicals. As my hon. Friend the Member for Plymouth, Moor View (Alison Seabeck) said, many people are turning to mobile hairdressers, and it is even more important that they should be properly state registered and therefore regulated.
We need to ensure quality and safety standards within the hairdressing and barbering industry. Many hairdressers who are not state registered practise great hairdressing and run successful salons, but registration is about guaranteeing a minimum level of competence for the consumer and deterring those who are not fit to practise from setting up. As politicians, we have a duty of care to members of the public. When things do go wrong and there are accidents resulting from the misuse of chemicals or dyes, it can be very distressing for the persons concerned. Ultimately, if medical treatment is needed, it is likely that the NHS—namely, the taxpayer—will pick up the bill.
Similar questions and concerns were raised in the wake of the Poly Implant Prothèse implants problem. Professor Sir Bruce Keogh headed up a review of the regulation of cosmetic interventions—in particular, non-surgical procedures such as dermal fillers, beauty treatments, collagen and Botox injections, chemical peels, and laser hair removal. In his report published in April 2013, he notes:
“Dermal fillers are a particular cause for concern as anyone can set themselves up as a practitioner, with no requirement for knowledge, training or previous experience.”
The Government have supported the recommendations of the report, one of which states:
“All non-surgical procedures must be performed under the responsibility of a clinical professional who has gained the accredited qualification”.
Most notably, it recommends that all practitioners should be registered, and states:
“Entry to the register should be subject to…achievement of accredited qualification”.
Some of these procedures could easily be undertaken in a spa or a salon, so let us make sure that we get regulation all round.
The introduction of compulsory registration for hairdressers and barbers would bring hairdressing and barbering into line with other industries in the UK. It would be similar, for example, to the regulation of taxi drivers or food hygiene: one would not expect to go into a restaurant that had not been properly regulated.
Registration of hairdressers and barbers is required elsewhere. In the USA, for example, practitioners are required to have a licence to practise and to provide evidence of training and certification in each business area they intend to provide at their salon. There are on-site inspections and trade tests, and a consumer complaints and procedures route. If they move state, they have to satisfy the regulations of the state to which they move. Australia has a similar set-up, with practitioners required to be registered. The UK remains one of the few countries in Europe that does not require the state registration of hairdressers or their equivalents.
The Hair Council has already made significant progress not only in raising the issue within the industry and with decision makers, but in consulting and drawing up details of how the system might work in practice. The questions that many people will rightly ask are about its cost, how it will be policed and how it will work in practice. There will clearly have to be proper consultation within the industry and a transition phase, but I will return to that later.
Once the system is up and running, it should be relatively easy to police. There will be a list of registered hairdressers. Just as now, people will be able to find their nearest state-registered hairdresser on the Hair Council website. The public and trading standards officers alike will be able to consult the list. Consumers will be able to check whether their hairdresser is state registered, just as they can for their plumber. Trading standards offices will be able to use it as a tool for checking what is happening in the local neighbourhood. When officers make inspections of local salons, they can also check the credentials of the people who are working there.
Ultimately, insurance companies are likely to provide the greatest motivation for hairdressers and salon owners to comply, and to make sure that all their staff are state-registered hairdressers. We all know that we have to comply with the terms and conditions of insurance policies for them to be valid, and that we have to report any change in circumstances. No hairdresser or salon owner will want to pay for insurance only to find that it is invalid. The requirement by insurance companies for hairdressers to comply with the law—they will provide cover for hairdressers serving the public only if they are state registered—will therefore provide a strong motivation for them to register and to employ only those who are state registered.
The Hair Council has estimated that the system can be run at no extra cost above the current fee of £40 per annum per individual hairdresser. In fact, it sees that figure as a maximum. No-one likes to pay any fee, but in the great scheme of things, it is not an unreasonable amount and could be recouped from customers relatively quickly. The cost per customer over a year would be negligible, and customers would find it a very small price to pay for knowing that the hairdressers and barbers that they and their family use are registered and therefore regulated.
On implementation, the structures and the mechanisms are already in place, and the Hair Council has done a lot of preparatory work. We already have the legislation. A registration scheme is in place—its framework has existed since 1964—and it is administered by the Hair Council. The Hairdressers (Registration) Act 1964 created the then Hairdressing Council and provided its constitution. Under the Act, a person can apply to be state registered in the same way as doctors, nurses and dentists. We are now seeking to make state registration compulsory.
The Hair Council has done a lot of work and has come up with proposals. It suggests that, as the keeper of the register of hairdressers and barbers, its remit would be extended from the maintenance of a voluntary register to keeping a statutory register, with the ability to set and enforce penalties where necessary. The Hair Council is committed to consultation within the industry, and to be both consumer and industry-focused in its communications. It proposes that those already practising as a hairdresser or barber in the UK would be required to join the register by a certain date—perhaps up to two years after the change in the legislation. That would be followed by a period of strict scrutiny, using a team of inspectors recruited for the sole objective of visiting salons. Practising hairdressers or barbers—whether mobile operatives, salon-based or self-employed individuals—would need to register to be able to function correctly and legally.
Trainers would be expected to inform learners that once they had obtained a level 2 national vocational qualification, they would be required to register before they could practise lawfully. That would educate individuals intending to work in a self-employed capacity about the need to register. Compliance could be monitored by qualification-awarding organisations.
When I have consulted local salons, they have stressed the need for high-quality training, so I was pleased to see in December that my local further education college, coleg Sir Gâr, has signed up to registering all its lecturers, assessors and qualified learners with the Hair Council. It clearly makes sense that all those who are training and assessing the next generation of hairdressers should themselves be state-registered.
Qualified professional hairdressers and barbers are drivers of growth on our high streets. They support local employment, train apprentices, serve their communities and contribute significantly to the UK economy, and it is time for the industry to be put on a much firmer regulatory footing to reflect that. We have regulatory and consumer laws because they reflect good practice. The majority of responsible practitioners already come up to or surpass the necessary standards, but we need legislation to provide protection from the unscrupulous or incompetent. A change in the law would not only ensure consumer protection but enhance standards and provide professional recognition for the industry. I therefore ask the Minister to take the initiative and to take the necessary steps to ensure that we are all properly protected, by introducing the compulsory registration of hairdressers.
Richard Fuller (Bedford) (Con)
It is a great pleasure to follow the hon. Member for Llanelli (Nia Griffith), and I thank her for providing me with the opportunity to contribute to the debate. I join her in placing on record admiration for barbers and hairdressers—one needs only to look around the House to see what a challenge it can be. You, of course, Madam Deputy Speaker, are at the top of the list. It is undoubtedly a challenge to get every individual’s hair correct. May I place on record my particular thanks to Sugaz barbers of Lime street, Bedford, for their tremendous dedication to making the Member of Parliament for Bedford look presentable in public these past four or five years?
Hairdressing is a tough profession, as every individual has their own needs and tastes. As the hon. Lady said, the skill sets in the industry and the services and products it provides have progressed dramatically over the past 20 or 30 years. I would also point out the size of the industry. As she said, it is not a small sector of our economy but a considerable one. It employs a large number of people, and there are a large number of businesses in it. It affects all of us—we all use the services of a hairdresser or barber on a regular basis, perhaps until we become follically challenged.
The hon. Lady did not mention another important aspect of the sector, which is that setting up a salon or becoming a barber or hairdresser is one of the most accessible ways for people to start out in their own profession or start up their own business. For a lot of people, formal education is not their direct interest, but making people feel better and bringing happiness to their lives is how hundreds of thousands of people contribute to our society. Hairdressing has historically been a relatively easy way for people to get involved in setting up a business. That is why I disagree with the hon. Lady’s approach to regulation, if I may say so, even though she outlined a solid case. Frankly, I do not want the state cutting my hair. More deeply than that, I believe that sufficient protections for the consumer are already in place. If I may, I will go through a number of them in turn.
Mrs Madeleine Moon (Bridgend) (Lab)
The hon. Gentleman has graciously thanked his hairdresser, but may I say that on the whole, his hairdresser’s task is rather simple? The point is the greater complication, and the use of chemicals and other products, when a woman’s hair is styled. That is often a more technical and difficult task, and that is where regulation is required.
Richard Fuller
I hear what the hon. Lady says, and I will state why I think regulation is not the approach to take. If that does not satisfy her, especially on the issue of chemical use, perhaps she will make a further intervention or contribution.
My first point applies to almost all barbers and hairdressers, because they almost all go through formal training. Bedford college has an active range of courses for people who want to become hairdressers and barbers. They go through the training, learn about the use of chemicals, different styles, techniques and human interactions, and achieve a good qualification.
Nia Griffith
If, as the hon. Gentleman says, the vast majority of hairdressers go through the process of getting a proper qualification, should we not give them credit for that, and ensure that someone who has not done so is not able to give the whole industry a bad name by doing something inappropriate or stupid? As he says, many hairdressers have done a lot of work and trained, and if they were asked to register because it was compulsory, I am sure the vast majority would be proud to do so.
Richard Fuller
There are a number of points in that. First, people who work for a qualification get that qualification and credit at the end of their training course, which is a sense of celebration and merit for them. Secondly, if they believe it is valuable to get that additional accreditation from the council, that is perfectly open to them. There is nothing barring someone from taking on that accreditation, but the hon. Lady proposes not to treat accreditation in that way but to make it a compulsory requirement, and that is where I differ from her approach. Qualifications provide people with that credit, and the sector currently works adequately at that level.
Another factor is word of mouth. If there is one part of our lives where word of mouth has a big influence on where we go, it must surely be in who cuts our hair. We listen to what people say, perhaps when we are younger, and then we stick with someone and they cut our hair for many years into the future. We get to know who we want from what other people say, and we tend to stick with what we know. In that type of structure, and given how demand in a market works, regulation seems to be more of an impediment and intrusion into people’s normal practice of finding the right barber or hairdresser than a help.
Supply and demand works. If someone is operating a salon and provides poor or risky service, they will go out of business because in most communities people know which barbers and hairdressers do not work effectively. As I said, there is already quite a lot of conversational management about the quality of service in that sector, and that has been supplemented by online sources. Nowadays people seeking a hairdresser can look at ratings and recommendations online, just as they can for other services. Finally, in the rare occurrences when a problem does occur, one can obviously seek redress directly from the salon for any impediment caused, and if a very severe issue has caused an injury, there is the opportunity for litigation. Plenty of measures are already in place that make regulation an unnecessary, perhaps even distracting, step.
The hon. Member for Llanelli said that regulation helps to stop the unscrupulous, but we had plenty of regulation in banking and that did not stop unscrupulous behaviour. She specifically mentioned taxi drivers. We have regulation in that sector, but in a number of activities there is still unscrupulous behaviour by taxi drivers. I do not see regulation, perhaps as the hon. Lady does, as providing a guarantee that something will be right. In fact, I believe that our understanding of how markets and people work, what we hear from our friends and others, and the service we directly receive, is a much better guide and form of consumer protection than blanket regulation.
I understand that the proposed measure is in the interests of the British Hair Council. I understand that it has about 6,000 registered members from the 250,000 people who could be registered, which is a relatively low proportion. Rather than compelling people to join, perhaps the council should ask itself some tough questions about why it has achieved such a low level of penetration. Why is its offer not attractive enough for people to join? It is not the job of government to give the council a leg up so that it can increase its membership—it should be doing that itself. I think the hon. Lady confirmed that the membership fee is £42, so the council, with its current 6,000 members, has an income of £250,000 a year. Were we to make membership compulsory, that income would go up to £10 million a year. I can therefore see a clear and direct financial interest for the council to be pushing this measure, through both the private Member’s Bill promoted by my hon. Friend the Member for Morecambe and Lunesdale (David Morris) and today’s debate. I can see why the council is pushing very hard, but I am not hearing any compelling argument, related to either consumer satisfaction or industry improvement, about why we should take that step.
Nia Griffith
The hon. Gentleman needs to take into consideration why one would register if it is not compulsory. There are lots of professional organisations to which people do not necessarily belong if they are not compulsory. When I was a modern languages teacher, I could have belonged to about three or four organisations, in addition to the trade union to which I belonged. If there is to be no regulation, how would the hon. Gentleman guarantee that somebody could not practise if they were not competent to do so? He talks about word of mouth; that might be all right for the established person, but it does not help the newly qualified person in setting up, which is one of the arguments he made. Why is it that he rejects any form of protection? Does he have another idea how that offer of a proper guarantee could be put in place, so that people could see a sticker in a window and know that the salon—or the individual, if it is someone visiting a house—is properly qualified? Is there another way to guarantee that?
Richard Fuller
First, as a politician I do not think I should be guaranteeing the quality of service that someone receives in a hair salon. Secondly, I do not think that regulation is the same as a guarantee, and I have tried to make that point. Regulation is, as the hon. Lady rightly says, a sticker in the window, but there are plenty of examples of regulation not providing protection. It can sometimes be misguiding to say that people are protected when they are not. If we want protection, we might have to put in place compensation schemes and ask the taxpayer to fund situations where there have been negative consequences. The hon. Lady and I have a substantially differing approach to whether it is appropriate for politicians to guarantee, and to whether a guarantee means protection. As I tried to set out earlier, there are a number of layers of informal protection that guide our decision to get a haircut in salon A or salon B.
The hon. Lady mentioned the Hair Council’s proposal to have inspectors going around regulating. That would be really tough. The Care Quality Commission has to regulate, I think, 21,000 care homes, and we know that that does not necessarily provide a guarantee of service. There are even more hair salons, so unless there is a very cursory inspection—just popping in and popping out—that would be a substantial undertaking. I have some scepticism about whether the council is currently in a position to provide the level of insight the hon. Lady thinks it can in an industry that is so widely distributed and so small scale individually. The sector also has quite a high turnover—a number of salons will set up and then fail—so there will perhaps be even more than the headline number of salons that need to be regulated.
The hon. Lady set out a good case, but I disagree with her approach. She talked about the regulation of new industries—for example botox and so on. There is a question—perhaps the Minister will address it—of whether there should be a difference of approach when we look at new industries, such as those providing botox and cosmetic surgery, that do not have a track record of customer service and what people understand, as there is in industries, such as hairdressing, that have been established for generations. What about nail salons? If the Minister is minded to agree with the hon. Lady, does he think we should also regulate nail salons? If so, how many nail salons would we have to cover? If not, why would we cover one, but not the other?
The hon. Lady did not mention Europe, but given the title of the debate, I want to talk about pending European regulations relating to the hairdressing industry in the UK. When many of us on the Government Benches hear about European regulation—this is a poor joke—we are minded to pull our hair out. [Interruption.] I said it was a poor joke. [Hon. Members: “It was a very poor joke”.] It is late in the day, so I can get away with it.
There is, however, a much more important non-joke issue that was drawn to my attention by the National Hairdressers’ Federation, which is based in my constituency: the framework agreement proposed by the EU on occupational health and safety protection. As I understand it, the Commission is seeking to make the framework voluntary agreement into something that is legally binding in all member states and for all businesses in the industry. This raises several issues. First, I am not sure we want additional European regulation in a sector in the UK. Secondly, it would not apply to those who are self-employed; it would apply only to businesses and so create a two-tier level of occupational health and safety protection? Thirdly, the European trade federation has said it would have severely negative consequences for the sector.
I think that most people who run salons would say it is a tough, low-margin business where every cost matters. Do we really want to add an additional burden from the EU? I understand that 10 member states have already expressed their opposition to making the regulation legally binding. Will the Minister give us his views and tell us whether the UK has or will oppose making it legally binding rather than a matter of voluntary compliance? In most sectors, voluntary compliance works effectively.
The hon. Lady has made a strong case for an alternative point of view, but it is a case I disagree with, and I hope that the Minister will also disagree. However, I am grateful to both of them for the opportunity to contribute to the debate.
The Minister for Disabled People (Mr Mark Harper)
I will not be as bold as my hon. Friend the Member for Bedford (Richard Fuller), but will steer clear of commenting on the quality of Members’ hairstyling; I think I will stay on safe ground.
I am sure the House will commend the hon. Member for Llanelli (Nia Griffith) for bringing this issue to its attention. She is right that it concerns a significant industry that affects almost all the population who use hairdressers or barbers. I am familiar with the Hair Council’s campaign—my predecessor met Sally Styles, the chief executive officer, to discuss the issues—and I am aware of the recent debate on the subject in the Welsh Assembly. I am sure that the hon. Lady, in her constituency and shadow ministerial roles, will be familiar with that.
As my hon. Friend the Member for Bedford and the hon. Member for Llanelli said, the hairdressing and beauty industry is important to the UK economy. It contributes about £5 billion a year and employs about 250,000 people, and it is dominated by small and micro-businesses, with about 36,000 salons and 3,000 barbers. The majority of the work force is female and a high proportion of people are self-employed. My hon. Friend made the point about the low barriers to entry and its being a very competitive industry. That is an important tool in ensuring that an industry is well regulated, because anyone who delivers poor customer service will not be in business for long in a business that is competitive and where people share knowledge about the quality of service they receive.
Of course, nobody wants to see incompetent people in the profession, unsatisfactory conditions of hygiene or unsafe use of chemicals, all of which could impact on business owners, employees and members of the public. However, I listened carefully to what the hon. Lady said and the thing that was missing from her speech—I will perhaps not be as generous as my hon. Friend, because I do not think she made a strong case—was what is the problem that we are trying to solve. Despite the size of the industry, how many people work in it and how many customers it has, I did not hear any analysis in her speech of what the problem was. She did not set out a compelling argument that large numbers of people are damaged by incompetent hairdressers, nor did she lay out a real problem that we are trying to solve. She laid out some theoretical risks, but they are not risks in practice. The Government’s position on health and safety regulation is that we should take a proportionate approach to risk and have regulation to deal with the amount of risk that exists, not overburden industry with unnecessary red tape.
Nia Griffith
Does the Minister not accept, though, that rather than waiting for disasters and scandals to happen, it is better to see what we can do in advance? This is a widespread industry; lots of teenagers go and get their hair done and all the rest of it; and just as we have seen with tanning salons and tattoo parlours and so forth, people sometimes end up doing things that perhaps are inappropriate. Would it not be better to put in place a system that we can properly use, rather than just leaving things to drift?
Mr Harper
This comes back to one of the points made by my hon. Friend the Member for Bedford. The hon. Lady’s argument might have some force if we were talking about a radical new industry, but we are talking about something that has been around for a long time and that has a clear track record showing that the problem that she suggests might occur is just not there. There is a genuine issue about how health and safety regulation can ensure that people can go to work and return home safely, not be killed, injured or damaged, and that members of the public can have the same protection. However, the Government’s general approach to regulation, particularly in the health and safety space, is to ensure that it focuses on where the risks are, not where they are not. As I have said, I did not hear in her speech a compelling case for the problem that she is trying to solve, and I do not think there is one, which is why I am not attracted to her solution.
Mrs Moon
My hon. Friend the Member for Llanelli (Nia Griffith) made the point that the industry has moved on. We have moved on from the days of the short back and sides for men. Men now have more products used on their hair, as do women. Women are having hair extensions, which can result in hair being pulled out, and are having different chemicals used on their hair all the time. Hairdressing is a more technically-minded industry, rather than just a creative, simplistic industry, where people went for a perm or a set, or a short back and sides. It is that change in the nature of the industry that has led to calls for greater regulation.
Mr Harper
I will come to the point about regulating the use of chemicals in a minute, but as I have said, I do not think a compelling case for the problem has been set out.
We welcome what the Hair Council does in operating its voluntary registration scheme and we support initiatives to improve professional competence and standards. However, it is interesting that about 10% of hairdressers—that is my understanding; I do not necessarily agree with the exact statistic used by my hon. Friend the Member for Bedford—are registered in the voluntary registration scheme that was implemented under the 1964 Act. Although the hon. Member for Llanelli said that the industry would support compulsory registration, the fact that only 10% of those in the industry are registered with the Hair Council suggests to me that they do not think there is a compelling argument that membership of that organisation is necessary to show their customers that they have the appropriate competence and skill. I think my hon. Friend is right: when people get a hairdresser they are confident in, they tend to stick with them for quite a long time. In my experience, good hairdressers have a good reputation and attract business in that way, and poor ones go out of business very quickly. I do not think the evidence suggests that the industry wants compulsory registration.
My hon. Friend is also right that the idea that a state registration scheme is a guarantee that everything will be fine is simply not right and is not shown by a range of other industries that have elements of regulation where that does not guarantee high quality. The thing that guarantees high quality is a competitive industry, low barriers to entry and a competitive marketplace. People who deliver poor customer service will not be around for very long. The evidence suggests that hairdressing is a generally well run sector of the economy and that the individuals and businesses supported by the trade bodies take sensible and proportionate measures effectively to manage the health and safety risks to their employees and customers.
The hon. Member for Llanelli said that there were not any measures or regulations to protect people in the industry at the moment. That is simply not true. Businesses operating in the hairdressing sector are covered by health and safety at work legislation and public health legislation, which are enforced by local authorities. They are covered by the provisions within the Health and Safety at Work etc. Act 1974 and the Management of Health and Safety at Work Regulations 1999, which set out requirements about identifying hazards, the control of risks, the provision of training and information for staff and the need for advice. If chemicals are used, there are other regulations about controlling substances hazardous to health, the use of work equipment, manual handling, welfare and personal protective equipment. There are already quite a lot of regulations, with which a hairdresser or hairdressing salon has to comply to ensure that they do not present a risk to their customers or their members of staff.
Nia Griffith
What research has the Minister done on the level of understanding of that legislation by hairdressers who go house to house to work?
Mr Harper
I have not done any specific work on that, but I do not think there is any evidence that there is a problem to be solved. Everyone who runs a business has to comply with health and safety legislation, but it is proportionate to the risk that they run. As I said, I agree with my hon. Friend the Member for Bedford; I do not think the evidence suggests a risk in this industry to justify imposing a state registration scheme. That is the first point, and the second is that I do not think there is any evidence that if we did so, it would have any impact on making the industry better. It is generally a well run industry, with some high-quality individuals and businesses operating, which delivers good customer service.
As well as providing a legislative framework, the Health and Safety Executive produces guidance for small businesses. It has an example risk assessment for hairdressing salons, which is accessed between 200 and 400 times each month. It goes through the common hazards that might be present in a hairdressing salon, the harm that can be caused to staff and customers and it suggests the sorts of actions that salons and hairdressers can take to control the risks. The HSE works closely with the National Hairdressers Federation and the Hairdressing and Beauty Industry Authority, which is the Government-appointed sector skills body that controls the standards that form the basis of all qualifications, to raise awareness of health issues.
The hon. Lady mentioned the training aspects. In my constituency, the Forest of Dean campus of Gloucester college trains people in the hair and beauty industry. I have been along myself and I recall for a short period sitting in the chair as a model while various people practised on me. That demonstrated the high level of skill and training in the industry. The college works closely with local employers and the standards are very high.
A good example of joint working was the “Bad Hand Day” campaign, which the HSE ran in partnership with the industry to raise awareness of how to prevent hairdressers suffering dermatitis. The HSE has run a recent health and safety campaign, which targeted small businesses across a number of industries, including the beauty industry. The HSE produced “Health & Safety ABC: An easy guide to health and safety”, which was supported by both the Hairdressing and Beauty Industry Authority and the National Hairdressers Federation, while 92% of those surveyed in the beauty industry said that the health and safety of their customers was either a major or moderate concern. Most people in the industry recognise that there is something they need to be concerned about and take appropriate steps to deal with it.
There are some other regulations under the Public Health (Control of Disease) Act 1984, and a new suite of health protection regulations came into effect in April 2010. This updated an “all hazards” approach, dealing with infections and contaminations. Public authorities are thus able to respond to modern-day health hazards. As well as local authorities, Public Health England, Public Health Wales and Health Protection Scotland have an interest in protecting the public from harm in the wider beauty industry.
Hairdressing products, which the hon. Member for Bridgend (Mrs Moon) mentioned, are also regulated—I am sorry to say this to my hon. Friend the Member for Bedford—under the EU cosmetics directive, which offers a further layer of protection for customers in that any product used must be authorised, properly labelled and packaged.
My hon. Friend the Member for Bedford and the hon. Member for Llanelli compared these proposals with measures taken to control other professions in the beauty industry, and the hon. Lady specifically mentioned other cosmetic treatments. There is a distinction between the Health and Safety at Work Regulations 1999 and wider public health legislation that regulates more invasive cosmetic treatments, such as the one that she mentioned. It is necessary to apply regulation that is proportionate to risk. The report to which she referred was clearly a response to some of the risks involved—I think I am right in saying that it was triggered partly by some of the fall-out from the issue of breast implants—and I do not think that it is relevant to the hairdressing industry.
Local authorities have powers, under various local Acts, to exercise a proper degree of control over standards of health and hygiene, which includes the cleanliness of premises, instruments and equipment, and they have powers to inspect. They take enforcement action, such as prosecuting poorly performing hairdressing salons, under the existing regulatory framework. Notwithstanding what was said by the hon. Lady, there is already a fairly comprehensive regulatory framework, which is designed to protect both staff and customers in hairdressing salons. If people comply with that legislation, the risks—which are relatively low—will be properly controlled, and I therefore see no case for extending it.
My hon. Friend the Member for Bedford referred to moves on the European front, specifically the European framework agreement on the protection of occupational health and safety in the hairdressing sector. The Government do not want that agreement to become a compulsory directive, and we have been working with like-minded states to prevent its implementation as such. We have no objection to a voluntary scheme, but, having analysed the agreement, we think that it duplicates a great deal of existing legislation. Moreover, an initial assessment suggests that it would impose an extra cost of £75 million on hairdressing businesses in the United Kingdom alone, without improving existing standards.
My hon. Friend mentioned nail salons. They are effectively covered by the same regulatory framework as hairdressers, so they must comply with the same health and safety regulations and public health legislation.
The hon. Member for Llanelli asked whether insurers could require hairdressers to be state-registered. Hairdressing businesses, like all other businesses, are already required to have employers’ liability insurance, and responsible businesses will have public liability insurance as well. Again, a regulatory framework already ensures that businesses providing these services are properly insured and therefore have the appropriate financial resources if they cause damage to their customers.
I do not think that the hon. Lady has set out a problem that needs to be solved. Hairdressing is an important industry that employs a great many people, is generally well run and delivers a good customer service, but it is already subject to a comprehensive range of regulatory laws contained in primary and secondary legislation that ensures that the risks must be dealt with properly.
Alison Seabeck
Throughout the Minister’s speech—it has been an interesting speech, in which he has expressed a different view from that of my hon. Friend the Member for Llanelli (Nia Griffith)—he has referred to a lack of evidence. Given that 70% of hairdressers suffer from conditions such as dermatitis at some point in their lives, there is no doubt that customers will also be subject to problems caused by chemicals, latex gloves and other equipment. Customers may enter salons without fully understanding some of the risks, particularly if the staff are not particularly experienced. That is a significant issue. The Minister says that he is opposed to regulation, but would it not be worthwhile to carry out research among customers as well as hairdressers about the nature of the problems that people experience in salons, given that we clearly do not know enough about it?
Mr Harper
The alternative way of looking at that is that if there was a real problem, we would know about it. As constituency MPs, lots of issues come to our attention, and I am digging through my memory and in my nine years as a Member of Parliament I do not think I have ever had a single letter complaining about appalling treatment by a hairdressing salon in my constituency. In fact the opposite is the case; I have been fortunate enough to go to salons in my constituency to present awards to high performing and well-trained members of staff. If there was a real problem that affected significant numbers of people, I think we would know about it.
Alison Seabeck
We have some fantastic salons in Plymouth, all of which are performing incredibly well, but if we go on Google and type in “hairdressing” and “accidents”, enormous numbers of messages from solicitors’ firms pop up on our screen saying, “Let us help you with your claim against your hairdressers”, so something is clearly going on out there.
Mr Harper
I hope that the hon. Lady will forgive me for saying that just because there are lots of ambulance-chasing lawyers around trying to dream up and invent legal actions in a particular sector does not necessarily give a good indication of whether there is a problem to solve. We all know about such lawyers trying to dream up and invent legal actions; we have seen what happens with people trying to sue others for car accidents and inventing claims and driving up motor insurance premiums. In the hairdressing sector, therefore, given that we already have a range of health and safety legislation, I do not think further legislation would deliver much gain to employees or customers.
The issue the hon. Member for Llanelli was raising was professional standards and competence among hairdressers. The Government believe such matters are often best dealt with by businesses and their representative bodies. They know how to improve standards. That is very effective in a competitive business with low barriers to entry and no reason why people cannot switch very easily, so the Government are not in favour of mandatory state registration for hairdressers, and as I said to my hon. Friend the Member for Bedford, we oppose the European social partner agreement becoming a compulsory directive.
The Health and Safety Executive will continue to work with all the various bodies representing the hairdressing industry, to maintain good standards of employee and customer health and safety. That is an appropriate way for what is a generally very well run and excellent industry to continue to be regulated.
Question put and agreed to.
Ministerial Corrections
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Transport
(9 years, 4 months ago)
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Mr Simon Burns (Chelmsford) (Con)
Does my right hon. Friend accept that the investment in financial terms and in the work done on improving and upgrading our rail network is warmly welcomed, but that the other side of coin is that there is a responsibility through Network Rail to ensure minimal disruption to commuters and passengers—not simply during key holiday periods but on every other weekend of the year—who too often hear on a Monday morning about the overrunning of engineering works and cancelled services? What can be done to hold Network Rail more to account to minimise such problems?
Mr McLoughlin
I agree with my right hon. Friend. The problem happens when we are doing the sort of massive upgrade to the system that we are doing. Over the five-year period between 2014 and 2019, some £38.5 billion will be spent on upgrading the railway infrastructure, and some of that will lead to delays through overrunning engineering works. I know that particular problems have affected my right hon. Friend’s constituency over some weekends, and I think we should look further to see whether there is a better way of doing the engineering work. Let me point out that 18 months ago, over a period of eight weeks, Nottingham station was closed down while 2,000 people were working on it. That is sometimes an option, but when we are talking about the main London termini, that is really not an option.
[Official Report, 5 January 2015, Vol. 590, c. 26.]
Letter of correction from Mr McLoughlin:
An error has been identified in the answer I gave to my right hon. Friend the Member for Chelmsford (Mr. Burns).
The correct response should have been:
Mr McLoughlin
I agree with my right hon. Friend. The problem happens when we are doing the sort of massive upgrade to the system that we are doing. Over the five-year period between 2014 and 2019, some £38 billion will be spent on upgrading the railway infrastructure, and some of that will lead to delays through overrunning engineering works. I know that particular problems have affected my right hon. Friend’s constituency over some weekends, and I think we should look further to see whether there is a better way of doing the engineering work. Let me point out that 18 months ago, over a period of eight weeks, Nottingham station was closed down while 2,000 people were working on it. That is sometimes an option, but when we are talking about the main London termini, that is really not an option.
An error has been identified in the answer I gave to the hon. Member for Wrexham (Ian Lucas).
Ian Lucas (Wrexham) (Lab)
We have heard much rhetoric from the Secretary of State about additional investment in the railways. In December, did not his Department, under his direction, cancel the investment in phases 1 and 2 of modular signalling improvements in north Wales? Will he confirm that he has authorised that?
Mr McLoughlin
What I will confirm is that we are investing some £38 billion in the railways, which is more than any previous Government have invested. In 13 years, Labour electrified 10 miles of track. We will be electrifying more than 800 miles, which is a record of which this Government are incredibly proud.
[Official Report, 5 January 2015, Vol. 590, c. 33.]
The correct response should have been:
Mr McLoughlin
What I will confirm is that we are investing some £38 billion in the railways, which is more than any previous Government have invested. In 13 years, Labour electrified 10 miles of track. We will be electrifying more than 850 miles, which is a record of which this Government are incredibly proud.
An error has been identified in the answer I gave to the hon. Member for Denton and Reddish (Andrew Gwynne).
Andrew Gwynne (Denton and Reddish) (Lab)
What lessons has the Secretary of State learned from this sorry episode over the Christmas period? Does he recognise that the frustration comes not just from cancellations and long delays but from the complexity of the compensation system, with different train companies applying different terms and conditions? There are also times when people end up on a rail replacement bus having paid top fares for a rail journey.
Mr McLoughlin
The hon. Gentleman asks a number of questions. I will try to answer them all. The new franchises I am issuing have changed the way in which compensation is awarded, and they are a great improvement on those awarded by the previous Government. He also asked me about bus replacement services. If he wants us to carry out improvements on the network, alternatives have to be made available. I accept that our changes and improvements are an issue, but we are investing a record £38.5 billion in the railways between 2014 and 2019.
[Official Report, 5 January 2015, Vol. 590, c. 34.]
The correct response should have been.
Mr McLoughlin
The hon. Gentleman asks a number of questions. I will try to answer them all. The new franchises I am issuing have changed the way in which compensation is awarded, and they are a great improvement on those awarded by the previous Government. He also asked me about bus replacement services. If he wants us to carry out improvements on the network, alternatives have to be made available. I accept that our changes and improvements are an issue, but we are investing a record £38 billion in the railways between 2014 and 2019.
An error has been identified in the answer I gave to the hon. Member for Kingston upon Hull North (Diana Johnson).
Diana Johnson (Kingston upon Hull North) (Lab)
After the Christmas shambles, I was pleased to see that the chief executive of Network Rail voluntarily said that he would not take his bonus of £34,000. Has the Secretary of State considered introducing performance-related pay for rail bosses, in the same way as his Government advocate it for teachers?
Mr McLoughlin
I do not think I will take too many lessons from the Labour party about bonuses. In 2009-10, the bonuses paid to Network Rail were £2.3 billion; this year, it was going to be £260,000. I think there should be carrots and sticks, and, if the criteria set are met, a bonus is a way of rewarding the people directly involved in providing services.
[Official Report, 5 January 2015, Vol. 590, c. 36.]
The correct response should have been:
Mr McLoughlin
I do not think I will take too many lessons from the Labour party about bonuses. In 2009-10, the bonuses paid to Network Rail were £2.3 million; this year, it was going to be £260,000. I think there should be carrots and sticks, and, if the criteria set are met, a bonus is a way of rewarding the people directly involved in providing services.
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Westminster Hall
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Diverted Profits Tax
(9 years, 4 months ago)
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Nigel Mills (Amber Valley) (Con)
A happy new year to everyone who is here for what I hope will be an interesting debate on a whole new tax. It is not often we get whole new taxes in this country, and I thought we should mark this one with a bit of parliamentary scrutiny, because I fear it will sneak through in the pre-election wrap-up Finance Bill and will not get much debate in Committee. It would therefore be helpful for Parliament to have a bit of a chance to work out the Government’s intentions and exactly where they intend this tax to go.
If we judge Government measures by how balanced the reaction to them is, this tax has probably gone down about right with people. Some advisers regard it as the worst-drafted legislation in some time, while some have said it is relatively narrow and focused—there has even been a cautious welcome from Richard Murphy, although he is perhaps thinking again about that. Another tax campaigner, David Quentin QC, regards the tax as “widely and aggressively drafted” with “a penally high rate”. If we take the average of all those reactions, it is probably about where the Government would want it to be. It appears that the tax will deter some people from doing some things, but it will not do so ridiculously little that it destroys the UK tax regime, so we are perhaps starting in the right place.
It would be useful to understand what the Government see as the way forward. We have had Treasury tweets suggesting, “This tax isn’t ever really meant to apply to anyone. We hope everyone will change their behaviour. We’ll accept they all have establishments in the UK after all. They’ll stop using artificial transactions, and everything will be fine. We’ll rarely have to apply this tax. It’ll be a big stick that never actually gets wielded.”
In some ways, the Treasury forecast of how much the tax will raise suggests it is not intended to apply to the many thousands of multinational companies it could apply to. Some advisers say that, in theory, the tax could apply to a large number of people and raise a large amount, but the Treasury seem to think it will raise a small amount. I assume, therefore, that behavioural change is the main motivation, but it would be interesting to see whether the Minister confirms that. It would also be useful for everyone to know that the Government actually intend to put this tax through before Parliament is dissolved so that it is on the statute book exactly on 1 April—the date on which it is intended to come into force.
That leads me to one of the main concerns about the new tax—its impact on, and the Government’s strategy for, the base erosion and profit shifting process, which is intended to produce an international agreement on stopping multilateral companies flouting tax rules around the world and avoiding paying tax on profits they earn in various countries. Everyone accepts that that is the right place to get to. It is ludicrous that a large global company can earn profits in the UK and not pay tax here. We all want that to stop, and we all welcome the fact that the Government have introduced a proactive measure to achieve that. However, what I suspect no one wants to happen is that, rather than moving forward with a global agreement so that we have globally consistent rules that can be applied everywhere, we end up with a load of countries taking a piecemeal approach, putting in place slightly different rules that overlap or conflict with each other. In other words, rather than a sensible level global playing field, where everyone knows what the rules are and applies them, we end up with some horrible complexity that results in a similar mess to the one we started with or, equally as bad, a load of double taxation risks. We are a main global trading nation, and I suspect we have a lot to lose from a load of conflicting double taxation rules.
David Simpson (Upper Bann) (DUP)
I congratulate the hon. Gentleman, who is a colleague on the Northern Ireland Affairs Committee, on securing the debate. The message I get from many in the business community in my constituency is that if Her Majesty’s Revenue and Customs had been doing its job in the first place, there would be no call for this new tax. HMRC does not seem to go after the large companies that avoid paying tax, but it does go after the medium-sized to small companies, and that is unfair. What we really need is a level playing field.
Nigel Mills
The hon. Gentleman comes from an area that would like to be a tax haven—under these rules, a tax haven is defined as somewhere where the tax rate is less than 80% of the UK rate, and I suspect he hopes that the rate in Northern Ireland will be less than that in the relatively near future, although I would be intrigued to see whether the rules would actually apply to profits diverted into Belfast. However, I agree with him in part, and we have had all the stories about sweetheart deals. It is much harder for the Revenue to go after very large companies with very sophisticated advisers who can resist the rules, and it may be tempted towards softer targets that are perhaps not as well advised. However, it is not fair to say that we have this new tax because the Revenue has failed to use the rules that exist. There is a gap in the law, and certain companies have managed artificially to avoid having a permanent establishment in the UK and have, therefore, avoided paying tax on UK profits. I think a general agreement has been reached through the OECD BEPS—Base erosion and profit shifting—process that the rules need changing to bring those profits into tax in the right places. The point the hon. Gentleman made at the start of his criticism was therefore perhaps not entirely fair, given the context we are talking about.
To return to the concern regarding BEPS, no one would want the UK, by acting unilaterally, to unravel that process so that we do not get the co-ordinated international outcome we all expect later this year. It would be helpful if the Minister could explain the Government’s strategy on BEPS. Is the tax meant to be complementary to it? If the outcome of the BEPS process is inconsistent with the tax, do we change the tax, or do we end up keeping both?
David Mowat (Warrington South) (Con)
My hon. Friend said that this unilateral action should not affect a global agreement that may be reached in the future. What concerns me, however, is that some countries—Luxembourg, the Republic of Ireland and, possibly, Holland—are acting as de facto tax havens. They regard helping big companies avoid tax in our country as a method of increasing their GDP. Given that, it is unlikely there will ever be a global agreement of the type my hon. Friend is talking about.
Nigel Mills
I have always been cynical about the OECD process, for exactly the reason my hon. Friend gives: the risk is that some countries will block it or undermine it out of self-interest. If the main countries are serious about tackling multinational tax avoidance, one country that really needs to change its rules is the US. The US could stop a lot of this by changing some of its rather strange entity classification rules and other things. That would stop US corporates getting the real tax saving they are after. I sense that until the US is willing to do that, we will never see these things stop completely.
David Mowat
I should have added that our hands are not clean. We appear quite sanguine about the status of the Isle of Man, Jersey and Guernsey. I am always a bit surprised that neither Front Bench has ever regarded that as an issue on which more action is needed. People in Luxembourg would raise that issue with us, just as I am accusing them of acting as de facto assisters of tax evasion.
Nigel Mills
My hon. Friend makes a fair point about the UK doing some sponsoring of the Channel Islands and the Isle of Man, but I will leave the Minister to answer for the Government’s policies on tackling that. My hon. Friend says our hands are not entirely clean; it is interesting that we have introduced the Patent Box to try to have a lower tax rate for intellectual property in the UK—presumably on royalties charged in countries around the world. We have also been trying to get our tax rate down to a low level to encourage international investment. Someone sitting somewhere with a tax rate much higher than 20% might think that we are trying to encourage profits to be taxed here that perhaps should not be, but I am sure that is not the Government’s intention.
To wrap up on the BEPS process, the Association of Revenue and Customs—the trade union for professionals at HMRC—raised the concern that the Government’s proposals were unilateral and stood outside the BEPS proposals. The ARC suggested an alternative approach, whereby the Government remain in the BEPS process and timetable, but use their current initiative to show they will have legislation in place in case the process falters or is impeded. I presume the Government will confirm that they do not intend to slow down on the rules and wait for the BEPS process and that we will see them on the statute book later in the year.
The second area I would like to look at briefly is how likely the rules are to be effective. We all want the tax to be collected in the UK. We do not want to see these corporates able to artificially avoid paying the tax that is due here, but there is a question on whether the rules will survive a challenge under the UK’s many double tax treaties or under EU law. People suspect that the Government have chosen to do a whole new tax, rather than just tweak the existing corporation tax rules, to try to ensure that the rules are not struck down by our international treaties or by EU law. Can the Minister confirm that the Government have looked into that and are satisfied that the treaty analysis is correct? Paragraph 4 of article 2 of the OECD’s model tax convention states:
“The Convention shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of the Convention in addition to, or in place of, the existing taxes.”
At first glance, it looks as though the direct profits tax will be a tax on corporate income, which sounds similar to a corporate income tax and our corporation tax. The definition in the convention suggests that the tax might be caught by the treaties. Article 7 of the convention, which is on business profits, states:
“Profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein.”
The problem we are trying to fix with the avoided permanent establishment part of the rules is that if a company does not have a PE, we cannot tax them. We think they are diverting profits out of the UK and we want to tax those profits, but if we are dropped back into the treaty, we might end up in the same position as we started. It would be useful to understand how the Government have satisfied themselves that the tax will not be caught. Is it because they are trying to tax the UK establishment that already exists, or do they believe that it is a new tax that falls outside the treaty?
On the EU law point, I am no big fan of the EU interfering in our tax system. Tax is meant to be for nation states and not the EU. I have never been keen on the view that the European Court of Justice should interfere in sensible tax avoidance rules, so I will not advocate that here, but there must be a risk for the many companies that choose to site themselves in Luxembourg, as my hon. Friend the Member for Warrington South (David Mowat) said. We have all seen the tax rulings that have been published, and we know how many companies are doing that. A company based in Luxembourg might say, “Wait a minute: if I am established in the UK and pay tax there, I pay it at 20%. Why, because I am in Luxembourg, do I pay a slightly different tax at 25%? Is that not fundamentally contrary to some kind of freedom of establishment principle?” There is a risk of a legal challenge to the rules on that basis. It would be useful to understand how the Government have satisfied themselves that the European courts would not strike down what many of us see as a sensible anti-avoidance measure that we would not want to lose.
The flipside to that is whether the provisions have been drawn up in the right way, so that they catch those we are aiming at, but do not create onerous burdens for loads of “innocent” corporations or place a ridiculous burden on HMRC. We want targeted rules that attack the corporations engaging in what they must know to be pretty aggressive artificial structuring. The guidance is clear on some of the structures that HMRC and the Treasury are targeting. We would all probably agree that it looks artificial if a sales force gets 95% of the way through a sale and cannot sign the final contract, but has to refer it to Luxembourg, Switzerland or somewhere else. If the rules are drafted too broadly, there is a risk of thousands of companies that the Government had not intended to be caught fearing that they will be caught. That creates a burden on them, and they will have to go through the whole compliance process to satisfy themselves that they are not caught.
The flipside to that is the risk that HMRC gets thousands of notices that it cannot possibly deal with, and then misses the notices that have all the tax at stake. By drawing the rules too widely, people could sneak through the middle who should not. The adviser community is expressing sensible concerns and asking, “Have the rules been drawn too broadly? Is there any way that they can be focused, perhaps through filters, such as those in the controlled foreign company rules?” Through that, we could be clear to taxpayers on who is intended to be caught, and what the hallmarks are that let them know that they are caught. That can give those who are not trying to avoid UK tax artificially some kind of comfort that they are not in the rules and do not need to do the self-assessment.
David Simpson
In the new tax legislation and the new tax that we are hoping to see implemented by April, is there any provision to protect against brass plating?
Nigel Mills
I should probably let the Minister explain the tax that the Government are trying to introduce, but there are two parts to the rules. One is about avoided PE and the other is aimed exactly at brass plating. It looks at where companies are paying fees, royalties or other things to companies that do not have the substance to justify the income they are earning. If the hon. Gentleman reads the examples that HMRC has put in the guidance, he will see that the rules target the routing of large fees into entities with very little substance in tax havens. I think we would all accept that that is an appropriate, sensible and fair target. I am sure the Minister will correct me later if I have misunderstood and am too optimistic about what the rules are trying to achieve.
Those concerns about how broadly the rules have been drafted are echoed by the ARC, which is concerned that HMRC will end up swamped by a load of notifications from people. It recognises the burden that that will place on companies and HMRC. Can the Minister confirm whether the Government are prepared to look in the consultation at whether any filters could be introduced to try to make the compliance burden easier for companies that are not trying to avoid tax, or does she think that that is too risky and might narrow the rules and allow some companies that should be caught to squeeze out?
Clarity on the direction of the Government’s thinking, and on how we can get the rules to apply only to those to whom it should would be welcomed by a lot of people. One way of achieving that would be a clearance mechanism. Will the Government consider that? Is there a way that taxpayers could seek an advance ruling from the Revenue, or confirmation that what they have done does not bring them under the rules?
That brings us to how the Government propose to handle large corporates that have been through inquiries on their transfer pricing or their permanent establishments and think they have an agreement with the Revenue that says that their tax affairs are okay. Are those agreements still in force or, because the tax did not exist when those agreements were made, are they outside the rules? If the company has been engaging in activities that HMRC thinks are avoidance, are those activities safely in scope? Do we expect customer relationship managers to give their customers any assurances on that? Exactly when can people get assurances? When will HMRC staff be trained on the new rules? The rules will apply from 1 April. If a company has an April year-end, it will in theory have to submit its notice by the end of July. The rules will apply in six months’ time, and people will have to start complying with them. When will the support be available for people to work out what they need to do?
The final area I will touch on is the assessment and collection process. This is a new tax with a different assessment method from the one we are used to in this country. We normally accept that people self-assess how much tax they owe and then pay it. HMRC chooses whether to inquire and challenge how much that tax is. With this tax, we have almost the reverse of that. A taxpayer has to write and say, “I think I might be caught”—that is perhaps not quite the technical language—and HMRC has two years from year-end to issue an initial charging notice stating, “Here is how much we think you owe.” The taxpayer has 30 days to make representations and HMRC has 30 days to issue a final charging notice. The taxpayer has to pay that then. Then there is a year in which that charge can be inquired into, challenged and discussed before it is finally agreed. Effectively, that is saying, “Pay now, argue later”, rather than agreeing the liability before it is charged. There are questions about how reasonable that approach is. I accept that it will enable the Revenue to get the money early and leave the arguing until later. Perhaps part of the intention behind the tax is to prevent people from engaging in that behaviour in the first place.
There is a practical question. If the Revenue gets a notice from a multinational corporation that it has not inquired into regularly in the past, how can it issue an initial notice saying, “Here’s how much we think you owe”? If it has absolutely no idea other than a territorial disclosure of its UK turnover, how can it have any idea of how much tax to assess in the first place? Will it put a finger in the air and say, “Don’t worry, we’ll sort it out in the fullness of time”, or will there be some process to enable the initial assessment to be at least relatively in the right ballpark? No one wants a system in which someone gets an assessment that is far too low and chooses not to challenge it, or one in which they get an assessment that is ridiculously high and that creates unintended business survival issues, although those are clearly extreme situations.
I am also slightly intrigued about what will happen if we think a whole load of tax is owed by a non-UK resident party. How do we collect it? I assume that we can go through the mutual collection procedures, but I have never been entirely convinced that it is easy to make them effective. There is a provision in the rules that enables us to collect tax from any UK member of the group, but if there are relatively small UK group companies that do not make any money due to artificial tax avoidance, how will we get the money from them? Are we assuming that all the multinationals that have apparently been engaging in artificial tax structuring will decide that standing behind their subsidiaries and ensuring that they can pay their tax bills is the right and noble thing to do, or is that one level of optimism too much?
In my 20-minute canter round the new rules, I have been trying to extract from the Government further information about their policy direction, the intent of the rules and who they are trying to catch. Are the Government happy that the rules are catching the right people, and not just spreading the net so wide that it will create compliance burdens? We do not want to make the UK a less attractive place for corporates to establish themselves. We clearly do not want to attract artificial tax abusers, who come here to take advantage of our tax regime. However, our strategy has been to make ourselves a territory in which companies want to base their head office, and in which they want to invest by creating a stable, predictable tax regime.
UK Trade & Investment published a helpful document, “A guide to UK taxation”, which notes that we have a stable tax regime, that we avoid unnecessary changes to the rules and that our tax policy is aligned with business practice. It states that we have
“legislation which minimises complexity…a level playing field for taxpayers”
and
“A transparent and consistent approach to policy-making”.
Our objective is to create a level playing field in the UK territorial system, so we want everybody who operates here to pay taxes on their profits here. I see this tax as a way of ensuring that everybody pays their tax, and as a way of creating a level playing field so that UK companies are not out-competed by multinationals that do not pay tax.
However, is the Minister concerned that the speed at which the rules are being introduced will worry some corporates? Will their breadth put some people off investing here or make some corporations think, “Well, the easy way out of these rules is to have no UK establishment at all. We’ll just ship everything in from Rotterdam”? Is there a risk that we will lose jobs and the tax that we do get by chasing such things too onerously? I suspect that most of us will say that we are a great place to do business, so if companies want to make money here, they must pay their tax here. If they do not want to pay their tax here, perhaps they are not the kind of people we want. However, I am not sure it is easy in the real world to make that stick.
Are the Government happy that the rules are proportionate and in the right place? Do they target the right people? Will they be effective in tackling those people? Are the Government sure that they will not be struck out by some other international law? Will the Government respond to the various responses by tweaking the rules to ensure they focus on the right places, so we get the tax off people who owe it without unduly burdening those who do not?
Jim Shannon (Strangford) (DUP)
I thank the hon. Member for Amber Valley (Nigel Mills) for giving us the opportunity to contribute to the debate. It is always a pleasure to speak on such issues. It is nice to see the shadow Minister in her place. More importantly, it is nice to see the Minister in her place, because we have conversed and supported each other in many debates in Westminster Hall. It is nice to see her back in a ministerial position. I look forward to her response, which will be worth listening to.
The public anger has been immense over this issue. If there is one thing that nyarks people, to use an Ulster Scotsism, in my part of this country, it is the issue of tax avoidance—big companies making money and not making the contribution they should.
We welcome the Chancellor’s introduction of the new tax; we are pleased to see it. Many of the companies that hit the headlines back in 2012—they are not all UK-owned—have been in and out of the news ever since, which infuriates people. The Chancellor said that this new legislation will bring in £1 billion over five years, although others have said that they are not sure whether it is workable. When the Minister replies, will she give us an idea of how it will work and how we can make those companies accountable?
Mr Gregory Campbell (East Londonderry) (DUP)
Does my hon. Friend agree that although the proposed legislation is welcome, we need to take account of what was said earlier? The director of the Oxford University Centre for Business Taxation said:
“The fundamental problem is the structure of the international tax system”.
In addition to this legislation, we need international co-ordination to prevent people from brass plating.
Jim Shannon
My hon. Friend and colleague is on the button. Although it is good that we have the legislative change, we need co-operation among countries across the world so we can work together to address this issue.
This new legislation aims to ensure that people pay tax. There are various safeguards that, as my hon. Friend and colleague said, we need to see in place. We need to work better with other countries across the world. We also need to ensure that businesses that are pursued wrongly are not affected.
The legislation is for larger companies. It concerns what is referred to as artificially diverted profits, and that is exactly what it is. Foreign companies must have UK sales of at least £10 million, and if the UK activity would be considered a small or medium-sized company for UK accounting purposes, this new law does not apply, so there are some important concessions.
Finally, the tax provision examines whether UK costs have been inflated or UK sales have been reduced, which is another way of artificially diverting the figures. We must look at whether there is a tax mismatch between what seems likely should have been reported in the UK and what is reported in a foreign company. We need clarification on those issues from the Minister. The hon. Member for Amber Valley set the scene well in his introduction.
Although £10 million might seem like a lot of money, I will put it in perspective. In 2011, Starbucks, a global company that has come into disrepute again for not paying any tax—its coffee is lovely but there is an issue to address elsewhere—made £398 million in UK sales alone. I used the word “nyark” earlier. It nyarks us greatly that companies can make that much turnover and not pay a considerable amount of tax.
Dr William McCrea (South Antrim) (DUP)
Does my hon. Friend accept that doing nothing is not acceptable? However, as questions have been asked about the new scheme that the Chancellor spoke about, is it not best that we look at those questions and ensure that the legislation that is being introduced will tackle the problem we face?
Jim Shannon
My hon. Friend is absolutely right. We need to have legislation in place that enables us to oversee the loopholes that have been outlined. We are all hoping that the Minister will tell us how it will work in her response. I hope she will address the questions that have been asked.
Starbucks employs 8,500 people in the UK, so it makes a contribution in employment, wages and associated taxes, but it pays no corporation tax. Amazon, another global company, employs 15,000 staff in the UK and reported sales of £3.35 billion in 2011, as well as profits of £74 million, but it paid only £1.8 million in corporation tax. That annoys me greatly. Google, one of our favourite search engines, made £396 million in 2011 and paid only £6 million in corporation tax. Some of the companies have of course been stung into making tax contributions, although those have been minimal.
An article by Joseph Brothers that I read last month in the magazine Tax Notes International sums up the subject of the earlier intervention by my hon. Friend the Member for Upper Bann (David Simpson) on brass plating. Brothers suggested that Apple, reacting to a threat by the Irish Government to shut down one of their lucrative, corporate-friendly, tax-avoiding laws, would switch strategies to escape taxes in Ireland. He wrote that the so-called “Double Irish” might soon be replaced by a new “Bermuda Triangle”: instead of ships and planes mysteriously disappearing in it, it would be a triangle of tax treaties between Ireland, the Netherlands and Bermuda, exploiting rules that do not quite align and creating the space for profits to vanish, at least to the eyes of the Internal Revenue Service auditors.
If that strategy works, Google and others are likely to follow suit. The outcome could well be that the big corporate tax dodgers achieve what a noted tax lawyer calls “stateless income”: siphoning profit out of high-tax countries in Europe, Japan and North America and moving it around under tax treaties until it is not subject to any tax, because any profits are being reported in a non-existent country called “nowhere”. That is the bottom line of what could happen if our legislation is not correct and if the loopholes, disparities and open questions are not dealt with.
I am using those three companies as examples, but there are many others. Unfortunately, a common trend is filtering down through to a large number of companies. At the end of the day, we must remember that UK-based companies pay corporation tax on their taxable profits wherever those are made. It is only right, therefore, that foreign companies pay tax in the UK on profits made in this country. We must make it clear that the UK is not a country to come to for freeloading. Those are the issues.
Many British-based global companies do pay their taxes. They are concerned that the new legislation might give HMRC too much discretion. Furthermore, as the head of the tax policy unit of KPMG here in the UK noted in the company’s latest annual tax competitiveness survey, companies value “stability” and “simplicity”, but unfortunately, one criticism of the proposed legislation is that it does not offer simplicity. Many questions therefore need to be answered and much transparency applied to ensure that the legislation, while welcome—we have to take a step in the right direction—can work in practice.
The aims of the legislation are admirable as well as necessary. In a recent poll of more than 500 accounting and small business professionals, taken immediately after the Chancellor’s autumn statement, 56% of respondents said that the most significant tax announcement in the speech was the one about the diverted profits tax. Many, perhaps all of us—if not the companies trying to avoid the measure—welcome it, but we need to be sure that everything is in place.
Will the Minister tell us about another issue raised by the hon. Member for Amber Valley: the IT equipment necessary to ensure that expertise is in place? There is also the question of the resourcing of moneys. I understand that the initial set-up will cost £2.3 million in staffing for the first year and £1 million per year thereafter. At a time of HMRC cuts, of which we are all aware in every area, perhaps the Minister will indicate whether provision has been made for the IT equipment and the necessary staffing resources to ensure implementation.
It is of course important to remember that big businesses are always welcome in the UK and, as other Members have said, we do not intend to turn any away. We want companies to be based in the United Kingdom, but we, like everyone else, want them to make their contribution to the tax system. It is always extremely pleasing to hear that another company has made the decision to expand in the UK, and we are seeing a lot of that at the moment in Belfast. It is good to have those companies providing employment opportunities and taxes, and spending money so that our economy in Northern Ireland grows. That is super news for local people, local business and the local economy. It is also vital, however, that those big companies pay their way, otherwise it is not so lucrative after all for local businesses, people and economies. Instead, the money will simply stay in the hands of the global giants.
Will the Minister say what steps the Government will take to deal with the tax havens in the Isle of Man and the Channel Islands? Will we have some influence there, or access to information? Gone are the days when money was hidden under the mattress, the bed or the floorboards; people now put it overseas in tax havens. Will the Minister give some indication of the direction of policy?
Nigel Mills
I am keen to check the view of the hon. Gentleman’s party. In the event that Northern Ireland chooses to reduce its corporation tax rate, does he agree that Northern Ireland should not use that lower rate to attract artificial income into Belfast, as the Irish did in the Republic? The lower rate should be for the purposes of getting real jobs and real substance into Belfast, instead of dragging profit out of the UK mainland, perhaps through the financing of intellectual property companies or other ways of artificially moving tax.
Jim Shannon
The hon. Gentleman will find that my party, through the Northern Ireland Assembly and the First Minister, will hold an upstanding position in working the policy. We will not be developing into a tax haven. We want to see real jobs for real people on the ground. That is the way forward, and it is what we support.
We are pleased to have the Minister in her place today. Responsibility for answering our questions and for how this will work lies very much with her Department. We are committed to having the new legislation in place, I hope by 1 April. We want the big companies to be brought into line and made accountable for tax avoidance. We want the issue of the tax havens over which we have control to be dealt with, and for our neighbours in the Republic of Ireland to have the same opportunity. In addition, we have to look at the global picture, because although legislative change may take place in this country, what will really make it work is how we interact with other countries.
Ian Swales (Redcar) (LD)
It is a pleasure to serve under your chairmanship, Mr Turner. I, too, congratulate the hon. Member for Amber Valley (Nigel Mills) on securing the debate. His initiative is excellent, given the enormity of what is proposed.
There is something of a crisis in corporation tax: globalisation, the European Union and the internet have all given many more opportunities to move tax or profits around. In the days since I was a global finance director in 1996, we have seen a lot more predatory activity by advisers and companies. They seem to be far more shameless about carrying out transactions without a commercial basis. With my training, I would have said that that was already a problem, even without any new legislation, but companies seem quite happy to do such transactions, to the extent that a year or so ago the chief executive of WPP could describe the amount of tax paid as “a question of judgment”, which tells us a lot about the amount of flexibility that he could see in the system.
Moreover, the chief executive of Google famously boasted about avoiding £2 billion in tax in a single year. He seemed to have no concept that that meant £2 billion in cuts to public services in the all countries in which his company operates, or the same amount more in tax that other companies and individuals in those countries would have to pay. The climate seems to be changing, although the Prime Minister’s business advisory group still includes that chief executive. I wonder whether he had any input into the new policy and what he thinks of it.
After the measure was announced, Newsweek commented on 26 December:
“The British government, after a search, says it knows how to tax profits Google earns in the United Kingdom. Its solution is simple and elegant, and it probably won’t change a damn thing.”
That view is perhaps overly cynical, but it backs up a point made by several Members: the expectation is that companies will take other measures rather than lie down and pay the tax. That is a huge issue.
The hon. Member for Amber Valley was right to mention the question of how on earth the tax will be calculated. City experts are already saying that the calculations will lead to a “legal quagmire”—that is one expression I have seen used. In other words, when HMRC comes up with an assessment the lawyers will probably start work. I wonder whether HMRC has budgeted sufficiently for the resources that it will need to make the tax stick. It could be involved in lengthy legal cases with expensive lawyers paid by large companies.
That leads us to the main question concerning this tax. When I was trained as an accountant, we were told that the one principle a tax system needs is certainty. In other words, it should be clear what a company is doing and what the tax on that will be; the company can then pay that tax. Certainty is one of the functions of a good tax system, but with the diverted profits tax we are straying into an area of high uncertainty about how the tax will be assessed and paid. The hon. Gentleman made an excellent point about our ability to collect the money: by definition, it could be all over the place and not in the UK. That leads us to the question of the confidence the Minister has in our ability to collect the money—I am interested to hear her comments on that.
David Mowat
The hon. Gentleman has made an interesting point about certainty and also about the difficulties that globalisation and the internet have caused for gathering corporation tax. Is there a case for the international community to give up on corporation tax and instead have higher taxes on sales and, if necessary, dividends, so that the tax is still raised in the end but we do not have a continual process of chasing money across international boundaries, which, for the reasons he has given, is time consuming and perhaps counter-productive?
Ian Swales
I take the hon. Gentleman’s point on board. I know that some commentators believe the right way to go is to scrap the incredibly complex system that we have. Although that might be where we end up, I would like to see country-by-country reporting introduced first, so that we know what activity companies are carrying out in each country, and where they are trading and are declaring their profits will be transparent to the world at large. That would help tax authorities; also, the problems companies would then have with reputation management would cause quite a shift. I would like to see that country-by-country reporting first, but perhaps we will end up in the position that he has suggested.
The estimate is that the tax will raise £1 billion over five years. That is a very small amount given the scale of the issue. One commentator has suggested that Google alone could be assessed as owing around half that figure. The Financial Times has found that in 2012 seven US technology companies paid only £54 million in tax on UK sales of $15 billion. I am aware that corporation tax is levied not on sales but on profits, but the companies we are talking about typically make 20% profit or more on sales, so we could quickly come up with a large number there. Will the Minister tell us how the assessment of the amount the tax will collect was made? What assumptions sit behind it? The figure seems small given all the relevant issues, which we are well aware of.
The hon. Member for Amber Valley rightly mentioned EU law. I will not repeat what he said but there is clearly the potential to challenge the tax through the EU. When one talks to global finance directors, there is no doubt that financing structures and interest payments are the tax avoidance measure of choice—they are how the largest diversion of profits occurs. Will the Minister explain why offshore finance centres and excessive foreign interest payments have been specifically excluded from the diverted profits tax? I welcome the moves that have been made, but a large area has not been addressed by the tax.
I will mention a few other aspects of profit diversion. The Minister may tell us that they are included, but my guess is that most are not. There are well documented loopholes used by banks for tax arbitrage between countries, particularly between the UK and the US, because different instruments are taxed differently in the two countries and by shuffling money backwards and forwards it is possible to create beneficial tax arrangements. Will the legislation address those loopholes? Does the legislation deal with hybrid entities, for which there are similar opportunities because of the different taxation of legal structures between different countries? They are another method that the financial services sector in particular uses to shift profits.
Some of the issues connected to Luxembourg have been mentioned already, but will the Minister address the issue of the wholesale tax avoidance and profit diversion that, for example, sees Vodafone holding five times as much capital in Luxembourg as the GDP of Luxembourg, although it does no trading there? That kind of thing enrages the public, and it is high time it was addressed. When will she get the EU to deal with the preposterous activity going on in Luxembourg behind its so-called headline corporation tax rate of 29%?
The Channel Islands have already been mentioned. The particular point I want to raise is that the majority of contracts for UK private finance initiatives are now financed from those islands. That makes a mockery of the Green Book assumptions about PFI tax recovery; it is assumed that a very high figure—I think it is 6%—will come back to the Treasury in tax receipts, but that assumption completely ignores the fact that PFI deals are routinely moved to the Channel Islands, including those for 50% of the schools in my constituency, which are apparently owned in Jersey.
Those are just a few of the arrangements that may or not be covered by the diverted profit tax legislation. I suspect most are not, but they illustrate the fact that there is a lot more yet to do.
Diverted profit arrangements do not simply cost tax or allow profit diversion; they incentivise offshore acquisition and ownership of UK businesses. These days, highly profitable UK businesses have to create some offshore financing or else somebody else will do it for them, as predatory takeover activity in the UK is often predicated on offshore finance structures designed to move taxable profits out of the country. A good example would be Betfair. Last year, a company was looking to take it over in an aggressive takeover. I wondered what the company was going to add in terms of betting technology or new IT, but the clue was the name: “So-and-so Partners, London and Luxembourg”. The factor the takeover was going to add was the shifting of Betfair’s profits away from the hands of the Treasury. In the end, that takeover did not go through, but the diversion of profits affects business ownership and competition in the UK.
I mentioned the amount that the tax is expected to raise. I think the figure is low because of what are traditionally called behavioural effects—in other words, what companies may do as a result of the tax—and so I am interested to hear more from the Minister on what the Treasury thinks will happen, as opposed to the idea that companies will simply sit there and pay the tax. What kind of measures does the Treasury consider companies might take?
How will the success of the tax ultimately be measured? As the hon. Member for Amber Valley rightly said, it could well be that the real success of the legislation will appear not in diverted profit tax receipts but as higher corporation tax receipts. Does the Treasury have any way of judging how the measures have played out?
I welcome what is happening and hope that the Government will do more. I have mentioned country by country reporting, and that has begun to happen in the financial services sector. It is driven partly by other countries’ legislation. I hope it will expand through the work of the OECD and pressure from our Government, and in the operation of companies around the world will become more transparent. We should push for that.
John Cridland, the head of the CBI, said about a year ago that he was confused and did not know what the Government wanted on tax. I do not think that it is confusing at all. We want companies to account for their UK activities in the UK and pay tax on the profits that they earn in the UK. It could not be any simpler. I addressed the CBI tax forum two or three months ago and made that point. I said bluntly that if its companies were doing otherwise, we would steadily be coming after them.
The Government have a record of at least moving in the right direction. I was a member of the Public Accounts Committee for more than four years and took part in scrutiny of large companies and tax advisors; judging by the culture and attitudes out there, we still have a long way to go. I vividly remember asking a tax advisor how many of the schemes that he had advised individuals and companies to adopt in the previous few years had been made illegal; he cheerfully said it was all of them. It is good news that HMRC keeps pinning those things down, but the fact is that there is an industry out there constantly looking for new ways to avoid the taxes that we try to levy. I hope that the Treasury will make its proposals work, and will continue to recognise that there is still much more to do.
Shabana Mahmood (Birmingham, Ladywood) (Lab)
It is a pleasure to serve under your chairmanship, Mr Turner. I congratulate the hon. Member for Amber Valley (Nigel Mills) on securing the debate, and on his speech. He raised many points on which I, too, want to press the Minister. He was right to say that the issue has not received a huge amount of attention, and that there will not be a great deal of parliamentary time for detailed scrutiny of the Government’s proposals, given where we are in the parliamentary cycle.
The announcement of the proposals was of course rather trumped by the changes in stamp duty, which led the media coverage and debate. However, there has been a lot of coverage in the specialist taxation media, and that has helped to bring out some of the issues raised by the proposed diverted profits tax. I am grateful for this opportunity to press the Government further on their proposals. I will seek answers about technical detail— bearing in mind that there is currently a technical consultation, which will report on 4 February—as well as about practical elements and the Government’s emerging thinking about the impact on the OECD BEPS process. All three hon. Members who spoke mentioned that.
Our general approach is not dissimilar to the Government’s, and we recognise that there is a significant issue. All those who have spoken have referred to the public examples of large companies, with significant businesses that are doing very well, effectively gaming international tax rules to minimise their tax liabilities in this country. That significantly undermines public trust and confidence in the taxation system, particularly at a time of economic difficulty and stress. It is a real issue, and it is legitimate for all political parties to look for practical answers to alleviate such concerns.
As a general principle, economic activity should be taxed where it takes place. The question for all politicians to grapple with is finding an effective way to get to that point. For the Opposition—and for the Government, going by what they have said throughout this Parliament—the starting point is to try to work with international partners, notwithstanding the concerns raised by the hon. Member for Amber Valley about whether the US and other jurisdictions would be willing to play ball on co-ordinated international action to deal with gaming of the international tax rules. It is the right place to start, and that is why we have supported the OECD’s BEPS process. It is the right forum for seeking an international agreement on tax rules.
The Government have of course been much closer than the Opposition to that process, and we rely on publicly available information about its progress, and expert commentary from, and conversations with, some of the participants. From what the Government were saying up to the time of the autumn statement, we anticipated that their preferred way of proceeding on all the issues that form BEPS action points would be to await the final reporting in September before thinking how to go further. They have of course moved a little more quickly with the diverted profits tax, and I, like other hon. Members, would like to hear more about how that affects our role in the BEPS process.
We agree that a solution is needed and are keen for the issue to be dealt with, so we broadly welcome the Government’s proposed action. We will approach the diverted profits tax proposal in the Finance Bill in a supportive and constructive spirit, because we want a workable solution to reach the statute book; but I want to press the Minister further, particularly about the BEPS process. It would be helpful if she could tell us how those in the process have reacted to the DPT proposals, and why the Government felt it necessary to take unilateral action at this point, notwithstanding what many commentators have said about the looming general election. Was there a feeling that BEPS would not produce much of a result in relation to the relevant element of the international tax rules? Does the decision mean that BEPS will effectively be a failure? Is that the kind of world that we are looking at?
Some commentators have, as I am sure the Minister is aware, expressed cynicism about the motive for a unilateral move by the UK, and some have even suggested that it will torpedo the whole BEPS process, so that we get nowhere. I am interested to understand the conversations that the Government have had with people in the OECD and in the tax specialist community about where BEPS now stands.
David Mowat
I have been listening carefully to the hon. Lady’s points about international co-ordination. In the event of a Labour victory in the May election, what would its position be on UK tax havens such as Jersey, Guernsey and the Isle of Man? I thought that the hon. Member for Redcar (Ian Swales) made a powerful point about the 50% of schools in his constituency that are financed from Jersey. I would expect the Opposition to have developed some policy on that.
Shabana Mahmood
I am grateful to the hon. Gentleman for giving me the opportunity to highlight Labour policy in this debate. A few months ago, we published a paper on corporate taxation that included a section on the Crown dependencies and overseas territories. We have made the commitment that, if we win the general election, we will require the Crown dependencies and overseas territories to publish a public register of beneficial ownership. That is the key demand of all in the wider tax justice and fairness community, and it would shine a light on the true owners of businesses based in the Crown dependencies and overseas territories. The Government have spoken a great deal about doing something similar, but I think it is fair to say, without being party political, that progress has stalled. We have gone further by saying that we will ensure that that process happens. I have already taken the conversation forward with Ministers and other officials from the Crown dependencies and overseas territories.
Ian Swales
The hon. Lady makes an interesting point. Recently, I met officials from Jersey and Guernsey, and although transparency might be part of the issue, a lot of the arrangements that shift profit out of the UK are totally transparent. The issue is not transparency, but the arrangements themselves and, for example, the allowance of huge interest payments. I know that the debate is not about Labour party policy, but since we have strayed into that area, would her party do anything about such arrangements? A lot of them occurred under the Labour Government’s watch.
Shabana Mahmood
Of course we will look at particular arrangements, but transparency is the starting point. The Prime Minister famously said that
“sunlight is the best disinfectant”.
There has already been some opposition to our proposals, which suggests that there is real gain to be made from a much more transparent system for the Crown dependencies and overseas territories. That will be our start point, but we will continue to look at the other issues mentioned by the hon. Gentleman.
While we are on the subject, I would be interested to hear from the Minister about the Government’s approach to tax transparency policy with regard to the diverted profits tax. She will know that, in its paper on corporate taxation published a few months ago, the Labour party committed to going a little further on the broader issue of tax transparency and country-by-country reporting of business profits than the Government have done so far. We will support multilateral action, because we think that that is the right start point, but if multilateral agreement is not reached, we are prepared to take unilateral action on public tax transparency.
The Government have fully rejected that approach, saying that it will create too large a burden on business and that, were the UK to take unilateral action on tax transparency and country-by-country reporting, it would negatively affect the UK’s tax competitiveness. The Minister is well aware that both those arguments apply equally to unilateral action on the diverted profits tax. Will she explain why the Government have used those arguments to block potential unilateral action on country-by-country reporting in the form of a public register, but are dismissive of the same concerns when they are raised by others regarding unilateral action on the diverted profits tax?
It is important to understand why the Government think that those arguments do not apply, because although we may disagree with the criticisms made by business, in particular in relation to the diverted profits tax, it is important to understand the values and philosophical thinking behind the Government’s approach, because that will give us an indication of where policy is likely to go. I would appreciate the Minister’s detailed comments on that.
Other hon. Members expressed concerns about the potential for legal challenge. The Minister is aware that there is substantial scope for discretion in the application of the new rules. Although I was not a tax specialist, as a former lawyer, whenever I see the word “discretion” I know that for lawyers it basically means that there is lots of money to be made—a point also made by other hon. Members. What assessment have the Government made of the possibility of challenges within both EU law and the terms of the UK’s various double taxation treaties? My working assumption was that conversations have already been had, particularly in relation to the double taxation treaties. Nevertheless, it would be helpful if the Minister could update us and perhaps also give further details on HMRC resourcing, particularly for known areas of risk of legal challenge.
The Exchequer impact was also mentioned. Given that the draft legislation casts a broader net than was anticipated in the lead-up to the autumn statement, it is unclear why the revenue associated with the measure is quite so low, comparatively speaking. For example, we know that Google and Amazon alone generate somewhere in the region of £7.5 billion of UK revenue between them. A £360 million tax boost at a corporation tax rate of 20% would imply taxable profits of £1.8 billion, which an aggressive interpretation of the rules could attribute to those two companies alone. The projected yield therefore implies some combination of caution and, potentially, significant ongoing royalty deductions from UK corporation tax, behavioural change, and the anticipation of legal challenges. Again, it would be helpful if the Minister could explain exactly what the Government had in mind when modelling the Exchequer impact of the changes.
Avoidance is a continuing issue. Whenever new rules are introduced, one of the first things we must all look for is the potential for avoidance opportunities. One method for avoiding the rules might be the relocation of businesses where the business model does not require a physical footprint in the UK. Have the Government done any work in consideration of such issues? The new rules read much more like a TAAR—targeted anti-avoidance rule. In the past year, I have had a number of discussions in Committee with the Minister’s colleague, the Financial Secretary to the Treasury, the hon. Member for South West Hertfordshire (Mr Gauke), about the use of targeted anti-avoidance rules to support the tax avoidance measures that the Government have introduced, and I have wondered whether we might also end up discussing a TAAR for this particular TAAR. Again, it would be helpful if the Minister could explain where the Government are coming from on that.
Has the Treasury done any modelling to take account of copycat or so-called retaliatory legislation from other countries? Could the UK ultimately be a net loser? We have some intellectual property-heavy sectors in our country, particularly pharmaceuticals and media. If other countries introduce similar rules, that would affect the UK, potentially making us a net loser. I am sure that the Treasury has done some work on such issues; we should know more about them in order to illuminate the debate.
Finally, where does the Minister think the new measures leave the general anti-abuse rule—GAAR—for which the Government legislated earlier in this Parliament? Tax lawyers in particular have commented that we are seeing much more complicated new legislation, rather than better use of existing legislation, including the GAAR and, potentially, transfer pricing rules and other elements of the tax system that people feel are currently not necessarily enforced. The combination of those two measures could have dealt with many of the issues that have been raised. Instead, the Government have decided to introduce an entirely new tax. Where do they think that that leaves the wider legislative framework?
The Opposition’s general approach is supportive, and we will seek to be constructive as we debate these issues further ahead of the Finance Bill 2015.
The Economic Secretary to the Treasury (Andrea Leadsom)
It is a pleasure to serve under your chairmanship, Mr Turner, and I wish you a happy new year. I congratulate my hon. Friend the Member for Amber Valley (Nigel Mills) on securing this debate on such an important subject. As a number of colleagues have pointed out, the new measure is designed to ensure that Britain is a very competitive place—in fact, our ambition is to be the best place in the world to start up and run a business. If a company comes to this country, we will charge it low tax rates, but it will be expected to pay. That is what lies behind the measure: to ensure that companies pay that fair rate of tax.
The Government are working to create the most competitive tax system in the G20—a simple, competitive and fair tax system that will support economic growth and investment. However, we then expect companies operating in the UK to pay these fair and competitive taxes, so we are taking action both domestically and internationally. It is not one or the other—one does not rule out the other, as the hon. Member for Birmingham, Ladywood (Shabana Mahmood) suggested it may. We are trying to address concerns about some businesses paying little or no tax on profits made in the UK.
When this Government came to power, Britain had one of the least competitive business tax regimes in Europe. Since 2010, the Government have introduced a series of tax reforms to boost competiveness, such as the patent box, increasing the generosity of research and development reliefs, modernising the UK’s controlled foreign companies regime, and cutting corporation tax from 28% to 21%—next year, it will fall to 20%, the lowest rate in the G20.
The corporation tax reforms were a central plank of our economic strategy, and that strategy is working: growth, jobs and investment are all moving in the right direction. An increasing number of multinational businesses are locating activities in the UK, including companies such as Brit Insurance and Hitachi Rail Europe. The UK is one of the most competitive and attractive countries when it comes to deciding where to base a business.
It is clear that the tax reforms we have made since 2010 are supporting the economic recovery, and that our plan to cut corporation tax again to 20% will lead to more jobs and investment in the UK. Nine out of 10 UK businesses say the corporation tax rate cuts delivered since 2010 have been good for UK competitiveness.
However, as all colleagues have pointed out, there are real public concerns about unfairness in the system, whereby some companies, particularly large multinationals, are seen to be aggressively avoiding tax in the UK. It is vital that the public have confidence in the tax system, and that the tax rules treat both companies and individuals fairly and consistently, without leaving them scope to avoid their obligations. As we seek to return the public finances to balance and reduce the deficit, it is also important to make sure that we collect all the tax that is due. For those reasons, we are taking action, both domestically and internationally, to reform the tax rules and tackle corporation tax avoidance.
The hon. Member for Birmingham, Ladywood asked whether we are therefore giving up on the international tax framework, and of course, as she will know, that is not the case. The current international tax rules were first developed in the 1920s and desperately need reforming, so that they continue to support free trade and ensure a level playing field for businesses, but also to make sure that they address weaknesses such as companies playing different regimes off against each other to avoid paying tax on their profits anywhere at all.
The UK has taken a lead on the international stage to reform these rules and is committed to multilateral action through the G20 and the OECD to tackle the issue of base erosion and profit shifting—known as BEPS. At their summit in St Petersburg last year, the G20 leaders fully endorsed the ambitious and comprehensive BEPS action plan set out over 2014 and 2015. The individual action points are being taken forward by various OECD working parties.
The OECD BEPS project is reviewing the international tax rules to find out where they are not fit for purpose in today’s modern globalised economy. Over 40 countries are collaborating to take forward the action plan: a comprehensive two-year strategy to tackle international tax avoidance.
Ian Swales
We constantly hear about the G20 and the OECD, but the Netherlands, for example, is not even a member of the G20. Is the Minister concerned that all this work is going to be focused on certain countries, but that will, in itself, just lead to even more activity in countries that are not party to this process?
Andrea Leadsom
The hon. Gentleman makes a good point; nevertheless, the UK is at the forefront of driving the international effort to tackle these problems—these weaknesses—in international tax laws that are very out of date. The UK is certainly doing its bit.
In line with the BEPS action plan, in September 2014 the OECD’s first set of outputs from the BEPS project were fully endorsed by the G20 Finance Ministers at their Cairns summit. In a global economy in which goods and services flow freely between countries, international co-operation, as the hon. Gentleman points out, is the only way to tackle the challenge of tax avoidance. Measures taken in Britain will not deal with the problem on their own; we must have global tax rules, too. That is why, under our Prime Minister, we have been pushing, through the G8, the G20 and the OECD, for global solutions.
David Mowat
Of course, that has to be the right answer, but does the Minister really believe that countries such as Luxembourg and the Republic of Ireland, which derive a considerable amount of GDP from a tax evasion strategy, will contribute to any such global effort when it is so important to their standard of living?
Andrea Leadsom
I am grateful to all hon. Members for the points they are making about other tax jurisdictions. What the UK can do is lead the international effort and focus on what we can do to ensure that the UK’s tax base is not eroded. Therefore, although these other points are extremely important, hon. Members will realise that I cannot influence directly the tax laws that Luxembourg undertakes for itself, other than through the contribution the Government make to the international effort to put pressure on different jurisdictions.
The Chancellor announced, in the autumn statement 2014, UK action on two of the internationally agreed 2014 outputs of the BEPS project. I know that the hon. Member for Redcar supports the UK’s introducing legislation to implement the G20-OECD agreed model for country-by-country reporting, which will require multinational companies to provide tax authorities with high-level information on profit, corporation tax paid and certain indicators of economic activity for risk assessment. Draft legislation for the Finance Bill 2015 was published on 10 December 2014, with a tax information and impact note and an explanatory note.
Furthermore, a consultation document on the UK plans for implementing the G20-OECD agreed rules for neutralising hybrid mismatch arrangements—another point raised by the hon. Gentleman—was published at the autumn statement. The new rules will tackle a tax avoidance technique used by multinationals to exploit differences between countries’ tax rules to avoid paying tax in either country, or to obtain more tax relief against profits than they are entitled to.
However, the Government have gone further still. The hon. Member for Birmingham, Ladywood asked whether that was instead of BEPS or because we feel that BEPS will not work, but no, not at all—this is in addition. The Government have gone further to tackle tax avoidance by multinational companies operating here in the UK and to strengthen our defences against the erosion of the UK tax base. That is entirely complementary to the BEPS process. Where companies in the UK are going to extraordinary lengths to avoid paying their fair share of tax, we will act to prevent that. That is why the Government have introduced the new diverted profits tax—to counter the use of aggressive tax planning by large multinationals to avoid paying tax in the UK on profits that have been generated from economic activity here in the UK.
The diverted profits tax will be applied using a rate of 25% from 1 April 2015. The measure is targeted at contrived arrangements used to shift profits away from the UK in a manner that ensures they go untaxed or largely untaxed. The measure is designed to counter the erosion of the UK tax base as a result of complex structures that circumvent the international tax rules on permanent establishment and transfer pricing.
For example, some multinationals have gone for aggressive tax planning that involves quite complicated arrangements, such as the so-called “double Irish”—a point raised by the hon. Member for Strangford (Jim Shannon) and my hon. Friend the Member for Amber Valley—using group companies in other countries as conduits to route expenditure to tax havens so that profits from UK activity goes untaxed.
Specifically, the diverted profits tax applies in two situations. The first is where a foreign company carries out activities in the UK in connection with the supply of goods or services to UK customers in such a way that it avoids creating a permanent establishment, and the main purpose of that arrangement is to avoid UK tax, or a tax mismatch is secured such that the total tax derived from UK activities is significantly reduced. The second situation is where a UK company, or a foreign company with a UK permanent establishment, creates a tax mismatch by using transactions or entities that lack economic substance.
If a multinational company is found to be using those contrived arrangements to avoid tax in the UK, HMRC will issue a notice that requires the diverted profits tax to be paid up front. The legislation provides for a review period of up to 12 months, within which the multinational company will have the opportunity, among other things, to demonstrate that it was not liable for the charge or to provide information to HMRC to show that the level of disallowance of intra-group expenditure in computing the charge is wrong on normal transfer pricing principles. The measure is designed to complement our transfer pricing arrangements.
Ian Swales
On the second case the Minister mentions, she can be interpreted as talking about artificial financing structures—for example, moving money to Luxembourg and then loaning it back to the UK—but the briefing note says that the legislation specifically excludes such arrangements. Can she confirm that?
Andrea Leadsom
I think I have been quite clear about the purpose of the legislation. I am not aware of the briefing note to which the hon. Gentleman refers. I will address the point again in responses to questions, so perhaps we can deal with it then.
After the 12-month review period, if the charge has not been withdrawn, the multinational company will have the right to appeal the charge at a tax tribunal on any appropriate grounds.
There are some specific exemptions from the tax. A number of hon. Members asked who was exempted. Those will include small and medium-sized enterprises, companies with limited UK sales and the situation where arrangements give rise only to loan relationships. I will come on to that in more detail at the end of my responses to questions. The draft legislation was published on 10 December and will come into effect from 1 April. Comments from industry are of course welcome as we finalise the rules to ensure that they are clear and targeted.
As I said, the UK is fully engaged in the work to reform the international tax framework through the OECD-G20 BEPS project. The introduction of the diverted profits tax is entirely consistent with those principles and complements the ongoing international efforts in the BEPS project, which is looking to align taxing rights with economic activity.
A number of hon. Members questioned the yield that is expected or forecast from the diverted profits tax. The Office for Budget Responsibility has certified the central estimate of tax yield to be £1.35 billion over the next five years to 2019-20. That will contribute to the £31 billion that HMRC has already secured from tackling tax avoidance and evasion by large businesses since April 2010.
Let me answer some specific questions. My hon. Friend the Member for Amber Valley asked whether this measure was in some way overriding UK tax treaties. I can reassure him that that is not the case. The scope of the UK’s tax treaties is limited under UK law to income tax, capital gains tax and corporation tax. The diverted profits tax is therefore not covered by those treaties, so, as a formal matter, there is no treaty override; and in fact the OECD, in the commentary on its model tax treaty, provides that states can deny the benefits of a tax treaty where arrangements have a main purpose of securing more favourable tax treatment in circumstances contrary to the object and purpose of that treaty.
My hon. Friend also asked whether the measure was compatible with EU law—he did so rather reluctantly, and I would be reluctant, too, on the matter of tax sovereignty. The diverted profits tax has been designed to comply fully with our obligations under EU law. It is aimed at structures that are clearly designed to erode the UK tax base. As such, it is an appropriate response to those who abuse EU law to divert profits from the UK. The safeguards built into the legislation provide taxpayers with a number of opportunities to demonstrate that they should not be subject to the diverted profits tax. Accordingly, we believe that this is a balanced and proportionate measure that tackles arrangements that are clearly designed for tax avoidance.
The hon. Members for Strangford, for South Antrim (Dr McCrea) and for Upper Bann (David Simpson) asked about the specific cut-off for the diverted profits tax. I can tell them that the rules do not apply to SMEs as defined by the EU. That includes companies with fewer than 250 employees, turnover of less than or equal to €50 million and a balance sheet size of €43 million. That is consistent with our transfer pricing legislation. There are also measures that restrict the diverted profits tax if there is not much UK business going on.
My hon. Friends the Members for Amber Valley and for Warrington South (David Mowat) asked about the Channel Islands and the Isle of Man. Of course, they will be aware that those territories are free to set their own rates. We in the UK will go through international forums in terms of influencing international tax jurisdictions, but the UK has a very clear and transparent tax policy-making process, as evidenced by this parliamentary debate. Tax is a national, sovereign matter, so individual tax jurisdictions are free to set their own tax policy. The diverted profits tax is designed to ensure that the UK’s tax base is not eroded by that.
My hon. Friend the Member for Amber Valley asked whether the assessment and collection processes will really work and whether they are fair. For example, if HMRC gets a notice from a big company saying that it might be within the scope, how can it issue an initial charge notice in 30 days? Where would the information come from and so on? I can tell him that the notification of potential liability to diverted profits tax must be made within three months of the end of the company’s accounting period. The Government are still consulting on the detail of the notification requirement and would welcome comments on the drafting. However, it is likely that not all notifications will result in the issue of a preliminary notice. The preliminary notice does not create a charge, but merely warns that a charging notice may be issued and sets out estimated figures that would be included. Following the issue of the preliminary notice, the company would have 30 days to correct any factual inaccuracies in it. That would include any errors in figures on which an assumption in the notice is based.
My hon. Friend the Member for Amber Valley and the hon. Member for Strangford asked whether the provisions were drawn too broadly, such that they might catch not only the abusive structures targeted but a whole load of other, unintended taxpayers. The Government are of course open to suggestions on how the drafting of the legislation could be clarified without undermining its effectiveness. However, the calculation of the charge follows well established transfer pricing principles. Those principles are widely understood and routinely applied by businesses in pricing intra-group transactions. The only difference is that where the contrived features set out in the legislation are present, the diverted profits tax will have to be paid earlier than in a normal transfer pricing dispute.
Ian Swales
I thank the Minister for giving way again; she is being very generous. She talked about the notification process and so on. Is she happy with our knowledge of legal entities and the fact that many of them will be outside the UK? Will HMRC be able to cope with that process?
Andrea Leadsom
The hon. Gentleman will be aware that this Government have significantly increased the resources available to HMRC for this purpose, so yes, we are confident we will be able to manage this process.
There were a number of other questions, which I fear I will not have time to deal with now, about interest payments being excluded. There is a limited exemption for certain arrangements that involve only loans, and separate work is going on to look at how to ensure fairness in the measures. That matter is not being excluded, but is being looked at separately.
Hon. Members raised the question of the wholesale diversion of profits to Luxembourg. The legislation targets profit diversion only where the profit has a clear link to the UK, as I think I made clear. It would not be appropriate for the legislation to go further than that and to bring into scope profits that originate from other territories. However, the Government are strongly supportive, as I said, of the BEPS process, which aims to prevent and address this international problem.
In conclusion, I reiterate that the whole purpose of the diverted profits tax is to create in the UK the most competitive environment in which to base and run a business, including low corporation taxes, but it is a requirement of this Government that companies wishing to do business in the UK should pay those taxes and should not seek to avoid paying them.
Health Care Provision (Newark)
(9 years, 4 months ago)
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Robert Jenrick (Newark) (Con)
I start by thanking Mr Speaker for granting the debate and the Minister for replying this morning. I am also grateful for the attention of the Secretary of State, who visited Newark hospital last year. I thank my constituents and the Newark Advertiser, who have come here for the debate, and I thank my constituency neighbour, my hon. Friend the Member for Sherwood (Mr Spencer). Rather like the film “Groundhog Day”, the last debate on the subject was held two years ago to the day. The matter has moved on somewhat since then and progress has been made, to which I will refer shortly, but concerns remain. That is the reason why I return to the subject today.
I do not want to bore the Minister, but a little bit of history might be useful. I know that she visited Newark three times in May last year, but let me briefly guide her. We sit on the border between Lincolnshire and Nottinghamshire, and despite excellent north-south road and rail links, the community is relatively remote and rural, and it is bedevilled by poor roads and awful traffic. Newark is a growing town, with applications for thousands of new homes being considered as we speak and many more to follow, according to local growth plans. We have an older population, and the number of over-65s is likely to have doubled by 2026. I fear that Newark suffers from the Nottinghamshire health care model, which has been in place for at least a decade and a half. Centres of excellence have been created in places such as Lincoln, Nottingham and King’s Mill hospital, but not in Newark. For reasons of population scale, Newark hospital was linked to King’s Mill hospital some years ago. They were, and remain, uneasy bedfellows, because there are few natural connections and poor transport links between the two.
Mr Mark Spencer (Sherwood) (Con)
I congratulate my hon. Friend on securing this important debate. In the two years that have elapsed since the previous debate, one thing that has changed is the transfer of more than £80 million in private finance initiative payments from Sherwood Forest hospitals trust to its PFI holder. What impact is that having on Newark hospital and Sherwood Forest hospitals trust?
Robert Jenrick
I thank my hon. Friend for his campaigning on PFI and Sherwood Forest hospitals trust. I will return to that question later in my remarks, because it is one of the central issues affecting the trust’s ability to deliver good-quality health care not only for my constituents, but for his and for people throughout Nottinghamshire.
To return to my brief history lesson, the hospital delivers superb services, and it always has done, but those services have diminished relative to those that were offered in the recent past. In addition, as we have heard, King’s Mill is saddled with a devastating PFI that will be in place for 30 years. The problem is not new; it has been a hot potato in the Newark area since at least 2004, and there is a history of declining services including the loss of maternity care in the increasingly distant past. The PFI was put in place, and in 2010—bridging the previous and current Governments—the A and E department was replaced with a minor injuries unit. I say that, but the classifications in the NHS seem byzantine to us amateurs, and even if they are not designed to confuse us, they undoubtedly have that effect. The department called itself an A and E for the best part of 10 years, but it did not qualify to be one. It was always going to be extremely painful to change the department’s title and inform the community that the back-up available at the hospital was insufficient to be safely called an A and E and to have ambulances directed to it for the commensurate range of emergency situations.
In 2012, Monitor delivered an extremely critical report on the PFI and the trust, which includes King’s Mill and Newark hospitals. The report pointed out that Newark hospital was, at times, underutilised by some 55%, and it was closed for admissions after 6 pm. Good has come from that report, including new management and significant improvements at the trust. However, the trust, as the Minister knows, remains in special measures, with a corresponding impact on recruitment, retention and the reputation of the trust and its hospitals among my constituents and those of my hon. Friend the Member for Sherwood.
To return to the hospital and bring us closer to the present day, some services, including those related to hips and knees, have been removed in recent years following the Keogh report and the imperative, we were told, to ensure that services are matched to appropriate levels of staffing and back-up. The trust is in the process of refocusing Newark on day case services and diagnostics. We all understand that the transformation of services takes time to implement, and the period of change has seen some underutilisation. I suspect that that period has gone on too long. Furthermore, there have been problems about directing patients to the appropriate hospital and ensuring that that hospital is Newark if the services are still available. I have lost count of the number of times that constituents have told me that they were not offered Newark hospital or had to ask for it specifically, when we know that the hospital delivers the necessary services. That contributes to underutilisation and must be resolved once and for all.
On top of those difficulties, East Midlands ambulance service received a concerning inspection report by the CQC at the beginning of 2013, which found it to be underperforming in four of the six central measures. As medical professionals agree that the most serious emergency situations are best treated by fully staffed and equipped general hospitals, the imperative becomes greater to have an ambulance service in north Nottinghamshire with the capacity to respond swiftly and meet the appropriate timings for our constituents. Furthermore, residents complain about the length of time taken to repatriate those who are no longer critical but who require rehabilitation or some further care closer to home. That is made all the worse and more onerous by the long journeys and expensive bus fares required for relatives to visit.
To bring my history lesson to a close, I want to report some positive developments of late. In 2013, a new 13-bed ward, the Fernwood recuperation and rehabilitation unit, opened. The Bramley children’s unit, new cardiac services and an endoscopy suite have all opened. The CT scanner at the hospital, which had reached the end of its natural life, is—admittedly after some pressure—to be replaced. The trust has appointed a new director, Mrs Jacqueline Totterdell, with the specific objective of bringing Newark hospital up to full capacity in the range of services that it provides. This week, the trust and the clinical commissioning group have announced a capital investment of more than £500,000 to enhance the facilities of the minor injuries unit, providing a better patient experience and more consultation rooms, and integrating the MIU with out-of-hours GP services. That development is the successful result of an application to the Prime Minister’s challenge fund.
Those developments are refreshing and should be celebrated. They confirm that the old rumours in the town that the hospital was to close are unfounded. The trust has made that clear. They also suggest a welcome degree of focus on the hospital by the trust and the CCG, which I hope will continue and which must intensify. I praise the clinical leader of the CCG, a respected Newark doctor named Dr Mark Jefford, for his role in that.
Where do we go from here? My objective, which I am sure that my hon. Friend the Member for Sherwood shares, is to ensure that Newark and north Nottinghamshire have health care provision of the highest possible quality delivered as close to home as is safe. I gave this debate the title “Health Care Provision (Newark)”, as distinct from the previous debate, to emphasise the fact that my interest is precisely that. My interest is not in bricks and mortar, and it is not driven by nostalgia or false science.
I return to the emergency provision. We still hear forlorn voices talking about the reopening of an A and E unit, but no one who understands the problem could think for a minute that Newark will have an A and E unit. I want to make it clear that that really is not the issue at hand. The issue is whether the present MIU or urgent care centre—whatever one wishes to call it—adequately reflects the fundamental remoteness of Newark and the surrounding area of Nottinghamshire, and whether anything can safely be done to provide a higher degree of emergency provision. Again, terminology gets in the way but, for the sake of argument, let me call it MIU-plus—in other words, providing sufficient support to enable Newark hospital to take a greater proportion of the so-called green cases. One can argue about what the proportion might be but, clearly, any material increase in the types of cases that paramedics could safely bring to Newark hospital, or that the hospital accepts from those walking into the MIU, would result in a range of benefits: shorter journeys to hospital for those in Newark and rural areas; less pressure on the ambulance service; and greater convenience for patients and their relatives. The benefits would surely be felt throughout Nottinghamshire and Lincolnshire and would take pressure off overstretched A and E departments.
In my time as a Member of Parliament, I have argued that, if a clinical case can be made, there is no reason why such an MIU-plus should not be introduced at Newark hospital. I have sought the advice of the Under-Secretary of State for Health, my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter), who, without detailed knowledge of the circumstances, pointed me in the direction of a hospital in Hexham where GPs, local authorities and the hospital trust have integrated to a degree to preserve and enhance services in a remote area.
Members of the management and leadership of the trust and CCG with whom I have discussed the matter over the past couple of months take a different view. They think the system would be extremely difficult to implement safely. I would be grateful if the Under-Secretary of State for Health, my hon. Friend the Member for Battersea (Jane Ellison) gave me her view, today or in the future, on exactly how realistic the proposal is. Members of the public seeking an outcome not wholly dissimilar to the one I have described have written to various authorities, including Ministers and NHS England, but have been unable to gain their opinion on that route. I admit to banging on about this, continuing a line of argument that has been made unsuccessfully for some time, but I raise it again because it is strongly felt by my constituents. I seek the Minister’s guidance and, of course, the ear of the trust and the CCG.
As I have already described, the heart of the problem in Newark and Nottinghamshire is the interlocking concern about the adequacy of the MIU and the performance of our ambulance service. East Midlands ambulance service has new leadership, a new chair in Mrs Pauline Tagg and acting chief executive in Mrs Sue Noyes. The ageing fleet, which I have seen myself, will be upgraded, including with welcome new vehicles for north Nottinghamshire. The trajectory appears to be upwards, which is welcome. Any support that the Minister and her Department can give to EMAS and its leadership would be greatly appreciated.
I recently spent time with paramedics and was hugely impressed. They face the challenge of operating in a large geographic area. A and E is under strain, and a contributing factor is the very limited circumstances in which paramedics are able to take patients to Newark. Whatever one’s view on that, there is a lack of clarity on those circumstances. I am told by one source that a lad breaking his arm on a football pitch, suffering no other major symptoms, could be taken to Newark, but I am aware of plenty of cases in which paramedics could not take such patients there or have been turned away. I am told that the number of circumstances in which paramedics may take patients to Newark has increased, yet I have seen a crib sheet in ambulances that appears to show that the number has decreased by two. I do not know the rights or wrongs—I am not a clinician, so I cannot say—but that must be cleared up urgently. Fundamentally, the rurality of Newark and north Nottinghamshire needs to be addressed with adequate ambulance capacity,
Finally, I will address the PFI debt, which my hon. Friend the Member for Sherwood mentioned. Monitor expressed concern about the financial situation of Sherwood Forest Hospitals NHS Foundation Trust. The trust signed its £320 million PFI deal for the redevelopment of King’s Mill hospital in November 2005, and in 2012-13 the trust’s PFI cash outflow was £42.5 million, which equates to 17% of the trust’s income. If ever we needed an example of a terrible PFI deal and debt, this is it.
The trust operates with one hand tied behind its back. In December, my hon. Friend and I asked the Secretary of State for Health whether he would review the trust’s finances as it is both in special measures and suffering the consequences of a disastrous PFI deal. He agreed to do so, and I ask the Minister to make good on that promise. PFI contracts are complex and the options available to the trust to reduce the current burden—whether that be some form of refinancing, the buying back of debt or addressing parts of the contract not yet or inadequately executed—are complex and require analysis. The trust has limited resources to devote to the analysis required, which would presumably require the help of outside specialists. Are the Minister and the Department willing to sponsor, by which I mean pay for and support with advice, a full review of the PFI deal, with the objective of presenting options to the trust that can be reviewed and, I hope, implemented? I make that request with the full support of the trust’s chief executive. Such support would make a difference to the trust, my constituents, my hon. Friend’s constituents and the constituents of many other north Nottinghamshire Members who have not been able to join us this morning.
In addition to my specific questions, I leave the Minister in absolutely no doubt of the importance to my constituents of Newark hospital and of health care provision in north Nottinghamshire. Newark hospital is much loved. I was there on Christmas morning, and patients and their relatives had the utmost respect for the wonderful staff. My constituents, and people across Nottinghamshire, want an inspiring vision of what their health care provision will look like, but a vision without substance is an illusion. My constituents now want a credible plan in which they can believe, a plan that ensures that health care continues to improve for them and for future generations in this growing and rural community. That, in essence, is what we seek today.
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
It is a pleasure to serve under your chairmanship, Mr Turner. I apologise for being a stand-in for the Under-Secretary of State for Health, my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter). I know he has previously debated these issues with my hon. Friend the Member for Newark (Robert Jenrick), whom I congratulate on securing this debate. It was a pleasure to go to Newark to campaign for him during the by-election. Literature that we all delivered told us that he would be a doughty campaigner, with health at the heart of his campaigning and his representations on behalf of his constituents. He has evidently made good on that promise in his relatively short time in the House. I am very aware of his dedication to ensuring that the health needs of his constituents are met. It is also a pleasure to see my hon. Friend the Member for Sherwood (Mr Spencer), who is another assiduous local Member and a valued colleague who has the health concerns of his constituents at heart.
This debate is a welcome chance to discuss local health care matters. I know both my hon. Friends regularly meet local health leaders, which is right. The depth of knowledge that comes across from both Members this morning is the result of that engagement. I encourage such engagement because it allows Members to be best placed to bring their constituents’ concerns to the House.
I recognise, as does my hon. Friend the Member for Newark, the hard work and dedication of NHS staff in his and other constituencies. He rightly describes them as wonderful, and it is excellent to hear that he was with them over the Christmas break. More than 4,000 staff are employed by Sherwood Forest Hospitals NHS Foundation Trust alone, in addition to the thousands who work in primary care. We thank them for their service at a time when we know they are under pressure.
It is all too easy to overlook primary care’s essential contribution to health care provision. The local GP or pharmacist is the key health care provider for many people. I will talk about the local hospital in a moment, but that foundation of good primary care is important. I am delighted that, through the Prime Minister’s challenge fund, Newark and Sherwood CCG is working with the hospital, local GP practices and Central Nottinghamshire Clinical Services, the out-of-hours provider, to improve access, reduce complexity for patients and ensure a sustainable staffing model. Given the pressure on the system over the Christmas and new year period, we can see only too well the importance of that work and the challenge fund in finding new ways to provide primary care access. In 2014, Mansfield and Ashfield CCG and Newark and Sherwood CCG were awarded a total of just over £1.8 million from the Prime Minister’s challenge fund, which was part of a £5.2 million collaborative funding bid that was spent in this financial year.
My hon. Friend is right to make Newark hospital the heart of his speech. Although there is legitimate concern, much of the worry caused for patients and the public in Newark has simply been unnecessary. I know he realises this but, for the record, the number of patients being treated is increasing. In 2012, the number was about 131,600; it increased to almost 133,500 in 2013. There is also more day care surgery, as my hon. Friend mentioned. The number of out-patients’ appointments is increasing and the number of specialities offering appointments at Newark is up. There is also improved provision for children.
I quite understand, however, why my hon. Friend wants to emphasise the need to keep building on that progress. He focused much of his speech on the minor injuries unit and urgent care centre. I can only sympathise with him with regard to navigating a way through terminology, because I am well aware that some terms mean different things in some parts of the country and that our health economy, because of its sophistication, is sometimes quite complex. It is therefore incumbent on all of us—Ministers, local health leaders and so on—to try to cut through that complexity as much as possible to make clear to local people what they can expect to get in a particular facility, what they would go there for, and where that facility fits into the local health economy, as well as the fact that it is part of a plan.
Newark provides consultant-led out-patients’ services, planned in-patient treatments, day-case procedures, diagnostic and therapy services and the MIU-UCC. My hon. Friend spoke about the need to increase the range of services. He is right to do so and to put forward his constituents’ concerns. As he outlined, there are plans to enhance the services offered at Newark hospital through the Newark strategy. He gave a history lesson at the beginning of his speech; I am well aware that there have been a number of strategies, but the current Newark strategy is being implemented, and I am encouraged by what I heard, in preparing for the debate, from local senior leaders. However, he is right to say that progress must be maintained.
The strategy includes Newark hospital being a centre of excellence for a broad range of services, including diagnostic, rehabilitation and so on. A number of new developments are already in place and a £500,000 development to make structural changes to the MIU is planned, which will make urgent care simpler and increase the range of Newark-based services.
As I said, I will take this debate as an chance to emphasise that if there is a lack of clarity locally—I can understand that there might be—local health leaders and all of us who work in and around the health system must work hard to ensure that the public, who are the users and end recipients of our excellent NHS services, really understand what is being offered. It is vital that they do.
The plans I mentioned include provision of additional consulting rooms, so that health care staff, including hospital staff and GPs, can work alongside each other instead of at separate locations. Building for that should start in April, which is really encouraging and testimony to my hon. Friend’s efforts to keep this a front-foot issue. Such evidence of the hospital’s long-term future is extremely welcome and should be reiterated.
With regard to the suggestion that more ambulance patients might be taken to Newark hospital, I understand that the local NHS has identified safety concerns with that. The level of emergency care was reviewed locally in 2013 as part of the development of the Newark strategy. As I know that my hon. Friend will appreciate, a patient’s diagnosis will not always be clear when the ambulance crew first arrives at the scene, so more comprehensive diagnostics are required—diagnostics that often need to be done in a main centre before a serious condition can be excluded.
I am told by the local NHS that the conveyance of all green ambulance calls to Newark would result in a limited improvement in ambulance response times, but I hope that it has looked at that carefully, has heard what my hon. Friend said today, and is giving proper weight to that. I know that for both my hon. Friends, the safety of their constituents is a paramount concern. They will know that for the Secretary of State for Health, the safety and quality of our health system is a touchstone issue in this Parliament, and we have debated significant safety concerns in recent years. When local clinicians believe that there are safety risks, it is important that their opinions carry weight and that we listen to those concerns closely.
My hon. Friend the Member for Newark has already discussed with the Under-Secretary of State for Health, my hon. Friend the Member for Central Suffolk and North Ipswich, whether hospitals elsewhere might provide helpful examples for both Sherwood Forest Hospitals NHS Foundation Trust and Newark hospital. Hexham was mentioned as one such example. While parallels can be drawn, an exact comparison cannot, as my hon. Friend the Member for Newark acknowledged. There are some similarities between the services offered at those sites, but Hexham is a larger site with a more remote community. I note, however, what he said about his constituency being mixed, with some areas being much harder to get to owing to their road services.
GP services are offered at Hexham, and the new extension at Newark will enable that to happen in my hon. Friend’s constituency, which will be welcome. As he is also aware, decisions on local services, including urgent and emergency services, are a matter for local NHS leadership because they are the people, working with elected representatives, who know the local community best. The local NHS is clear that decisions about services will be based on patient safety and sustainability, which, having seen some of the problems uncovered in this Parliament in cases such as Mid Staffs, is what we all want as the foundation on which we build.
Mr Spencer
It is good to hear that progress is being made, but the elephant in the room remains the £40 million a year in PFI payments. Until we solve that problem, the challenges will remain. In the time remaining, will the Minister discuss that?
Jane Ellison
I will; in fact, that is on my next page. My hon. Friend is right to bring me to that. On the trust’s financial position, as my hon. Friends have mentioned, Monitor assessed Sherwood Forest Hospitals NHS Foundation Trust in 2012 and identified issues that had contributed to its deteriorating financial performance. The trust signed its £326 million PFI deal under the previous Government in November 2005 for the redevelopment of King’s Mill hospital. The trust’s PFI cash outflow equates to some 17% of its annual income, which is clearly a substantial amount. The operating costs for that scheme are inflating with the retail prices index by about £1.5 million a year. My colleagues are therefore right to raise that considerable concern.
The trust has received ongoing financial support directly from the Department of Health: it received £28 million in 2013-14 and £26 million in 2014-15. However, as my hon. Friends realise, it is important that I emphasise that such funding is not sustainable as it takes resources away from other areas. We therefore clearly need a better solution.
The trust forecast a financial deficit this year, but Monitor does not have any immediate concerns about the sustainability of services at Newark hospital. I put that on the record as a note of reassurance for my hon. Friend the Member for Newark. The trust recognises the challenge that its PFI payments present—that has come out clearly in my discussions—and it accepts that the solution lies in the full involvement of all partners in the local health economy. The Better Together programme for Nottinghamshire goes some way towards achieving sustainability, and local commissioners continue to work with Monitor and NHS England, as they need to, to find a solution.
I am aware that there have been suggestions locally that Sherwood Forest Hospitals NHS Foundation Trust should look at the route taken by Northumbria Healthcare NHS Foundation Trust and buy out its contract. However, the overall PFI deal for Sherwood Forest is much bigger than Northumbria’s, so a similar buy-out would incur a far greater cost. That is a note of caution.
The Department and the Treasury have discussed a range of options to reduce the cost of PFI projects in general, using public sector capital, including buying senior debt and terminating contracts completely. It is however for individual trusts to be clear about what options they have considered and to bring proposals forward.
Looking around the country, it is clear that the individual schemes have complexities, in terms of when they were signed, effective pricing and risk profile, so it is important both that such matters are looked at carefully at a local level and that the Department is engaged early on by trusts and foundation trusts when they develop their proposals, which will then be considered carefully by the Department of Health and the Treasury—and Monitor, if required—on a case-by-case basis for value for money and affordability. That is what happened in Hexham.
In the time left, I want to assure my hon. Friend the Member for Newark that my right hon. Friend the Secretary of State, as he said last year, will be happy to consider any proposals brought forward. We are very much open to that.
I am left with little time to comment on the ambulance services, other than to say that although we acknowledge that there are some big challenges, a resilience plan is in place and we will monitor that carefully. I end by congratulating my hon. Friends the Members for Newark and for Sherwood on bringing this important topic once again to Ministers’ attention.
Benefit Claimants (North-east)
(9 years, 4 months ago)
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Chi Onwurah (Newcastle upon Tyne Central) (Lab)
It is a pleasure to serve under your chairmanship for such an important debate, Mrs Riordan. I hope that you and all Members present enjoyed the festive period. As we return to Westminster, it is important to recognise that not everyone will have been able to enjoy it. We have seen unprecedented demand at north-east food banks over Christmas, and it is not hard to see why. On my website, I publish pie charts of the issues raised with me by constituents. If Members visit www.chionwurahmp.com —I recommend that everyone does regularly—they will see that benefits is consistently among the top two or three issues. For example, my office dealt with 28 benefits cases in November, 36 in October and 32 in September.
MPs all over the north-east are aware that a particular challenge of benefit cases is that they almost always involve someone vulnerable. Those claiming benefits are by definition going through a tough time. They may have lost a job, have an illness or disability, or be in low-paid or part-time work, or they may be caring for young children or relatives, making it harder for them to work. They need our support. They need our care, a helping hand to get their lives back together, and concern for and understanding of the challenges they face. As the shadow Secretary of State, my hon. Friend the Member for Leeds West (Rachel Reeves), has said:
“Jobcentres, and the HMRC offices that currently administer tax credits, are vital public services that British citizens pay for with their taxes. People who use them have as much right to expect fair and respectful treatment as patients in an NHS hospital, parents dealing with their child’s school, or victims reporting a crime at a police station.”
It has become increasingly clear to me that that is not the experience of my constituents.
I have dealt with cases in which the only explanation for the cruel and inhumane way people were treated is that the employees of the Department and its agencies—public servants—have forgotten, or been told to forget, that benefit claimants are people: human beings with lives, loved ones and feelings. That is why I want the Minister to answer for the treatment of benefits claimants in the north-east and the culture in the Department for Work and Pensions that results in that treatment. I am going to raise a number of cases from my constituency to illustrate my point. I know that the issue extends beyond the north-east, but I want to focus on my region. I know from speaking to colleagues that they have many similar cases, and we can see how well represented the region is by the Members present.
The first case concerns a constituent whom I will not name for reasons that will become evident. Each constituent I do name has given me their express permission to do so. In January last year, my constituent was found hanged in his home by a neighbour. He was well known to Newcastle Welfare Rights, from which he had received considerable support in his dealings with the DWP. He had been in receipt of employment and support allowance, and previously incapacity benefit, and he was engaging well with NWR until November 2013, when he underwent a work capability assessment. The social worker who accompanied him had to spend two hours with him afterwards.
After he scored zero points and was found fit to work, NWR sought evidence from psychological services, and wrote to the Department, stating:
“The recent news that Mr…is not entitled to ESA support has had a significant impact on his mental health…he was acutely distressed; he struggled to talk, he was having thoughts of suicide, he had also started drinking alcohol to cope and had struggled to leave the house…His main emotion was one of fear and unfortunately this has reawakened traumatic memories of abuse in the past”.
The letter went into a lot more detail, but was disregarded by the DWP. The decision remained unchanged.
Over Christmas 2013, my constituent attempted to take his life using prescribed medication and attempted hanging. He had daily input from the local mental health trust crisis assessment and treatment team, and regular input from NWR. In January 2014, NWR submitted another letter from his psychologist that said that his
“distress and subsequent suicide attempt are directly related to the ATOS/benefits decision recently made”.
The letter went on to state that the psychologist was aware that my constituent was “highly anxious” prior to the assessment
“and required a significant amount of support following the interview.”
The psychologist’s professional opinion was that if he
“was found to be ‘fit for work’ this could directly lead to further suicide attempts and subsequently result in him successfully killing himself.”
That was a warning, and, tragically, that is exactly what happened.
As one can imagine, his suicide had a serious impact on the NWR team, especially those who were working to support him. They told me they were numbed and deeply saddened that their efforts were not enough to prevent his suicide. The neighbour who found him was also deeply affected and continues to require psychological support.
The second case that I want to highlight concerns another of my constituents, Mr Roy Hails, an IT specialist who was recently made redundant. He was determined to find work and applied for every suitable job while claiming jobseeker’s allowance, but was sanctioned by the jobcentre when his work search record was judged inadequate—in the week that his father died. Think about that for a moment. I happened to know Mr Hails’ father and the long and complex illnesses that he suffered from. I also know what a close family they were, and what a loss to his family and the community Mr Hails senior was. Regardless of that, is there anyone in this Chamber—or, indeed, in this country—who does not believe that a son should be given the opportunity to grieve for and bury his father, whether or not he is claiming benefits? The culture that this Government have put in place is such that people are not being given that opportunity.
Members are no doubt familiar with the play “Antigone” by Sophocles, in which the heroine defies a brutal Government to bury and mourn for her brother. It is a sad indictment of the Conservative party when an ancient Greek playwright, dead for more than 2,000 years, is more in touch with the needs and values of this country than the Government.
After I wrote to the director general for operations, the Department did find an exception by which a bereaved claimant can be excused from signing on or job search requirements for up to two weeks. However, the officials who dealt with Mr Hails were unaware of it; they thought that that the Government they work for would prevent a man from grieving for his father. What does that say about the culture the Government are promoting? Mr Hails told the Jobcentre Plus in Newcastle that his father had died and that was why he had not been searching for jobs, but they still thought it appropriate to sanction him.
Ian Lavery (Wansbeck) (Lab)
I congratulate my hon. Friend on securing such an important debate. Does she share my deep concern about the rumours that there are league tables in DWP offices, and that people who are working very hard are being brought to task for not sanctioning people enough? They are told that they are underperforming. If that is the case, we will face these issues for ever and a day, as long as a Conservative Government are in charge.
Chi Onwurah
My hon. Friend is absolutely right. I will not call what I too have heard rumours, because it is clear that jobcentres are measured on the number of sanctions they issue. There may not be official targets, but the numbers are measured and published, so of course they are compared. I know from speaking to former and current DWP employees that they are under pressure to sanction people, almost regardless of how hard they are trying to find a job.
My third and final example concerns another constituent, Adam Ross Williams. What happened to him occurred just before Christmas. In November, the jobcentre wrote to Adam to say that because he had failed to complete and return a JSA2 claim review form, which he had never received, all payments to him were going to be suspended. He immediately called to ask why the form had not been sent to him by recorded delivery or handed to him at the jobcentre, which he has to attend. He also asked if he could complete the form by phone. He was told that that was impossible and that he would have to wait for another form to be posted to him.
The form finally arrived just before Christmas, almost one month after he had requested it, during which time he had no income, going without and relying on handouts from friends and family, “when I was lucky”. Of course, many other claimants in similar situations are forced into debt, and in particular to use payday loans.
Adam’s circumstances had not changed and the form he was sent was exactly the same as the one he had first filled out. He filled out the second form, took it to his local jobcentre and asked them to fax it straight over to the DWP. However, he immediately got a phone call from the DWP saying that they had not received his form and asked if he would be willing to complete the form over the phone, which is what he had wanted to do in the first place. We must remember that all this happened just before Christmas, which is a really stressful time for everybody, particularly those on a low income or, as in this case, no income.
Adam asked for an emergency payment and he was assured that he would get a phone call confirming that he would be paid. No phone call came, so he checked with the benefit inquiry line and was told that no emergency payment had been requested, so nothing could reach him until after Christmas. And yet all that had been needed was to ask him to confirm that his circumstances had not changed. When I hear stories such as this, I wonder whether the system is designed to hound people such as Adam, who are seeking work.
I could go on for hours—I could give 300 examples, not just three—but I know that many Members from the region wish to speak, and I also want to say a little about the broader context. There are people on benefits who are abusing the system; there are what are known as “scroungers”, who take what they can get and consider benefits both a lifestyle and a right. However, they are a very small proportion of those on benefits. It is estimated that 0.7% of welfare spending is lost to fraud, in comparison with the 1.3% lost to overpayment because of mistakes.
It is of course important to tackle fraud and error, but does the Minister think it necessary to place adverts on buses in my constituency saying:
“Think you know a Newcastle upon Tyne Benefits Cheat? Report them anonymously”?
Stunts such as that fuel misconceptions about benefits and fraud. Is it any surprise that people estimate that 34 times more benefit money is claimed fraudulently than is actually the case? Perhaps the Minister can tell us how much that campaign cost and how the Department plans to measure how much money has been saved by it. I have yet to see adverts encouraging people to turn in tax evaders, despite the Treasury itself estimating the “tax gap” at £34 billion and tax campaigners suggesting that the true figure could be much, much higher. Or is this process more about, as one person complained to me, fostering a culture of suspicion and bitterness towards claimants? That is the outcome, and certainly that is how many of my constituents have come to feel.
I will quote from what Adam said to me:
“In summary, I am absolutely disgusted at how I have been treated. I feel entirely let down by my government, and like a second class citizen. What have I done to deserve this?”
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
I did not mean to interrupt my hon. Friend before she reaches the end of her excellent contribution, but I wonder whether she, like me, has had cases involving former service personnel who served in Iraq, Afghanistan and, in some instances, even earlier conflicts. They were in receipt of incapacity benefit and other benefits due to their war disablement, but under the new system—the work capability tests—they have been thrown off those benefits. Does she have such disgraceful cases in her constituency? I will raise those I have come across with the Minister when she replies to the debate.
Chi Onwurah
My hon. Friend makes an excellent contribution herself. I am not using all the examples I have, because I have so many. However, I am aware of the way some veterans in my constituency have been treated, and of the disgraceful impact it has had upon their lives. I look forward to hearing from her about the cases in her constituency.
My constituent, Adam, went on to say:
“How can it be right that an unemployed person…not only has the shame of completely having to rely on the government for my next meal but can have my only income arbitrarily stopped? A civil servant promises to get an emergency payment to me then what…? Forgets? So now I have to wait an extra week. Christmas is ruined…I can’t even go see my little girl, let alone put the heating on or buy some food.”
I want to make it clear that I am not blaming those who work in jobcentres or in the DWP. As I mentioned earlier, I have spoken to current and former jobcentre officers, and they have told me how they are pressurised to sanction claimants and how, as one former agent told me, the atmosphere changed immediately following the general election. Their job was no longer to help claimants into work but to “find them out”. I accept that mistakes are sometimes made, but it is the organisational culture that the Minister is responsible for, and I am sure she will want to take responsibility for it, as any business leader would. I would welcome her comments on this issue. I am sure she will acknowledge, as I do, that this challenge is not an easy one, but that much more needs to be done. That means supporting those in work, and not vilifying those seeking work or unable to work.
Five charities have come together for the Who Benefits? campaign. I know the Minister prefers charities to be seen and not heard; that is the Victorian mindset of this Government. However, the Children’s Society, Crisis, Gingerbread, Macmillan Cancer Support and Mind often work with people who find themselves in receipt of benefits. The charities are campaigning because they believe that
“politicians should do more to listen to, understand and act on the realities of people’s lives”
and to focus on
“the real reasons that people are struggling to address, like low wages, the high cost of living and the housing crisis”,
rather than demonising those on welfare benefits.
I have a number of specific questions for the Minister. First, will she make it clear in her own words how much she recognises the challenges that benefits claimants face, and outline the kind of nurturing, supportive environment that she is seeking to establish? Secondly, what measures are in place to ensure that benefit claimants are nurtured and supported, and that those who work for the DWP and its agencies treat them with dignity and respect? Thirdly, what assessment has been made of the impact of measuring and comparing the number of sanctions meted out by jobcentres? What other measures have been looked at, such as measuring the number of claimants in every jobcentre who found and stayed in work for six months? Fourthly, what sanctions are in place for those who are not respectful towards benefits claimants, and are those sanctions applied to Ministers? Fifthly, why do the Government refuse to acknowledge the link between increased sanctions and increased food bank usage? Finally, why did the recent Oakley report on sanctioning not extend to all benefit claimants? I look forward to the Minister’s response.
When the Minister’s office wrote to me asking what this debate would be about and what my concerns were, I wanted to give her lots of time to prepare for it, so I made it clear to her that the debate would centre on the culture and treatment of benefit claimants, and that I would cite examples where that culture and treatment had not met the standard that I hope the Minister aspires to. I would also like to reassure her that I have studied the recent Westminster Hall debate on benefit sanctions, on 2 December 2014. I have read the questions posed by my hon. Friends in that debate and her response to them. I think it fair to say that there is not a strong correlation between the two. I assure the Minister that she does not need to repeat the points made in that debate about the importance of getting work, the history of sanctions or the role of incentives to work. I and the vast majority of benefit claimants are familiar with them. No one wishes to make it easy for freeloaders, or foster a culture that does not recognise the value of work. That is not what the debate is about. Will she ensure—unlike on the last occasion—that she saves some time to address our concerns? They are important.
The sense that claimants are being treated as second-class citizens, scroungers and cheats has a terrible impact on their well-being and, in particular, their mental health. I have some experience of that. I was brought up largely on benefits. We were a one-parent family. My mother was crippled with rheumatoid arthritis and also suffered from breast cancer. It was hard for her, not only because of our poverty but because of her shame at taking handouts. I am so glad that she did not have to face the sort of vilification and abuse that benefits claimants face now—abuse caused in part by a sustained campaign from those on the right of the political spectrum. Contrary to what many of them would imagine, I was brought up with a strong work ethic and to believe that the state should provide a robust safety net for those who need it. I am not proud that I grew up on benefits, but I am not ashamed either. I want to know what the Government are doing to prevent the demonisation of those claiming benefits.
Mrs Linda Riordan (in the Chair)
Before I call the next speaker, I remind the Chamber that several Members want to take part in the debate. I want to give the Minister enough time to reply to all the points raised, so I would be grateful if Members kept their speeches to about six minutes.
Mrs Emma Lewell-Buck (South Shields) (Lab)
It is a pleasure to serve under your chairmanship, Mrs Riordan. I congratulate my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) on securing the debate and on her passionate speech. We all know how the changes under this Government have victimised benefits claimants, and we have all met people who have suffered because of the harsh sanctions regime, but it is not only the law that has changed; the culture has changed, too. The jobcentre is a very different place from what it was just a few years ago. The focus has changed. It is no longer about getting people into work; it is about getting them off benefits by any means necessary.
My hon. Friend gave several examples, and things are no different in South Shields. Constituents of mine have been refused a private room to discuss intimate personal or medical issues, and have felt humiliated at having to hold such discussions in a public area. One man who was suffering from serious back pain and could barely climb the stairs was told that he could not use the lift because it was for staff only. The general attitude of staff is confrontational and sometimes downright rude. One man was told that he had to shut his mouth and get out when he disagreed with staff.
Ian Lavery
To highlight one of the difficulties with the staff, who generally do a fantastic job, the press reported on the assessment of a lady who is blind and has a guide dog. The person doing the assessment held three fingers up and asked the blind lady, “How many fingers am I holding up?” The lady said, “I am blind.” The person said, “That has nothing at all to do with it. I have to ask you the questions.” That is the way disabled people—in this case, a blind person—are being treated by some of the staff in jobcentres.
Mrs Lewell-Buck
I have noticed that compassion and understanding are being completely removed from the jobcentre. There are no grey areas anymore; it is black or white. When I went to my local jobcentre to discuss some of my constituents’ complaints, I was shocked by how dismissive the local management team were. They explained that they refused to offer a private room because they did not want to set a precedent. In other cases, they simply said that they did not believe what I and my constituents were telling them. The whole attitude was completely negative and showed the confrontational way in which jobcentres now deal with claimants. In fact, the attitude shown to me was so appalling that I complained to the regional manager. It was not that I was particularly fussed by how they spoke to me; my concern was that if they speak to a Member of Parliament in that way, how on earth are they treating our constituents?
Jobcentre staff are ultimately there to provide a service, and to help people find work. If someone has special requirements, staff should be allowed to accommodate them. The Government’s hard-line approach and the pressure on staff to meet targets mean that the focus has changed and the majority of hard-working staff, who I genuinely believe want to do their jobs properly, feel hindered and frustrated about being unable to do so. When I was looking for work, advisers were there to guide jobseekers into work or training that was right for them. It was a process that treated people like human beings. That is important when people are already feeling low or marginalised because of their unemployment. That is not how the system works today. Now the role of the jobcentre is to police the unemployed and punish them for making even the smallest of mistakes. If they are five minutes late for an appointment, there is no mercy or discussion—their benefits are simply cut off. Where once staff were there to advise, they are now told to check up on claimants, to police them and to catch them out.
As far as I am concerned, our jobcentres are no longer providing a good enough service. Staff are under pressure to get people off benefits by any means necessary, and there are perverse incentives to push people on to make-work courses. Constituents have complained that they have been ordered to take the same CV writing courses over and over again as a substitute for genuine support. That is a complete waste of time and does not get them into work. What it does, however, is remove them from the unemployment figures. Like those on the Work programme, they are not employed in any meaningful sense, but they do not show up in the figures. I make it crystal clear to the Minister that being on the Work programme or stuck on make-work training courses does not constitute employment, no matter how much her Government would like us to think so. The only purpose of the schemes is to help a jobcentre meet its targets, because it can use the courses as evidence that it has provided training or work-related activity, or use non-attendance as a reason to sanction benefit claimants.
In any organisation, the attitude of those at the top filters down. That is why the culture change at the DWP fits right in with the ugly attitude that the Government have taken towards people on benefits. They have encouraged and continue to encourage the public to think of claimants as spongers or skivers, so that working people struggling to get by will blame the unemployed man or woman next door, claiming their £70 a week, instead of the tax-dodging companies that cost our economy billions every year. The way claimants are treated is nothing to do with getting people into work; it is about scapegoating the poor and making them a target for the anger and frustration the public feel during a time of serious hardship. It is downright nasty politics, and the Government should be thoroughly ashamed of themselves.
Julie Elliott (Sunderland Central) (Lab)
It is, as ever, a pleasure to serve under your chairmanship, Mrs Riordan. I congratulate my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) on securing the debate, and I applaud the graphic, detailed way in which she outlined the problem faced by all Members of Parliament in the north-east. Sadly, the cases she outlined are not unusual. They are common—even the case where the gentleman died. There has been more than one such example in recent times in the north-east, and that is completely unacceptable.
I will start by talking about the staff at Jobcentre Plus and the DWP in general. They work hard and are put under enormous pressure. Staffing levels have diminished dramatically since 2010. We hear anecdotally about the pressures of informal targets on sanctions—we all know they are in place—from people who are too frightened to say something, so they tell us off the record. I sympathise enormously with them about the job they are being asked to do every day.
The other thing I want to discuss before I go on to the example I will talk about is the north-east’s economy. I have lived in the north-east my entire life. I live two miles from where I was born, which is very common in the north-east. We are a close-knit, supportive community, and that is replicated throughout the north-east, not just the part I am from. We have had high unemployment throughout my lifetime—obviously, there have been peaks and troughs, but it has been consistent. Although more jobs are available at the minute, their quality has to be questioned: a lot involve zero-hours or temporary contracts, so they give no stability.
We have a lot of people who, through no fault of their own, rely on benefits. We are also a low-wage economy. Furthermore, most people’s families do not have massive wealth, so if people fall on hard times, their families do not have the wealth to support them informally. If somebody’s benefits are sanctioned, they really do have no money. They cannot go to their families to ask for a little help, because their families simply do not have the money. It is not that they do not want to help—they simply do not have the finances to.
The other thing to say about the background of people in the north-east is that we are a hard-working area. Life is pretty tough for many people, but people have an ethos of working hard, paying their way and doing a fair day’s work for a fair day’s pay. That is the mindset of people in the north-east, and I take great offence when I read or hear about people criticising the area and talking as if people there were just scroungers, because that simply is not the case. I have no truck with people who really try to fiddle the system, and I would be the first to remove their benefits and sanction them, but they are not the norm, and they are not the people we are talking about.
People who need to claim benefits should be treated with dignity and respect, not only by those they deal with at the DWP and Jobcentre Plus, but by the rest of society. They should not be made to feel that they are worth any less than the person next to them because, for whatever reason, they have to live on benefits. However, the treatment people receive often falls short; in some cases, it is absolutely appalling and unacceptable.
I want to give an example of a case study I have had. Like my hon. Friend the Member for Newcastle upon Tyne Central, I get a staggering number of cases every week. A few months ago, I had a constituent who was unable to attend an appointment at Jobcentre Plus because he had suffered an asthma attack and was in A and E. He telephoned his adviser to tell them, although, to be fair, it would have been perfectly reasonable if he had not managed to do that. However, he did, and he spoke to the receptionist about the Jobcentre Plus appointment that had been scheduled for that day, which he would clearly be unable to get to. He explained his reasons and, on returning from hospital, he sent a letter.
A few weeks later, he received a letter saying that he had failed to comply with the scheme’s requirements and that his jobseeker’s allowance would be sanctioned for one month. Extraordinarily, the letter went on to say that an asthma attack was not a sufficiently good reason for missing an appointment. I am an asthmatic myself, and I know how crucial it is for people to get to hospital pretty darn quick if they have an attack that is out of control. The difference between not getting treated correctly in a timely fashion and surviving is paper-thin, and we read every year about the tragic cases of people who have not got to hospital quickly enough. However, if people get to hospital in time, they can be treated and brought back to health quite easily. The time element is crucial, which is why I said that, although my constituent took the time to ring, it would have been acceptable if he had not.
Miraculously, when my constituent came to me and I got involved, the decision was overturned. The most annoying thing is not that it was overturned—that was absolutely the right thing to do—but that it was made in the first place and that my constituent ever had to come to me. That is the problem, and that is what needs sorting out.
If people are ill, or have other genuine reasons for not being able to get somewhere at a certain time, they need to be treated fairly. They need to be treated like anybody else in any other system, and to be believed. In this case, my constituent had discharge letters from hospital; there was no question but that he had been at hospital, but that was not seen as a reason not to attend an appointment. That is just one case, but it graphically explains the problem.
I do not want to go over other cases, because we all have them. The people we are talking about are vulnerable. Many have not always been on benefits, and the unemployment that has arisen in the last few years is new to them. They are not part of a culture of benefit claiming. Treating them in this absolutely inhumane way is wrong and unacceptable—there is no other way of saying it—and it reflects badly on the DWP, the Government and, in broader terms, us as a society. We should be proud of the fact that we have a safety net for people who fall on hard times.
Sheila Gilmore (Edinburgh East) (Lab)
Let me take the debate slightly further north. I was recently astonished to read reports that the DWP was issuing stories and details about people they alleged were scroungers to the media to feed this attitude that my hon. Friend describes. This is therefore coming from the top, not just from a local office level.
Julie Elliott
That is not something I have read of, but it would not surprise me, quite honestly.
This week, the Select Committee on Work and Pensions held its first oral evidence session on benefit sanctions beyond the Oakley review. The review was highly critical of what was going on, and I look forward to seeing what comes of that. The Minister needs to accept our comments as constituency MPs who have witnessed the same problem at different jobcentres and offices. It is not one office that is to blame; this is about a culture. I hope that she will listen and act on our comments, because we are genuine people, and I am sure that the way we have described the system working is not what she would intend. I am interested to hear her comments on the situation as it actually is.
Mr Nicholas Brown (Newcastle upon Tyne East) (Lab)
It is a pleasure to serve under your chairmanship, Mrs Riordan. It is also a pleasure to take part in this important debate. I congratulate my neighbour, my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah), on securing it. It is enormously important to the people we represent that we debate these issues and tease out things that are just not acceptable.
At the heart of the problem is the mismatch between the pressure on DWP staff and what is actually obtainable for the citizens we represent in the circumstances of the north-east of England. The inflexibility of the regime—especially the ESA regime—is at the heart of many of the individual cases that have been raised so far and of the one or two constituency cases I will raise in a minute.
The restricted nature of the jobseekers labour market, as opposed to the broader north-east labour market, is a significant factor in this, as is the Department’s practice of churning people through projects, a further period of JSA and then more projects, and of migrating them from incapacity benefit to the new ESA, when their chances of actually securing sustainable employment are not that strong.
People come to my surgeries, as they do to all Members’ surgeries, but when their opening gambit is, “You are my last hope,” my heart sinks, because I know the system is failing them and that they have been referred to me, as their Member of Parliament, by others who are trying to help them or that they feel they have nowhere else to go.
One chap I met—I will call him Mr A because I do not want to put his name into the public domain—is 62 years old. He has been a labourer all his life. One look at him told me that his days of being a labourer were over. He is on ESA. He is certainly not capable of manual work any more, but he is to be churned through a range of schemes to train him for jobs that I do not think he will ever be able to do. I went to visit Ingeus, and I do not take as harsh a view of the Work programme as my colleagues. I thought that much of what Ingeus was doing, as one of the Government’s contractors, was sensible and well founded; but I was struck by how different the labour market that it was dealing with was from the broader labour market in the north-east of England. The spectrum of all the jobs across the north-east of England is not there for people on ESA. A much narrower range of overwhelmingly service-sector jobs is open to them. I do not think that it will work for the chap who came to see me.
The same will be true for another constituent, who was referred to me by the Newcastle Society for Blind People, which was trying to help her. She is 60 years old and epileptic. Her eyeballs were removed in childhood, so she is absolutely blind. She has a carer; he cares for her, but cannot read or write. She has been transferred from incapacity benefit to ESA; therefore, the system will find her a job. She cannot write or see, but can read Braille. She uses a thumbprint for her signature. I have asked the DWP to write to her in Braille. After a lot of haggling between the Department and me, it has agreed to note my request. Perhaps I may gently put it to the Minister that there are a number of ways for MPs to deal with issues of this kind: the first might be for me to ask her politely to get the Department to do a bit more than just note my request.
Given my constituent’s age and circumstances, and the obvious hardship that she has endured throughout her life, it is not fair to her to kid her on that somehow she will now find a job she can do without overcoming every one of the hardships that confront her. It seems just wrong—almost inhuman—to put her through the sort of exercises that the Department is putting her through. It is harsh and unreasonable. I once did the Minister’s job. I was the first Minister for Work when the Department was created under the previous Labour Government. In my time as a Minister I did not come up against a case of this kind, referred to me by a Member of Parliament from either side of the House. Had I done so, I would have intervened straight away to help the victim of what I would regard as oppressive treatment.
Another constituent of mine, a 62-year-old, was sanctioned for a year for not complying with JSA. As his sanction—it actually went on for a year and a month—came to an end, he was told that he would be sanctioned for another 13 weeks, but not given a reason. He was then told that he had to fill in a JSA10 form at a jobcentre. He went there and was told that the form did not exist any more, and that he had to ring the benefit delivery centre. The centre staff told him that he had to go to Felling to fill in a declaration, and he walked from Newcastle to Felling. Hon. Members might ask why he walked, when we have some very good integrated transport arrangements in Tyne and Wear. The walk is not a direct one, because there is a river in the way, and it means going to the centre of Newcastle—in the constituency of my hon. Friend the Member for Newcastle upon Tyne Central—over the bridge and along the south bank. My constituent walked because he does not have any money to pay for his travel.
When he got to Felling the official gave him a telephone number that he had to ring. It would have been possible either to give him that without requiring him to undertake the journey, or to ensure that he had the money to make the journey on public transport, rather than having to walk. My constituent then got another phone call from the Department—which was being proactive, for once—telling him that he faced further sanctions because he had missed an appointment with his work provider. He had not missed any actual work, the House will understand —just a meeting with the provider. He missed the appointment because, as he had informed the Department, his residency at the Salvation Army on City road was closing down, and his mail was not being satisfactorily redirected. That is an issue that will apply to other people who have lived in that facility, which was quite well known on Tyneside. He spent 45 minutes on the telephone begging for a hardship payment, because he had no money at all to live on. He eventually got an £86-per-fortnight payment—just think of living on £86 a fortnight—and was then told that he stood to be sanctioned again and that his national insurance contributions would be withheld as well.
My office intervened. MPs always get the credit for dealing with these cases and it is actually our staff who do it. This is probably an appropriate time to thank our staff, who work very hard, not least on wading through pretty intransigent responses from the Minister’s Department. It is certainly not how we originally envisaged Jobcentre Plus operating when it was rolled out more than a decade ago. My assistant’s intervention meant that the matter was finally resolved in a satisfactory way; but we should not be putting people through such turmoil. The system should be on their side. It is meant to be run by the state for the citizens of the country—and it just is not. It should not be necessary for us to have to take such matters up with the Minister directly. I hope that she will take from the debate the fact that things are going wrong with case work, and that there is a need to intervene directly to turn around the culture in the Department that allows that to happen.
Mr Iain Wright (Hartlepool) (Lab)
It is a pleasure to serve under your chairmanship so early in the new year, Mrs Riordan. I congratulate my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) on securing this important debate. I am conscious of the time and the fact that several of my hon. Friends want to speak, so I want to make several quick points, based on the experience of constituents who have contacted me.
The first point is about the rise in the use of sanctions in the past couple of years. Most people would accept the principle that if people flagrantly and persistently fail to adhere to mutually accepted requirements, they should face consequences. I have a constituent who failed to attend 22 out of 26 appointments, without any real explanation, and it is difficult to argue against some sanction in that case. However, like my hon. Friends, I have noticed a large increase in the number of sanctions imposed, often for a first or light transgression, and often with no regard to the context. Life is not so black and white. If it were, everyone who went over their parking meter allocation by a minute would be fined automatically, and I think there would be outrage at that.
A constituent contacted me about his experience of realising, on the date of his appointment, that he had missed the time. He phoned up the same day to apologise and make another appointment, which was offered for the following day. He turned up and went through the interview, and was then sanctioned by post. The staff did not even have the respect to do it face to face. He was left with no income—no means of feeding himself or heating his home—for an entire month, on the basis of one missed appointment.
There have recently been roadworks at the junction of Raby road and Middleton road in the centre of Hartlepool, which have caused chaos. All road users have been affected, including bus passengers. A constituent of mine was late for her appointment because her bus could not navigate Raby road and was delayed on the first day of the roadworks. That was not her fault. She had no way of knowing it would happen; but she was sanctioned and left without money for a month.
One of my constituents was told that her appointment for a work capability assessment was cancelled; she was then sanctioned for failing to attend the cancelled appointment. If it were not so serious it would be ludicrous. Another constituent was sanctioned for a month, and left with no means of feeding herself or heating her home, because she missed an appointment once. The reason she missed it was that on the day of the appointment she was burying her grandfather, having been at his deathbed for the previous week. In all those cases, and in others, I have been able to get the sanctions overturned; but that itself raises some issues. Is it an efficient use of taxpayer resources to apply a sanction, only for staff time to be employed in overturning it? How robust, efficient and effective is the process if that continues to be the case?
My second point is about jobcentre culture. Front-line staff do not have any flexibility to determine whether a benefit claimant has failed to comply with a requirement. They have to see things in black and white and they cannot provide personalised support. The system is geared not to help individuals, but merely to process them.
Claimants can suffer appallingly as a result of their treatment. Jobcentre Plus is not seen as a place that assesses people’s skills and training needs and helps them get back into work, but as a negative place where any contact results in the delay or stopping of benefits. It is seen as somewhere where claimants are punished and belittled, rather than helped. I have constituents who have independently told me that Jobcentre Plus staff have said to them, “But you sit on your backside all day watching ‘Jeremy Kyle’, don’t you?” That cannot be acceptable. What is the Minister doing about that top-down, politically driven culture? It is demoralising for staff and claimants, and something needs to be done.
My third point relates to personalised support. Hartlepool, like other parts of the north-east, has a large number of men—it is largely men—who worked in manual occupations for most of their working lives. Many reach their late 50s and find that, because of their personal circumstances, the fact that they are becoming ill or changes to the economy, those occupations are no longer available to them. The jobcentre is simply not interested in helping them secure a new job. Through its indifference and latent hostility, it is consigning my constituents and those of other hon. Members to the scrap heap long before their time.
A constituent came to see me who had worked in factories for 35 years and had been made redundant. He was a hard worker and a proud working man. He had never been on the dole in his life, but he said that the jobcentre was treating him like a leper because he had asked for assistance. He was told to apply for benefits online, and was not given an answer or any support when he said that he did not have a computer, had never used one and did not even know where to begin. There are many people like my constituent in Hartlepool and the north-east. The digital divide is creating social exclusion that is affecting the most vulnerable people. What will the Minister do to address that?
My final point is a technical one. Will the Minister take action to ensure that jobseeker’s allowance or employment and support allowance sanctions result in the suspension, rather than the closure, of claims? The different public agencies are not talking to one another. Will the Minister also ensure that her Department distinguishes between claims that are closed because the claimant has gained employment, and claimants who are sanctioned and are entitled to housing benefit on the grounds of low income? If the Department provides local authorities with that additional information, it will ensure that those claimants’ entitlement to housing benefit continues and that they do not lose their houses as a result of that culture and their treatment.
My constituents deserve better, as do many others in the north-east and elsewhere. They are treated shabbily and with contempt. They are proud people who want to work. The Minister should be trying harder.
Several hon. Members rose—
Mrs Linda Riordan (in the Chair)
Order. I will call the Front Benchers at about 3.30 pm, so I ask the two remaining speakers to limit their speeches to a maximum of five minutes each.
Mrs Mary Glindon (North Tyneside) (Lab)
It is an honour to serve under your chairmanship, Mrs Riordan. I congratulate my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) on securing the debate and on her touching personal and factual speech.
My office, like those of my hon. Friend and other Members here today, receives many enquiries from constituents who have problems with their benefits and are at the end of their tether. My excellent staff always do their best to resolve their problems. In some instances, as has been said, constituents turn out to be swinging the lead, but when they have a genuine case we see the unnecessary distress that can be caused, and we do our best to help them.
Anybody here who has experienced unemployment—I know that some colleagues have—know how miserable it is to go through the process of signing on at the jobcentre, and they know the feeling of rejection when job application after job application does not even receive a response. When somebody gets an interview and it is unsuccessful, it adds to the feeling of deflation and their confidence goes down even further. That is why people’s experience at the jobcentre is so important.
The Work and Pensions Secretary said that in return for claiming unemployment benefits, jobseekers have a responsibility to do everything they can to get back into work, and that sanction should be a last resort. However, the examples we have heard today show that the Government are not keeping their side of the bargain and that sanctions are far from being used as a last resort.
I have two examples of people at different stages of their working lives that illustrate how my constituents have been short-changed in the jobseeker’s allowance process. The first concerns a single mother who works as a dinner supervisor for less than 16 hours per week. She is entitled to a top-up of JSA, and she dutifully always sends the necessary wage slips every month. She was shocked when her benefits were stopped because her wage slips had not been received. My office got in touch with the MP hotline. We got further copies of her wage slips and sent them in again, only to find that those had disappeared too. The issue was sorted out in the end, but in the meantime her benefits were stopped and she fell into rent arrears, all through no fault of her own.
A single, older constituent who had paid her taxes and national insurance for more than 40 years was referred to the Work programme. She attended appointments with Ingeus three times a week, and her job adviser was satisfied that she met the job search requirements. She was pleased when she managed to find a part-time job, but when she went to the jobcentre to tell them about the new job, the adviser wanted to see her jobseekers’ diary. She had shown it to the Ingeus adviser, and thought she would not need it at the jobcentre. She was told that she had not demonstrated that she had performed an adequate job search, and her case was referred to a decision maker. She was left without any money for more than a week, which caused her a great deal of hardship as she started her new job. Fortunately, she won her appeal, but that was no consolation for the poor treatment she received.
I worked in the former Department of Social Security back in the 1980s, so I know that staff take pride in their work and want to help people. I cannot help thinking that the Government cuts to the public sector are putting more pressure on staff in our jobcentres and that consequently, claimants in the north-east and across the country do not receive a fair and proper service. Evidence shows that advisers interpret the guidelines for sanctions inconsistently, which means that claimants in similar circumstances can receive completely different decisions. That should never happen.
I watched some of the first session of the Work and Pensions Committee’s inquiry into benefit sanctions this morning, and I was surprised to hear that the sanctions process is not monitored. How can the Government possibly measure its success? North Tyneside citizens advice bureau told me that, according to the monitoring of a similar scheme in Canada, sanctions have little or no effect on claimants’ behaviour. I have written to the Secretary of State about the examples I have outlined. I hope the Minister can give my hon. Friend the Member for Newcastle upon Tyne Central and our constituents some positive answers, and that in the future jobseekers receive the fair treatment they deserve.
Andy McDonald (Middlesbrough) (Lab)
It is a pleasure to serve under your chairmanship, Mrs Riordan. I, too, congratulate my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) on securing this debate. She spoke with great passion, authority and personal conviction, and we should listen to her.
At the start of the day in the Main Chamber, the Speaker’s Chaplain leads the main prayer in which we undertake to
“seek to improve the condition of all mankind”.
That sentiment is hardly likely to chime with my constituents who have had recourse to the benefits system or who have suffered sanctions.
The creation of the welfare state by the great post-war Labour Government ranks among our nation’s greatest achievements. It was created with the conviction that in a wealthy nation such as ours, nobody should fall into the depths of deprivation and extreme poverty. British citizens fund vital public services with their taxes, with the understanding that when people lose their jobs or fall on hard times there will be a safety net and a network of support to assist them and help them back to employment. We expect anybody who uses those services to be treated with dignity and respect.
There is a consensus among the public that the existence of such a system is right and civilised. However, under the Government, we have witnessed policies that seek to redefine the role of the welfare state and the status of those who depend upon it. Our society includes those who, through luck, hard work or talent, are unlikely to ever need to depend upon the state. Those people are often entrepreneurs or committed and hard-working individuals who work in businesses and create wealth and jobs. It includes those who have the potential to make great contributions to our society, but require support to achieve what they are capable of, and it includes a small minority who need more than just a gentle nudge to engage with employment and contribute towards society. It also includes vulnerable people who live at the margins of our society, and who have not been as fortunate as others and are in need of our support, compassion and love. The Government, however, have lumped together all those who have to use benefits. The notion that has permeated this Government’s welfare reforms has been that joblessness is the personal and moral failure of the unemployed to which there is an “all stick and no carrot” solution, plunging them into destitution. It is almost a case of, “If we make people’s lives more difficult and more unbearable, somehow there will be a positive outcome.”
Since the existing regime was introduced, 1.4 million jobseeker’s allowance sanctions have been imposed. My constituents are sanctioned more than any others in the north-east, with more than 1,000 sanctions applied against JSA claimants in Middlesbrough between April and June last year, 300 more than in any other constituency. Ministers would have us believe that each of those sanctions was a just act that punished workshy people for failing to demonstrate that they were looking for employment. Every hon. Member present knows, however, that that is often not the case. We are inundated with stories from our constituents who describe a punitive regime that punishes benefit claimants for things beyond their control. The human cost is unacceptable.
One case is that of a single mum who works part-time as a lunch-time supervisor at a primary school while undertaking training to become a classroom assistant. She is in receipt of in-work benefits. Despite her asking for the interviews to be arranged outside her working hours, they were constantly arranged during them, meaning that she faced sanctions. She failed to attend one interview that was due to take place on the day that her father died. In the distress of the moment, she forgot the appointment, but when she rang the jobcentre the next day to apologise and explain that her dad had died, it was not accepted as a valid reason for missing her appointment. She was sanctioned for a month.
Another case is that of a 19-year-old homeless boy with no family, a baby and no support network, who has little in the way of formal education and limitations in his ability to communicate. He failed to complete a particular form correctly, which was beyond his capacity. He was duly sanctioned and left destitute. He then stole food from a supermarket in the hope and desire that he would be sent to prison, so that he would have something to eat and somewhere to sleep.
The number of such cases is shaming and a damning indictment of the Government and their policies. The Government refuse to explain the increase, but numerous sources have reported that it is being driven by unofficial targets imposed on jobcentres by the DWP. That is unacceptable. Introducing targets or expectations for jobcentres on sanctioning benefit claimants is a perversion of the values of the welfare state. People’s benefit entitlements ought to be decided on the basis of need, not on an arbitrary target set in Whitehall.
Ian Lavery
One important issue that has not been discussed in the debate is the coalition decision to withdraw the independent living fund, which hundreds if not thousands of disabled people in our area, the north-east, depend on. Does my hon. Friend agree that that decision should be reviewed? The independent living fund is there to help disabled people. If it is withdrawn, disabled people will end up in abject poverty.
Andy McDonald
My hon. Friend makes an absolutely valid point. That the circumstances of people dependent on such a vital source of income should be reduced—we saw on the television last night the people protesting outside this place—is an absolute horror and brings shame upon us all.
In conclusion, with the vulnerable being penalised along with hard-working people who do all that we expect of them, either the Government must concede that, on their watch, the safety net that marks us as a civilised society has become no longer fit for purpose, or they must admit to their audacious abandonment of the principles of the welfare state.
Helen Goodman (Bishop Auckland) (Lab)
I am pleased to serve under your chairmanship this afternoon, Mrs Riordan.
I congratulate my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah). She has done everyone a great service in securing this extremely important debate. I am also immensely pleased that so many Labour MPs from the north-east have spoken this afternoon: my right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) and my hon. Friends the Members for South Shields (Mrs Lewell-Buck), for Sunderland Central (Julie Elliott), for Hartlepool (Mr Wright), for North Tyneside (Mrs Glindon), for Middlesbrough (Andy McDonald), for Wansbeck (Ian Lavery) and for Washington and Sunderland West (Mrs Hodgson). They all took part and have spoken with compassion and forensic attention to detail, which it would be nice to see from those on the Government Benches as well.
To understand the problem, we need to think more about the reasons why people in the north-east claim benefits. The north-east is the area of the country with the highest unemployment. At the moment, unemployment is 9%, compared with a 6% national average. An issue with sanctions is that we suspect them of forming part of an attempt to massage down the level of unemployment figures, in particular in our region. It is absolutely clear, however, that there is a serious problem for people in finding work, as my right hon. Friend the Member for Newcastle upon Tyne East pointed out. The ratio of vacancies to claimants, when that number was last collected in 2012—again, the Government are hiding more recent numbers from us—was 4:1 in the south-east, but 9:1 in the north-east.
High unemployment in the north-east is caused by economic restructuring, as my hon. Friend the Member for Hartlepool pointed out. When people move from, say, being an administrator in the local magistrates court, they are not immediately able to go and work for a biotech company. They are bound to be unemployed for a certain time. We need a safety net to support them during that period. The Government have been boasting about the level of public spending cuts in the north-east, because they believe that we were over-dependent on public service jobs, but it behoves the Government to take a more positive attitude to the people most affected by their chosen policies.
The second problem, also mentioned by my colleagues, is the overhang of heavy industry, which means that we have higher levels of industrial injuries, disabilities and chronic illnesses. Therefore, any problems in the benefit system that relate to JSA, PIP, disability living allowance, ESA, IB or industrial injuries benefit—all areas that the Department has managed to mismanage over the past five years—weigh particularly heavily in our region. In Redcar, for example—it is unfortunate that the hon. Member for Redcar (Ian Swales), who is a Liberal Democrat, has not bothered to turn up today—16% of the working-age population is on out-of-work benefits. That is not a lifestyle choice by the people who live in Redcar; it is because they face serious problems.
My hon. Friend the Member for Newcastle upon Tyne Central talked about the problem of people with chronic conditions and disabilities who have wrongly been turned down for benefits. That continues to be a problem and I still have such problems in my constituency. It is incredibly unpleasant for people, creates misery, worsens their health and is a prime example of Tory welfare waste. The level of appeals has been as high as a third; the level of decisions overturned has also been a third—the Minister is looking puzzled, but I am quoting from what the Select Committee said about the ESA system in 2012. The cost to the public purse therefore has been £70 million per year. In the north-east, we are used to working with the Japanese and they have a “right first time” approach; we would like to see more of that in the benefits system.
The second set of problems involves the immense delays that we see over and over again. The situation is pitiable and particularly problematic at this time for people making PIP applications. Since April 2013, 670,000 people have made claims; as of last October, 287,000 people were still waiting for decisions. That is appalling; that is almost half. I know the problem is a continuing one, because my constituency office is looking at 35 such cases. At the moment, 900,000 people in this country are stuck in that waiting period. What is the Government response to the report by Mr Paul Gray? It would be helpful to hear something from the Minister. Again, however, we have the problem of the Government avoiding addressing the issue by delaying the publication of the statistics on waiting periods for some further months.
The final and most discussed set of problems is to do with sanctions. Everyone knows that we need some sanctions in the benefits system. Indeed, like my right hon. Friend the Member for Newcastle upon Tyne East, I was a Minister in the DWP during the previous Parliament, and the last thing I did in that role was take a statutory instrument through the House in March 2010 to tighten up the sanctions regime.
Under this Government, however, we have seen an absolute explosion in and abuse of the use of sanctions. My right hon. Friend the Member for East Ham (Stephen Timms) had an Adjournment debate on this issue in the main Chamber just before Christmas, to which the Minister responded. My right hon. Friend has discovered that, across the nation as a whole, the number of people sanctioned has doubled during this Parliament, that sanctions are longer and that a quarter of JSA claimants will now be sanctioned at some time during their claim. In the north-east, it is even worse. The number of ESA claimants sanctioned has increased at least fourfold and the number of JSA claimants sanctioned has doubled, meaning that in any year, 30,000 people are being sanctioned at any moment in time in our region.
Mrs Hodgson
It is obvious to the Opposition that that is what is feeding—I use that word deliberately—the rise in people accessing food banks. When I visited a food bank in Washington in December, the people there said that when they analyse the reasons why people are coming through their doors, benefit sanctions are by far the top reason given.
Helen Goodman
My hon. Friend is absolutely right. The sanctions problem is extremely alarming. For example, a constituent of mine, Mr A, rearranged an appointment he had missed—he had got confused because a close family member had died. When my office got in touch with the jobcentre, the sanction for that was overturned. Mr B was sanctioned for missing an appointment because he was collecting his ill daughter from school. The jobcentre falsely accused him of having a fictional child. The sanction was overturned on appeal, but in the meantime he was sanctioned for 13 weeks. In another case, Ms D was sanctioned because she refused to do a job at the weekend, when there was no child care.
There is a pattern to the sanctions cases that we are receiving, taking up and seeing overturned. I had a look at the Department’s guidelines on what constitutes a good reason for someone not being sanctioned if they miss an appointment. Good reasons include: domestic violence; health conditions; harassment or bullying at work; homelessness; travel time; domestic situations, such as bereavement or child care issues; learning difficulties; and legal constraints. We have heard examples of cases involving almost all of those reasons today.
Will the Minister deny this afternoon that there are any targets for jobcentres on sanctions? Will she tell us how many sanctions have been overturned on appeal? Will she also tell us how many of those overturned fall into those categories—how many people have been wrongly sanctioned because a bereavement, a child care problem or ill health have not been properly taken into account?
From what we are hearing it is clear that decision makers and people working in jobcentres are not clear about what is in the guidelines. When the Minister gets back to her office in half an hour’s time, will she write a letter to all the jobcentres across the land to tell them that those categories are there for good reasons and that she expects decision makers and people who work in jobcentres to take proper account of the guidelines that her Department has promulgated? We cannot have a set of guidelines in the left hand and a piece of behaviour in the right hand, and no connection made between the two.
As my right hon. and hon. Friends have said, however, it should not be necessary for us to come to the Minister to tell her about these problems. She should know what they are. She should have tackled them and done something about this situation. I want to know why she has not. Why has she not sorted out the sanctioning problem? I very much hope that she will be able to tell us, in detail, what she is doing about it. She must understand that she is responsible for the misery caused to thousands of people up and down this country. Of course, it is possible that Ministers in her Department do not care about the misery they are creating, in which case, as no good reasons for what is going on have been given to us, one might say that they are the ones who should be sanctioned.
The upshot of the situation is that we have seen appalling maladministration and cases of people living in a half light that make the Kafkaesque seem totally straightforward. As my hon. Friend the Member for Washington and Sunderland West said, the number of people in the north-east accessing food banks has gone up, and in the six months between April and September last year it reached 40,000.
The whole situation is the result of Tory welfare waste. It is a waste of public money, a waste of official time—things get done and then redone, and redone again—a waste of the efforts of people in the voluntary sector, who would much prefer to be doing creative projects, and it is certainly a waste of the lives of the people who are on the receiving end.
The Minister for Employment (Esther McVey)
It is a pleasure to serve under your chairmanship, Mrs Riordan. I thank the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) for securing the debate, as it allows me to clarify and explain some of the points that have been raised. First off, I want to speak on behalf of the 34,000 jobcentre staff who work in over 740 jobcentres across the country and see about 400,000 people a month. The attacks I have heard on them are completely misplaced.
Esther McVey
I will continue, because I have heard specific quotes today. I have to defend those people, because I believe they work incredibly hard.
Esther McVey
No, they were specific quotes used by Members about what advisers had said. Those people in the past year alone have helped record numbers of people into work, and work consistently hard every day, to the best of their abilities, so I want to speak on their behalf.
I will also say that nobody, whoever they are, should be treated shoddily, badly or rudely—I think those were the words used—or as a lesser person in some way because they are on benefits. That is not allowed and should not happen. If it is proved that anybody has done that, they are answerable to me. I will not have people doing that anonymously.
Ian Lavery
Is the Minister saying that she is unaware of the fact that people are being treated shoddily and poorly in jobcentres? By the way, nobody here has had a go at anybody other than the people in jobcentres who were treating people like that.
Esther McVey
I am trying to follow the logic. Apparently we were not talking about the staff, but there are people who are treating people shoddily, badly and so on; the hon. Gentleman therefore is talking about people who work in jobcentres—[Interruption.] I would like to finish my sentence.
Esther McVey
Not at this moment, no. When people have been spoken to or treated like that, the people who have done that will be brought to account. I am saying that it is not acceptable that anybody is spoken to in such a manner, irrespective of who they are. I will defend the right of anybody to be spoken to properly and courteously. That is only right, and it is the way I would expect everybody to speak to others.
Esther McVey
I will give way first to the hon. Lady who secured the debate.
Chi Onwurah
I thank the Minister for giving way, but I have to say that I have rarely heard such a cowardly defence of a position—attacking the people for whom she, as Minister, is responsible. All of us here made it very clear that this is about the culture. She shakes her head, but I hope that she has some experience of the responsibility associated with management and will therefore take responsibility for the culture that she and her Government have created, and for how people behave in that culture. If she will not do that, she is even less in touch with reality in this country than I thought.
Esther McVey
As I said, I take full responsibility, because I would not accept anyone speaking to anyone else, irrespective of who they are, in a discourteous way. Obviously, hon. Members would like to know that, actually, claimant satisfaction has increased under this Government. It has increased in the north-east, and at the moment it stands at 81%. That is only right. We constantly monitor how people are treated and what happens.
I meet with staff, claimants and businesses daily to ensure that we are doing the best for all of them. When we talk about different people—where they have come from, their backgrounds and the various paths that they have trodden—I have always said, “There but for the grace of God go I.” That is something that I would totally live by, and which I think is only right. Anyone may be only one pay packet away from being unemployed, whether owing to redundancy, to falling on hard times or to a family matter. I live by that completely, because all of us here may know family members or members of other people’s families who have fallen on tough times and come to the state for support. It is only right that we support those people as best we can.
Mrs Hodgson
I am grateful to the Minister for giving way. She said that she will not stand by anyone in the work force if such cases are proven. Therefore, if any Member can bring evidence to her, will she commit today to looking into those cases? There are probably just a few bad apples among the work force, with the rest of them doing a sterling job.
Esther McVey
Absolutely. If anyone comes forward to point out what has happened, the people involved should be brought to task. I would like to think that these are instances of bad apples, because I do not believe that that reflects the 34,000 people who are doing a sterling job, and who have helped so many people into employment—that is their job. They come into the profession because they want to help other people, and it is only right that they do that. As for feeding stories to the media—words such as “workshy” and “scroungers” were used today—I can honestly say that I have never put forward a story like that, and I never will. That serves nobody’s purpose.
We have talked a lot about sanctions. Sanctions have existed since benefits were created. The Oakley review described them as
“a key element of the mutual obligation that underpins both the effectiveness and fairness of the social security system.”
Benefit sanctions provide a vital backdrop in the social security system for jobseekers. That is correct, and I think I heard Members from both sides of the House agree with that. [Interruption.]
Mrs Linda Riordan (in the Chair)
Order. The Minister must be heard. I know that emotions are running high, but the Minister is replying and it is entirely up to her whether she chooses to give way.
Esther McVey
On what happened pre-2010, that was so significantly different from what is happening now. There was widespread inconsistency in decision making, with similar cases treated differently in different jobcentres.
Esther McVey
I will not; I will proceed a little further. We had to ensure that we did not have different approaches and inconsistencies. We had to ensure that everyone was treated the same and fairly across the country. In 2010, 1.4 million people had spent most of the previous decade trapped on out-of-work benefits, so our mission was to renew the incentives to work and to remove barriers in people’s way and, in so doing that, transform the benefit system for those who were locked out of work but who wanted to work, so that, going forward, we could give them the best help to get them into work.
The latest employment figures nationally and in the north-east show that employment has increased by 1.75 million since the election, and by nearly 600,000 in the past year. In the north-east, it has increased by 32,000. There are a record 30.8 million people in work in the UK and 1.18 million in the north-east. Employment for women in the UK is at a record number of 14.4 million and rate of 68.1%. That has increased by 300,000 in the past year in the UK and in the north-east by 18,000.
Private sector employment has increased by nearly 640,000 in the past year—nearly 2.2 million since the election—and 60,000 in the north-east. We have done that as part of our transformation of the UK as a whole to get it back to working. There are various sources of extra support, such as the £310 million in the north-east for the regional growth fund. There are new and other companies expanding there, such as Siemens and Quorn. There is offshore development, and £20 million for research to create jobs and innovation. That shows that considerable infrastructure investment is going into the north-east.
Helen Goodman
Will the Minister please address the issues that we raised about why people are being sanctioned, and say what she will do about it?
Esther McVey
Part of the picture—perhaps Opposition Members do not want to hear this—is about why welfare has been changing and what has been happening. How many people are sanctioned? We know that, per month for JSA, the figure is between 5% and 6%, and that for ESA the figure is less than 1%. In the past year, the number of people sanctioned actually decreased. The number of adverse decisions overturned on reconsideration is 12%, and the figure on appeal is 3%.
Chi Onwurah
I thank the Minister for giving way. I repeat that we specifically asked her not to repeat the statistics that she used in previous debates, but to address the issues that we were raising. In these last two minutes, will she say what she will do to ensure both that our constituents are not treated in the ways shown in the examples we have given and that the sanctioning regime is fair? That is not how it is now.
Esther McVey
I have been answering those points. Today’s statistics were specifically for the north-east. They show the help and support that we have given to individuals who would have been locked out of the workplace but who were given support to get into work. We have reduced the figures for worklessness and for children living in workless households; all of that is key.
On digital separation, the extra support needed there and how difficult that is for people, one of the key things is to help people who are digitally excluded to be able to use IT, because they will need that not only to claim benefits, but to get a job and a cheaper standard of living. We are providing extra support to enable people to claim benefits, and to benefit them later in life, once they have got a job.
We have provided more support than ever before with training, extra help, work experience and sector-based academies. With that comes a greater commitment from the individual. We have ensured that that is totally personalised: when each person walks through the door, they will get an intense interview with their adviser on making a claim and giving a commitment. Everything that they want to do—their hopes, dreams, ambitions and where they would like to go—is written down and formulated, so that, between the two of them, they have a claimant commitment that they can work from. They get the best out of their time, and we understand what they need so that we can help them. It is a deal between two: those who need a job and those who are giving them the support. That is key: how do we best help that individual to get a job? How do we bring about a culture that is all about support to get people into a job?
Short Let Deregulation (London)
(9 years, 4 months ago)
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Ms Karen Buck (Westminster North) (Lab)
I am extremely grateful for the opportunity at the 11th hour to explain to the Minister the concerns that I am picking up from constituents, residents, community associations and local authorities about the impact, particularly in inner London, of the proposals to deregulate further the rules on short-term lettings.
Residents in my local communities that are particularly affected—in areas where there is already a substantial proportion of private rented accommodation that is very much at the front of this kind of problem—are already under a number of pressures; I will develop that point later on in my speech. They are very anxious about how much that will be extended with further deregulation. I believe that measures can still be taken that can offset those problems for my local residents.
The Government’s logic in extending deregulation is that home owners should be free to take decisions about what they do with their own homes, within some continuing limitations. Of course, no one wants to put in place petty, bureaucratic restrictions. If a home owner wants, for example, to do a home swap when they go on holiday for two or three weeks, or to take advantage of their absence to let their home out for a week or two, they should not be subject to severe restrictions and enforcement action. However, what local authorities will say—particularly the central London authorities—is that they do not seek to enforce against that kind of casual and holiday use, but they do seek to use the existing law to enforce against the significant and growing problem of abuse of short-term lets. What seems reasonable when viewed as cutting red tape for the individual can feel very different when it is scaled up and applied to the residential economy of central London neighbourhoods. That is certainly the conclusion of the residents and amenity societies in Westminster.
Even before the deregulation, those neighbourhoods have been facing this pressure, and local authorities have been feeling the cost of enforcement, as residential neighbourhoods increasingly resemble an extension of the hospitality industry. That can be confirmed by spending a minute or two on home-letting websites such as Airbnb. The simple fact is that there is a strong economic incentive for inner London property owners in particular to turn over their properties to commercial use. Data collected by Westminster council a few months ago demonstrated that hospitality rents are far higher than those that apply to longer-term residential properties. It found that a one-bedroom flat would earn almost £800 a week in the short-term let industry, compared with £440 on average for a longer tenancy—and prices are rising proportionally.
Mr Andy Slaughter (Hammersmith) (Lab)
I am pleased that my hon. Friend has secured this debate. She mentioned Airbnb, one of the more aggressive marketers. Not a day goes by without constituents writing to me having been asked by this organisation to give their flat or house over. They are worried because they feel that residential areas are effectively turning into hotels, and as a consequence, there are fewer properties in an area where there is already great pressure, and there is also a lot of disruption to their lives.
Ms Buck
I am grateful to my hon. Friend, because that is exactly the substance of my comments, and I agree with him totally. As I said, a one-bedroom flat could generate £800 a week in the short-term let industry. For a two-bedroom flat, Westminster council estimates that £1,372 a week could be earned, compared with £600 in a residential let. For a three-bedroom flat, £2,660 could be generated, compared with £950 for a longer-term rental, and for a four-bedroom flat, £3,367 could be earned, compared with £1,158. That economic incentive not only reduces the attractiveness of longer-term residential letting, but distorts rents elsewhere and reduces affordability still further.
Central London, and particularly Westminster, has traditionally been the largest private rental market in the country, meeting a growing need for rental homes offering accommodation to different groups of people. That includes people who want to move to London for employment, sometimes on short-term contracts; students and young people who are starting out in life and saving for a home; and people in housing need who are unable to access a declining stock of social housing. We need a healthy private rented sector. Even if that sector is less secure than owner-occupation or social renting, and in many cases, less attractive, it is none the less an important element of the residential mix in central London.
The growth of the unplanned and deregulated hospitality economy is already eroding the ability to provide homes. Indeed, the purpose behind the original legislation that the Government are seeking to change was
“to protect London’s existing housing supply, for the benefit of permanent residents, by giving London boroughs greater and easier means of planning control to prevent the conversion of family homes into short-term lets.”
Around 3,000 properties are estimated to be in use as short-term accommodation in Westminster alone. That figure is almost half as much again as the total number of Westminster’s homeless households who are in temporary accommodation, who are of course in many cases increasingly being forced out of the borough in which they live. In some cases, they have lived in the borough for decades, even their whole lives. I am not suggesting that there is a neat match between the two kinds of accommodation, but the figures are striking.
Westminster council’s estimates show a loss of housing stock equivalent to seven years’ worth of housing supply. That figure is simply extrapolated from the 7,300 enforcement actions taken with regard to the alleged unauthorised use of property for short lets since the millennium. Further deregulation can only add to the loss of homes to commercial use, as it becomes easier and less risky to change to commercial use, and harder for the local council to detect abuse. It cannot be a coincidence that Camden council found 923 flats being offered on Airbnb in October last year. That figure is up 37% on the previous three months, so over the months that followed the Government’s introduction of that clause in the Deregulation Bill, the amount of property advertised as lets of this kind has soared.
What an irony it is that at the very moment when the Government are seeking further deregulation, other cities such as Paris are looking into tightening regulation to protect their city. We are going in the opposite direction. The Parisian authorities are so worried about the drain on residential property that they are enacting measures to bring the situation under further control.
It is not only the loss of accommodation in the longer-term residential sector that is a concern; even without short-term lets, the private rental market has a downside, which is the massive turnover of population, with a one-in-three churn in the electoral register in Westminster annually. A short-term-lets economy exacerbates that trend dramatically. As Westminster council has said, there is a
“proven negative impact…arising from short-term letting, as longer-term...residents are forced out, the consequences of which include an increase in anti-social behaviour, reduced security and a higher fear of crime for permanent residents in the vicinity of properties used for short-term let purposes.”
The 18 Westminster amenity societies, in a joint representation, added:
“Short-term letting is causing a major problem for some permanent residents in a number of these amenity societies, particularly in cases where short-term lets are regularly made. There can be real problems of anti-social behaviour (and even intimidation), noise, refuse collection problems and similar issues. The Council’s dedicated ward budget, which reflects the wishes of a particular ward community, has in three cases set aside funds to tackle the problem.”
To that can be added further concerns, including inconsistent standards within the hospitality sector, potentially leading to undercutting on health and safety standards; the lack of security checks on guests; and the potential for fraud, including housing benefit fraud.
The findings of the London Councils survey of local authorities are therefore unsurprising: 92% of responding boroughs said that short-term lets caused problems with noise and nuisance; 92% said that the issue led to a loss of permanent accommodation; 75% said that it caused a loss of community identity; 58% said that it caused a heightened fear of crime; and 25% said that it increased crime and fire safety risks. All the findings were confirmed by local residents replying to a survey that I undertook in selected blocks of flats in high-risk areas. With only a few exceptions—there were some people who felt strongly that home owners should be able to do as they wished with their property—residents reported concerns. One Lancaster Gate resident described her experience in a mansion block of flats:
“People are turning up and buzzing the doorbells for keys to various flats”
all the time. She said that there are three, four, five or six people to a flat and they stay for only three or four days. She said:
“I think I am now living in a hotel because of the groups of people coming in and out the whole time...It is harder for us to know our neighbours and there is no community cohesion.”
A Maida Vale resident, also from a block of mansion flats, talked of the
“constant stream of strangers in my block, leading to an increased risk of burglary, noise and more.”
Another lady from Lancaster Gate described all-night parties and
“damaged communal areas with walls scratched and rubbish left everywhere”,
and a resident of Queensway said:
“Long-term leaseholders in blocks of flats find that short-term residents do not respect the communal areas of the building”
and
“the majority of flats are sub-let...it needs constant vigilance to keep civilised standards in a block I have lived in for forty years.”
Mr Slaughter
I am most grateful to my hon. Friend for giving way again; she is very generous. She has identified clearly the problem. It is with mansion flat blocks, and her constituency has even more of those than mine does. Many long-term residents, a lot of whom are now elderly, simply want the quiet enjoyment of their own home, but find themselves living in a highly disruptive atmosphere, often with groups of young people who do not take care of the property because they are there for days or weeks at a time and who are making their lives a misery.
Ms Buck
My hon. Friend is absolutely right. This is a common theme. This often, but not exclusively, affects older residents, who describe their experience as one of being completely stranded in what used to be a neighbourly block, where they knew people, felt a sense of security and had the quiet enjoyment of their homes. Now, they find the constant movement of people in and out very bewildering and alienating, and find that it causes or is linked to a number of practical problems.
Another resident wrote to me to say that
“this will increase problems related to noise and nuisance for Westminster residents from the short-let tenants. It’s already happening within my own apartment block, and I’ve had to complain to Westminster Council 24-hour noise hotline due to loud parties and excessive noise every week from short-let tenants in my block. This is making me want to sell my home and move to a safer, quieter neighbourhood outside of Westminster.”
Of course, none of this means that all visitors cause problems or that all landlords, whether professional or casual, are careless of the consequences of their letting. That is far from the case. It is the cumulative impact and the nature of the high turnover in the visitor and tourist economy that is often the problem; it is not the behaviour of any single person or group of people. These blocks of flats—the properties are largely flats—were not designed to be part of the hospitality economy; they were designed to be part of a residential community, and they have changed.
In addition to the impact on residents and neighbours, Westminster council—I am sure that this is also true of other local authorities—is investigating some 1,600 properties for violations of the short-term-let rules with a staff of four, at a time of massive reductions in funding and staffing. Some councillors are having to use ward budgets for this purpose—I do not think that is what ward budgets were intended for—as complaints have risen. There have been 360 complaints in the last 12 months.
If resources were going on enforcement action against the home owners renting out their home for a few weeks while they are away—against the very people whom the Government claim the deregulation is aimed at helping and relieving the pressure on—money could be saved, but of course that is not the case. Enforcement action is aimed at the de facto commercial landlord, and the new deregulated environment will make that harder and costlier to pursue, with a requirement to meet a higher burden of proof. The reality is that a bigger burden will fall on councils that are increasingly ill equipped to deal with it.
The Government seem to accept the need to limit the extent to which professional landlords can take advantage of the opportunities offered by higher incomes from inner-London lettings; otherwise, presumably, they would abandon all restrictions, rather than simply change the limit to permit 90-day letting under the Deregulation Bill. Unfortunately, that is likely to work better in theory than in practice. As the Covent Garden Community Association explained to me:
“Some amateur landlords are causing just as many problems. Not only will it be very difficult to prove who is a genuine resident but short lets even by genuine residents can be very disruptive and insecure...we are hearing complaints about this sort of thing all the time now, with an estimated 200 flats in Covent Garden alone available to rent by the night on Airbnb at any one time.”
I say to the Minister that there is still an opportunity to use the Deregulation Bill to meet the legitimate and indeed cross-party concerns raised by civic and amenity societies and local authorities in central London. By amending it to give individual London boroughs the right to override any relaxation of planning requirements for short lets that the Secretary of State might introduce, and by making it clear that local authorities could restrict lettings in respect of residential properties that were not the sole or main residence of the lessor, many of the risks could be offset. The Minister should take that opportunity.
We think that it would also be useful to consider the findings of the review of property conditions in the private rented sector before proceeding. It would be useful if the Minister could provide further information on that. Finally, we expect regulations to be tabled, and they offer greater scope for local flexibility in response to what are obviously varying pressures.
However, local authorities and the communities that make up their areas need to be listened to. In the spirit of localism, to which we all pay tribute, the Government need to understand that it is local authorities that understand their communities, and this is a particularly excellent example of where decisions need to be taken closer to the ground, balancing a wish to reduce unnecessary bureaucracy against the pressing need to sustain healthy, safe and vibrant neighbourhoods, even and perhaps especially when these are on the fringes of the hospitality heart of the world’s greatest city.
The Minister of State, Department for Communities and Local Government (Brandon Lewis)
The Government, through the legislation we are considering, are taking forward proposals that will tackle out-of-date legislation from the 1970s. Section 25 of the Greater London Council (General Powers) Act 1973 makes it illegal for London residents to rent out their homes to visitors on a short-term basis. Londoners who want to rent out their homes for less than three months are required to apply for planning permission from the council. That burden does not apply anywhere else in the country. We want just to update that legislation, to give London residents the freedom to let their homes on a short-term, temporary basis without the unnecessary cost and bureaucracy of applying for planning permission. We also want to ensure that we maintain the important provisions for the protection of London’s housing supply and residential amenity. That goes directly to the point raised by the hon. Member for Westminster North (Ms Buck), and I will come back to that in a few moments.
Section 25 provides that the use of a
“building, or any part of a building”
for “temporary sleeping accommodation” for less than 90 consecutive nights is a change of use, for which planning permission is required. London local authorities can take enforcement action against an unauthorised change of use. As a result, London residents failing to secure planning permission face a possible fine of up to £20,000 for each offence.
Clause 33 of the Deregulation Bill grants a power for the Secretary of State to make regulations in respect of short-term letting. Our intention is that regulations will set out the circumstances in which temporary sleeping accommodation in London would not require planning permission. It will also allow for the exclusion of particular residential premises, and residential premises in particular areas, from any relaxation of section 25.
We all know that the internet is creating a new world in which to live and do business. It has made it much easier for people to rent out their property; references have been made to Airbnb, for example. It allows residents to supplement their incomes and offer new experiences for consumers. Last summer, nearly 5 million overseas visitors came to the capital. Some of those visitors, as well as British residents, want to experience London as a local. That means staying with Londoners who live in London permanently, or in their homes while the resident is away on holiday. We know that thousands of London properties and rooms are currently advertised on such websites. However, each of them is potentially in breach of section 25 as it stands. There is uncertainty for householders as to whether their local authority will take planning enforcement action against them for unauthorised short-term letting.
Brandon Lewis
That is the point I was making. There is an uncertainty for residents if they do not know whether any given local authority would take action. If the local authority is not using that power, however, it will not miss it after the change in the legislation.
Planning legislation for the capital needs to catch up with our 21st-century way of living. Every year, thousands of visitors enjoy their holidays in Londoners’ homes. Such short-term letting already supports major events, such as tennis at Wimbledon. Our proposals will not only benefit London’s strong tourism industry by expanding the competitively priced accommodation offer; it will allow families to earn some extra income by making their home or spare room available to visitors. It offers an alternative to hotels and guest houses, so it can support the wider tourism industry. In addition, such accommodation helps those who are temporarily working in the capital or searching for a place to live by expanding the pool of competitively priced accommodation.
Residential homes provide a type of accommodation that is different from the average hotel or guest house. Renting a room in a person’s home, or renting their home while they are away, provides an opportunity to travel and live like a local, and it caters for a different type of client. Websites advertising householders’ rooms and homes indicate that a wide variety of accommodation is available in different locations, many of which are outside the central hotel zones.
Mr Slaughter
I do not think anybody objects to people renting out rooms in their homes. In any event, such people will not be caught at the moment. I do not think anybody objects to people renting out their property for Wimbledon or when they are away on holiday. The problem is the commercial, organised letting of large numbers of flats in single blocks, which effectively turns residential blocks into hotels or “aparthotels”. That is what we want local discretion to prevent.
Brandon Lewis
I suspect, therefore, that the hon. Gentleman will be pleased to support the Government’s proposals. If he looks back at my opening remarks, I think that that will deal with some of his concerns. I will go a bit further in a second.
London is a great city, as the hon. Member for Westminster North has outlined. Our proposed step forward gives Londoners the opportunity to be part of a huge industry and supplement their income. We want to be leaders, not followers, and we want to open up our great global city even further. Where other cities and countries may wish to shut down, we want to move forward.
I want to make it clear that through our reforms we want only to give London residents the freedom that is enjoyed in the rest of the country: to let out their homes on a short-term, temporary basis without the unnecessary cost and bureaucracy of applying for planning permission. We do not seek to provide new opportunities for short-term letting on a permanent or commercial basis. We fully recognise that London’s homes should not be lost to investors who will use them exclusively for short-term lets, and our reforms will not enable that. Through regulations, we want to provide certainty and consistency for residents in all London local authority areas. We want them to know when householders will be permitted temporarily to short-term let their property without the need for planning permission. The regulations we will introduce will clarify for London residents what is permissible, so they can be confident they are within the law. We will look to strike an appropriate balance between allowing freedom for occasional short-term letting by residents, as well as—this goes directly to the point made by the hon. Member for Hammersmith (Mr Slaughter)—maintaining the important provisions of the existing legislation to protect London’s housing stock.
I know there are concerns that our deregulation of section 25 could lead to a loss of permanent housing stock for Londoners at a time when London needs more new homes. However, as we seek only to allow residents to let out their homes while they are away, those properties will not be lost to the short-term rental market from London’s permanent housing stock. We will not be providing new opportunities for short-term letting on a permanent or commercial basis.
Ms Buck
This is the heart of the worry. If it is difficult now for local authorities to enforce against properties they believe are part of the short-term letting sector when one merely has to prove that that is the case, will it not be far more difficult to enforce when the local authority has to demonstrate that the property has not been let for more than 90 days?
Brandon Lewis
Our proposals are designed to ensure that we bring things up to date, which is why I have said that we want to make sure that we get the regulations right. It is important that we move forward and allow people to have the right flexibility. We must not be scared away from doing the right thing because something has been done incorrectly in the past. We want to move this forward and get it right for the future. We must recognise the world in which we now live, rather than harking back to something from the past that did not work.
As at present, it will still be open to property owners to seek planning permission from their local authority if they want to change the use of their premises. It will also, therefore, remain for local planning authorities to determine whether an unauthorised change of use has taken place and whether they should take planning enforcement action in the public interest, so that protection remains.
It has been suggested that our proposals might lead to an increased loss of amenity for London residents as a result of people’s behaviour. Reference was made earlier to antisocial behaviour in neighbouring accommodation on a short-term basis. Our proposed reforms will do nothing to weaken the duty on a local authority to investigate such complaints of statutory nuisance from people who live in its area, or to take action against those responsible.
I know there are concerns that people who currently short-term let property through internet sites are somehow permitted to circumvent not only section 25 but other vital measures, such as health and safety regulations and fire orders. That is not the case. I can confirm that our proposed change to the legislation will not provide a short-cut to important protections, beyond allowing householders temporarily to short-term let their property without applying for planning permission. Clause 33 of the Deregulation Bill provides a regulation-making power. The regulations will be subject to the affirmative process for statutory instruments following Royal Assent, which will enable Parliament to scrutinise the detail of the proposed deregulation. We recognise that there is considerable interest in ensuring that we get the changes right. We will continue to work closely with the London local authorities to ensure that the measures brought forward meet householders’ aspirations of temporarily letting out their homes or spare rooms but that, importantly, they retain the key purpose of section 25, which is to keep London’s homes for those who live and work permanently in London.
NHS Funding (York and North Yorkshire)
(9 years, 4 months ago)
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Julian Sturdy (York Outer) (Con)
It is a privilege to serve under your chairmanship, Mrs Riordan. I am delighted once again to have secured an opportunity to address the important issue of health care funding in York and North Yorkshire and, ultimately, the formula used to calculate the per patient funding from which clinical commissioning groups—and, before them, the primary care trusts—derive their money. Other North Yorkshire and York MPs and I have been campaigning on this issue since 2010, and I am delighted that my hon. Friends the Members for Skipton and Ripon (Julian Smith) and for Harrogate and Knaresborough (Andrew Jones) are here to support me this afternoon. I strongly believe that the nettle has to be grasped on what I accept is a difficult issue, albeit one that cannot continue to be ignored.
The quality of local health care is of the utmost importance to many, if not all, people because, ultimately, it is something upon which we all come to rely at some point in our life. Health care provision is a measure of the local community’s economic well-being and happiness, and it is in our moral and economic interest to ensure the widest availability of health services, the shortest waiting lists and that the most impressive health outcomes are available to all, which I stress. Ensuring such health care standards for all is truly one of the Government’s most essential roles. Indeed, I am sure that all hon. Members from North Yorkshire, both those who are here and those who are not, will agree that health-related concerns crop up frequently in our constituency mail. That is certainly the case in my constituency, as I am sure it is in yours, Mrs Riordan. As such, I welcome the £2 billion of health care spending promised by the Government for this financial year in the autumn statement. That injection of cash has led to every area’s budget increasing ahead of inflation in the recently released allocations. It is for such reasons that I believe the Government can stand proudly on their NHS funding record.
I have called this debate, however, to address the fair allocation of funding and the impact on health care delivery due to a funding formula that works to my CCG’s disadvantage. In a previous debate on this issue I outlined my concern that the now-abolished primary care trusts would pass on their historical debts to the new CCGs. Vale of York CCG inherited a deficit of some £7 million in April 2013 due to the current funding formula. NHS England has acknowledged that the previous York and North Yorkshire PCT received approximately £17 million less than the allocation should have provided for the local population demographic because the funding is phased in over time. Although I am pleased to say that Vale of York CCG has cleared the deficit it inherited, it is still struggling to offer many services that constituents have a right to expect. Allocations made for the newly formed CCG in 2013-14 were a straight uplift of the historical allocations, which resulted in a postcode lottery for certain health care services in my area.
Why does Vale of York CCG, in particular, receive such a poor allocation? The Government decide how much money should be allocated to each CCG. Officials begin by dividing the total budget by the number of people living in each respective area. Money is then added or taken away to account for local characteristics, including the proportion of people claiming benefits, the teenage pregnancy rate and the number of people who leave education early. That is where the problem lies. Of the 10 characteristics, nine reduce the amount of money allocated to our area. That disparity in the allocation is due to the funding formula failing to take account of both the rural nature of the region and, most importantly, age. Instead, the current formula provides a significant weighting that awards additional funds to areas with high levels of social deprivation. The allocations for 2015-16 have now been announced and, once again, Vale of York CCG has received, by a substantial margin, the lowest per capita funding of all the CCGs in the area. Although I recognise that health needs are generally greater in more deprived areas, the current formula provides far too much weighting for deprivation and insufficient weightings for age and rurality.
Age and rurality are even greater problems in my constituency and in other North Yorkshire constituencies because York and North Yorkshire have the highest proportion of over-85s in the north, but Vale of York still receives among the lowest funding per head of any northern CCG. The area also has a high number of people in care homes, with a typical GP practice informing me that up to 50% of home visits are taken up by care home residents, who account for only 2% of patients on the practice’s roll. The distribution of health care costs is strongly age dependent, and it is difficult to argue against that. On average, it costs approximately eight times more for the NHS to care for a patient over 85 than for a patient in their 40s, which, of course, is due to elderly people being more likely to have additional health problems. We are all living longer, which is obviously a good thing, but we are living longer with more complicated conditions. Age is increasingly becoming a defining factor in health care funding.
Alongside age, the formula does not account for the additional cost of providing health care services in sparsely populated rural areas. Those additional costs are reflected, among other things, in longer average journey times for ambulances and community health staff, such as health visitors. There is also a need to provide additional smaller hospitals in rural areas in order to retain accessible and essential services for those communities.
The distortion in the funding formula has led to certain areas being awash with money, which in the past has sadly led to well publicised vanity health care projects, whereas York and North Yorkshire have consistently struggled to balance the books, resulting in their continuing to take difficult decisions on health care provision. Those decisions have had a massive impact on the quality of life of many of my constituents, hampering their ability to work and affecting their careers.
To my mind, Vale of York CCG does not provide some procedures due to the funding formula. I have been contacted by many constituents over the past few years regarding their inability to receive pain-relief injections free on the NHS. I have been actively campaigning for the removal of those charges for all who require such injections. I am sorry to say that the charges are symptomatic of the postcode lottery due to the current funding formula. The CCG reviewed its position on pain-relief injections and concluded that the injections are not clinically beneficial, which is why it decided to retain the charge, but I would argue that the injections can dramatically improve people’s quality of life and should be offered free of charge. Pain-relief injections are offered free of charge by many other CCGs across the country and across our region.
Alongside pain-relief injections, another procedure that has not been available through the Vale of York CCG is IVF treatment. In fact, for a long time the Vale of York was the only health authority in the country not to offer any free IVF treatment. I know from many constituents who have contacted me about the issue that infertility has an awful effect on people’s lives, causing stress and depression, and with the potential to tear otherwise healthy relationships apart. It must be extremely frustrating for someone to know that treatments are available just a few miles away but are inaccessible to them; nevertheless, that has been the reality in many parts of my constituency for a number of years.
I was pleased to hear the CCG announce in late December that it will now offer at least one cycle of IVF. Although that falls well short of the three cycles recommended by NICE, it is a welcome step in the right direction.
Miss Anne McIntosh (Thirsk and Malton) (Con)
I apologise to my hon. Friend for missing the start of his speech and congratulate him on securing this debate. This may tempt him toward a conclusion, but does he agree that spending more on primary care in the Vale of York and other North Yorkshire CCGs would keep people out of hospital, which would obviously be to the greater good of the health service and those living in North Yorkshire?
Julian Sturdy
I entirely agree with my hon. Friend. Given the rurality of the whole of North Yorkshire, which I mentioned at the start of my speech, we know that providing health care services is difficult and expensive. That is part of the argument for why the funding formula must be adjusted. At the same time, it must be more cost-effective to deliver services in people’s homes and offer more accessibility. Nevertheless, as my hon. Friend will know from the situation in her constituency, it is important that we also keep small hospitals open and accessible. I know that that is an important issue in the constituency of my hon. Friend the Member for Skipton and Ripon. This debate is all about ensuring that we have a fair formula so that we can deliver those services.
Julian Smith (Skipton and Ripon) (Con)
On that point, when we are here in London it is difficult for people fully to comprehend the distances involved for both patients and their families in North Yorkshire. The local provision from the hospital in Ripon and Castleberg hospital in Settle in my constituency is valued really highly by families and patients alike.
Julian Sturdy
My hon. Friend is absolutely right that that is fundamental to a fair health care system and to fair health care for all. Through this debate I want to show how important that is for our area. We need a fair funding system that can deliver health care across not only York and North Yorkshire but the whole country. We must ensure that areas such as York and North Yorkshire do not suffer while others benefit. That is why we must get the funding formula revised.
Returning to IVF, the treatment now offered by Vale of York CCG does not help those who have been denied access to treatment, as have many people in my constituency over many years. They have either paid thousands of pounds privately or are now past the eligible age criteria for access to IVF. Despite that welcome news from the CCG, people living in our area had no access at all to IVF treatment for some time.
Alongside certain procedures that have been denied to many of my constituents, another area that has really felt the strain is A and E, which has hit the headlines in the past 24 hours. I wholeheartedly welcome the Government’s £700 million increase to the NHS budget to deal with well-known winter pressures. That shows the Government’s foresight: they knew that the issue was looming and so put that money in. Nevertheless, altering the funding formula would also help areas that are constrained by their budgets, because A and E funding ultimately comes through CCGs.
Finally, I want to turn to the controversial issue of clinical exceptionality and the impact that it has had on several of my constituents. Where a treatment is not routinely commissioned by the local health authority, clinicians must submit individual funding requests on behalf of their patients, which are then decided by a special panel. In order to achieve funding, the GP is required to prove that their patient is clinically exceptional from the referenced population. Or, to put it more plainly, they must be suffering more than other sufferers of the same condition.
That is, just as it sounds, an extremely difficult task for already busy GPs. It also results in an extremely tragic situation wherein a small group of people who suffer with a rare condition slip through the net and do not receive the treatment that their doctors feel that they need. Their condition is too rare for the particular treatment to be routinely commissioned, but not rare enough to prove that they are clinically exceptional and therefore eligible for individual funding.
One young constituent of mine suffers with severe gastroparesis, as well as diabetes. His devastating condition effectively prohibits his stomach from doing the job that it is supposed to do. As a result, he feels almost permanently nauseous and vomits up to 30 times a day. His clinicians believe that the most effective treatment for him is to have a gastro-pacemaker fitted at a cost of £25,000. That may seem like a lot of money, but as my constituent is unable to work and his mother has had to leave work to care for him, the cost to the state is far greater each year. The alternative treatments that he currently receives, such as morphine, also come at great cost to his health and well-being.
I have been working for some time on behalf of my constituent and alongside his clinicians to try to obtain the necessary funding for the treatment he so badly needs. The most frustrating thing for him is to know that other patients under the same clinicians, who do not suffer as badly as he does, are being accepted for funding because they live in areas that do much better out of the existing formula than York. Sadly, I fear that the lack of funding in our area is causing the individual funding request panel to interpret the rules of clinical exceptionality much more rigidly than our neighbours in, for example, Leeds.
My nine-year-old constituent Ben Foy, of Strensall, has also been a victim of the deeply unsatisfactory situation. Ben suffers with narcolepsy and cataplexy after having the swine flu vaccine, and he is known to fall asleep suddenly up to 20 times a day. Along with Ben’s family and clinicians, I have tried numerous times to obtain funding for sodium oxybate to treat his condition, but we were repeatedly told that we had fallen short of proving his clinical exceptionality.
To sum up, as it stands the funding formula is clearly causing a disparity in how health care is delivered across Yorkshire, as well as across the country. It is imperative that we move toward a funding formula that gives much greater weight to age and that recognises rurality and its associated higher cost of health care provision, while scaling back on the amount given for deprivation. We cannot continue to have, as was previously the case with PCTs, CCGs in the deprived areas of Yorkshire and the Humber receiving substantially more per capita and consistently under-spending their allocation, at the expense of CCGs in areas such as mine. Time and again, we are seeing patients being refused or pushed away from treatment because of the funding formula.
Ultimately, I accept that it is a difficult decision for the Government, the Department of Health and the Secretary of State. Along with colleagues, I have met the Secretary of State and Ministers numerous times to discuss the issue. As I say, I know that it is a difficult decision, but I fundamentally feel that we have protected the NHS budget during the past five years and we have seen more money go into the NHS over that time, which is the right thing to have done, but now we must ensure that we have a funding formula that backs that investment up and can deliver a fair health care system for all.
The Parliamentary Under-Secretary of State for Health (George Freeman)
Thank you, Mrs Riordan, for calling me to speak. It is a pleasure to serve under your chairmanship this afternoon.
I start by congratulating my hon. Friend the Member for York Outer (Julian Sturdy) on securing this debate, with the support of our hon. Friends the Members for Skipton and Ripon (Julian Smith), and for Malton (Miss McIntosh), and I congratulate them all on their contributions to the debate. I am very aware of the personal interest of my hon. Friend the Member for York Outer in health matters affecting his constituents, and of course his interest in NHS allocations, including this question of fairness for rural areas.
I will also take this opportunity to pay tribute to all the North Yorkshire MPs who have worked so hard together on this issue since 2010: my hon. Friends the Members for Selby and Ainsty (Nigel Adams), for Skipton and Ripon, for Thirsk and Malton, and for Harrogate and Knaresborough (Andrew Jones), the hon. Member for York Central (Sir Hugh Bayley), my right hon. Friend the Member for Richmond (Yorks) (Mr Hague), and my hon. Friend the Member for Scarborough and Whitby (Mr Goodwill). I know they have had one meeting, if not more, with the Secretary of State for Health, and as a group they have been an effective and forceful lobby on this important issue, which we in the Department of Health all take seriously.
Of course, the whole House will agree that good-quality patient care is something we all expect, regardless of which part of the country, or indeed which county, we live in. As my hon. Friend the Member for York Outer has signalled, the question is how we work within the overall NHS budget—I welcome his acknowledgement of the Government’s increasing that budget—to determine how funding for each area should be assessed and decided. He made the key point: that it must be done in a way that is fair to all citizens and patients, wherever and whoever they are, and that where someone lives should not in any way unreasonably distort their access to health care. It is the NHS—the national health service—and those initials should mean something.
My hon. Friend will be aware that I, too, come from a very rural constituency—Mid Norfolk—where many of the issues he has identified chime, including ambulance response times and the extra time that clinical staff and patients take to travel around. Of course, there are other issues and problems, which he has highlighted: hidden deprivation, ageing and elderly populations, and isolation and loneliness compounding conditions such as dementia, making it harder to set up initiatives such as dementia cafés.
Health funding is an issue I have taken an interest in for a long time. Years ago, I did some work in County Durham to unpack the index of local conditions and the standard assessments in local government spending. When we unpack those formulae, we discover that those used to allocate funding for deprivation are all inner-city indicators: they are all about high-rise blocks, the percentage of black and minority ethnic people, and density. They are all urban indicators, as if only urban areas really experience deprivation. So my hon. Friend is raising an important point, which goes to the heart of much of the way that Whitehall allocates funding.
I will say something about how allocations within the NHS are made under the arrangements we have put in place. As my hon. Friend is aware, NHS England is the independent organisation responsible for managing the budget and the day-to-day workings of the NHS. It supports clinical commissioning groups—the local groups of GPs and other health professionals who commission NHS services on behalf of their patients. To make sure that the taxpayer has a say in how that money is spent, the Government provide direction and strategic ambitions for the NHS through a document called “the mandate”. The current 2014-15 mandate was reviewed and updated in December. There are eight key areas, which are about making general improvements; the Government deliberately leave the NHS free to make decisions about how these objectives should be met. They are: helping people to live well for longer; managing ongoing physical and mental health conditions; helping people to recover from episodes of ill health or injury; making sure that people experience better care, and integrated care; providing safer care, with a greater emphasis on patient safety; promoting NHS innovation; supporting the NHS to play a broader role in society; and making better use of our health resources.
NHS England has been given £98.7 billion this year, rising to £101 billion in 2015-16, to achieve the objectives in the mandate. I welcome my hon. Friend’s support for the extra £2 billion that the Secretary of State recently announced. NHS England has the responsibility to ensure that that money is well spent.
The first thing to say on the financial aspect of the mandate is that we have protected NHS funding in this Parliament, as my hon. Friend acknowledged. In 2014-15, all CCGs received a funding increase matching inflation. Furthermore, like all CCGs in England, North Yorkshire CCGs will benefit from the £2 billion of additional funding announced in the autumn statement. As I say, those CCG allocations and the formula used to decide what they should be are the responsibility of NHS England. NHS England itself commissions some services directly, including all primary care, as well as making allocations to individual CCGs. So these allocations to CCGs, although they are crucial, are only one part of a broader picture. In making those allocations, NHS England relies on advice from the Advisory Committee on Resource Allocation. As my hon. Friend will be aware, ACRA provides advice on the share of available resources provided to each CCG, in order to support equal access for equal need, as specified in the mandate.
NHS England does not set income on an equal “cost per head” basis across the whole country. Instead, allocations follow an assessment of the expected need for health services in an area, and funds are distributed in line with that, which means that areas with a high health need, including rural areas, should receive more money per head. There have sometimes been suggestions that a single per capita payment should be made across all CCGs, but I am not sure that that would not in fact lead to further discrepancies. As my hon. Friend will be fully aware, the key question is what overall weighting should be given to a range of factors, including age, disability, rurality and disease prevalence. As he himself acknowledged, there is no simple answer that would please everyone; this process requires the making of difficult judgments.
Without knowing that background, it can sometimes be hard for people to understand what are misleadingly presented as huge anomalies in allocations to CCGs. In the Vale of York, the funding is £1,067 per head; in my constituency of Mid Norfolk, it is £1,050; and in central Manchester, an urban area with an urban CCG, it is £1,085. I appreciate that those small differences add up over large populations, but they are not huge variations. The objective is to ensure a consistent supply of health services across the country, with health funding following —as best the system can map it—health need. That is one of the reasons why the data steps that we are putting in place are so important to allow us to monitor disease and health need.
NHS England has reviewed the funding formula and made welcome changes that take into account three important factors in driving health care need: population growth, deprivation and the impact of an ageing population. That should go some way towards helping to address the points my hon. Friend made.
NHS England now believes, and tells us, that it has a funding formula that sets recurrent allocations to CCGs more accurately and fairly, which is what the formula is supposed to do. However, I welcome the scrutiny that my hon. Friend and other colleagues from North Yorkshire are rightly insisting that it be put under.
By reflecting changes in population around the country and better targeting of pockets of deprivation, the NHS should be able to offer the best services to patients where they need them. I know there is a perception in North Yorkshire that the area is relatively underfunded. However, the NHS in North Yorkshire has benefited from increased funding, and when the Vale of York CCG’s funding is compared to that of other CCGs across the country, it is evident that it is not a significant outlier in terms of either funding per head of population or the level of funding relative to the formula. I appreciate that those are average figures; my hon. Friend will know better than I do the specific details of his own constituency.
At a time of continued pressure on the public finances, the additional funding we have provided for the NHS underlines the priority that this Government place on it. It means that the NHS will continue to benefit from stable, real-terms increases in funding, which will allow us and NHS England to get those formulae more and more accurate. Next year, the recurrent allocations of all CCGs in North Yorkshire will grow by 1.94%, an increase of almost £17 million. I am delighted that these increases will ensure that CCGs, including those in North Yorkshire, can continue to meet ever-growing demands for services, while investing in new services.
As time is short, with my hon. Friend’s permission perhaps I could write to him on the specific points he raised about back pain and IVF.
Miss McIntosh
I have a very simple question. Obviously, we as Back Benchers scrutinise the Department of Health, but who scrutinises and monitors NHS England?
George Freeman
As Ministers, we are responsible and ultimately accountable to Parliament for that. However, I am conscious of the time, so perhaps I could pick that point up in a letter to my hon. Friend.
As I said, I welcome the attention my hon. Friend the Member for York Outer and other North Yorkshire MPs are bringing to this issue, and I hope I have signalled that I consider it a substantive concern. Citizens in this country, rural or urban, demand and expect a national health service—rightly so, because they have contributed to it—and they expect national access on a fair basis. The structure we have put in place is really about giving NHS England the clinical freedom to ensure that funding decisions are made on the right basis. No system will be perfect, but as Ministers we are absolutely committed to ensuring that the system we have is as accountable and transparent as possible, and to providing the security of funding to allow that process to be pursued.
I know from my own experience in County Durham and in my Norfolk constituency that these are important issues. It is about ensuring that our citizens in rural areas get equal access to health services. My hon. Friend the Member for York Outer and other colleagues are doing exactly the right thing in raising this issue. I will happily address in writing the points I have not had time to address this afternoon. I look forward to writing to colleagues with more detailed answers to the specific points they have raised.
Question put and agreed to.
Written Statements
(9 years, 4 months ago)
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Forced Labour Convention
(9 years, 4 months ago)
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The Parliamentary Under-Secretary of State for the Home Department (Karen Bradley)
The Forced Labour Convention (the convention) is one of eight fundamental conventions of the International Labour Organisation (ILO). In June the ILO agreed a protocol and set of recommendations to supplement the convention, with support from the UK Government.
On 12 September, the European Commission proposed that Council decisions should be adopted to authorise member states to ratify the ILO protocol, in the interest of the European Union, with regard to matters related to judicial co-operation in criminal matters and with regard to matters related to social policy.
The Government do not agree that the EU has any exclusive competence in the area covered by the protocol. The Government have therefore decided not to opt in to the Council decision covering matters related to judicial co-operation.
The UK is determined to tackle the horrific crime of modern slavery, and intends to ratify the protocol to the Forced Labour Convention.
[HCWS173]
Hatfield Colliery
(9 years, 4 months ago)
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The Minister for Business and Enterprise (Matthew Hancock)
I want to update the House on matters concerning Hatfield Colliery Partnership Ltd.
The directors of Hatfield Colliery Partnership Ltd (HCPL) approached the Government in November 2014 to report that, due to a combination of unfavourable coal prices, exchange rates and production issues, the viability of the business was in doubt. Having exhausted all other options for securing investment, HCPL requested financial support from Government.
The taxpayer would face significant costs and liabilities in the event of an immediate insolvency of HCPL, principally relating to safe closure costs for the mine, redundancy and unpaid tax liabilities. Considering this, the taxpayer is better served by supporting a managed closure of the mine.
I can therefore announce that the Government have agreed to provide a short-term commercial loan of £8 million available for drawing down in tranches subject to performance, to support the company’s managed closure plan. The first tranche (in the sum of £2 million) of this loan was remitted to HCPL on 31 December 2014. This short-term loan will provide time for further consideration of the case for a longer term loan to allow HCPL to continue operating until 2016. We expect the loan to be paid back in full.
[HCWS172]
Grand Committee
(9 years, 4 months ago)
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Small Business, Enterprise and Employment Bill
(9 years, 4 months ago)
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The Deputy Chairman of Committees (Lord Colwyn) (Con)
My Lords, if there is a Division in the Chamber, the Committee will adjourn for 10 minutes.
Amendment 1
Lord Mitchell
“Needs and requirements of small and medium sized enterprises
(1) The Secretary of State shall provide a report on the future needs and requirements of the small and medium enterprise sector for the next ten years with regard to—
(a) access to advice;(b) access to finance;(c) access and support to engage in the export sector;(d) training;(e) recruitment of apprentices.(2) This report shall be published within six months of the passing of this Act and shall be laid before both Houses of Parliament.”
Lord Mitchell (Lab)
My Lords, first, happy new year to everybody. At Second Reading, the general tone that came from these Benches was that we welcome the Bill. We welcome it because we, the Opposition, realise only too well that national growth in productivity, investment, exporting and employment—all of which we desperately need—can come only from a strong political culture that supports small and medium-sized companies. The Government, and in particular the Conservative Party, want to lead us to believe something else, but we refute it. Labour stands for a dynamic business sector that will prosper with strong support and without the debilitating threat hanging over us of the possibly of the UK leaving the EU two years from now.
I must admit that even I have struggled to keep up with each of the announcements that the Government have made for various forms of funding for small business. Given that it is my job to keep up with all of this, I wonder what the average small business man at the sharp end makes of it all. Let us take a look at Funding for Lending. I said at Second Reading that I thought it was a flop, and the Minister—the noble Baroness, Lady Neville-Rolfe—chastised me and said that I had got it wrong. But I still have to say that I do not think I have got it wrong; I think I have got it right. Much of the funding that has been advanced to the banking sector has been assigned by the banks to the business areas that they know well: in particular, mortgage lending, which is easy, profitable and relatively risk-free for them, as opposed to lending to small businesses, which is hard work and risky, and probably cannot make anything like the same return.
Predictably, they went for the easy option and the route that minimises risk and maximises profit. As a business, why should they not? But that is not what the Government said was going to happen. Investment in small business has made little progress, which is why I called it a flop. The noble Baroness may think otherwise but I can assure her that, based on my own background in equipment leasing, I know the SME funding scene. She may be told by the banks and by her officials that small businesses are being helped, but I speak to those at the coalface and know that many businesses strive in vain to get vital funding. We have to do more to help them.
With that in mind, I turn to this first group of amendments. They are designed to ensure greater security and understanding of the action that the Government are taking with the aim of supporting small businesses. They will enable us to better account for the effectiveness of the steps taken in this direction. The first of the two amendments requires the Secretary of State to undertake an immediate strategic review of the key issues affecting small businesses and, in doing so, design better policy interventions to support them. The second requires that, allied to this strategic review of what small businesses need from government, the Government should publish an annual report which details the steps that they are taking. Taken together, the intention is, first, that there will be a greater level of strategic thinking about the correct policies to support small business in the future and, secondly, that Parliament will be better able to scrutinise these policies.
The truth is that this is required because all is not well with regards to the policy framework for small businesses. During the term of this Government, they have been adversely affected by a £1,500 rise in business rates in what by any account have been difficult trading conditions. It is our view that they should now see a freeze or a cut in business rates. This is one immediate step that could be taken towards supporting small firms. When it comes to receiving advice about how to strengthen and grow small businesses, the landscape remains confused. I have to say that when I go around and ask those who are running small businesses what is the main issue that really bothers them, it is business rates—so this needs to be looked at very seriously.
In the United States, the Small Business Administration represents a successful model for providing support and advice, and indeed for directing policy, and one that we should look to imitate in this country. It is often easier for large companies, especially those which can pay for lobbying advice, to understand how to approach business and how to look for the support that government may be able to provide. In the UK, responsibility for small businesses lies with the Minister of State, who has additional sectors to his brief. In the US, the head of the SBA is a member of the President’s Cabinet: surely we should have the same prominence here.
Perhaps the most important area which the report sought by these amendments should look at is access to finance. There has been a great deal of activity with the intention of improving credit conditions for small businesses—but, as I have said, with only limited success. The Federation of Small Businesses’ Voice of Small Business index shows that small firms are struggling to get the finance they need and still require greater competition and choice in the banking options available to them. Without improvement in these areas, we are unlikely to see significant improvements in credit conditions. The latest Bank of England Credit Conditions Survey shows that credit availability fell slightly during the last quarter, while Funding for Lending figures show that net lending to small businesses remains negative, despite improvements for larger businesses. This issue will arise throughout our discussions in Committee and these figures provide the backdrop to it.
The amendment would also require the Secretary of State to look closely at how best to support small and medium-sized businesses that want to export. This is vital and goes to the heart of the kind of economic recovery we want to experience. The news over the recess that the UK’s current account deficit is at one of its highest ever historic levels should serve to focus our minds on the importance of exports. The export-led recovery that the Chancellor promised has simply not taken place, and to meet the impossible target of £1 trillion a year by 2020 would require nominal growth of around 10% per year—way above current levels and, I must say, way beyond anything I can imagine.
The OBR’s latest forecast has revised down the contribution that trade is expected to make to GDP growth for every year of the next Parliament. Policy action taken to improve this does not show much sign of having a positive effect. The £5 billion export financing facility has helped few businesses. This is a huge missed opportunity. Also, I simply do not understand why we are forever cutting back our embassies and trade capabilities. You cannot set up an environment for export if you are not represented in the countries concerned. In my travels, I frequently come across foreign business people who say that the UK does not take their own country seriously and how good it would be to have more ministerial and trade visits.
Finally, we need to see increased help for those who want to recruit apprentices. The number of apprenticeships actually went down last year, so this is another area that the Government could usefully look at both in terms of future needs and the efficacy of current government policy. I hope that the Minister will be able to accept these amendments, which represent a good way of combining strategy planning and support for small businesses and the effective scrutiny of policy interventions. I beg to move.
Baroness Wheatcroft (Con)
My Lords, I take issue with these amendments. What we do not need is another report into the problems that small businesses face. There is no shortage of information on these problems, not least from the Federation of Small Businesses, to which the noble Lord referred. We know what the issues are. There is not enough finance available for small businesses. One of the things that this Bill attempts to do is make access to finance easier. It also includes lots of measures that will help small and medium-sized businesses. However, what those businesses need is action now, not another delay while another report is produced. As we get regular feedback on what the legislation does, that will become more than apparent. Organisations such as the federation will not hesitate to make clear what they think about what the Government are doing. This would be just another bureaucratic exercise when what we need is action.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Neville-Rolfe) (Con)
My Lords, Amendment 1 asks that we report on the long-term needs of small and medium-sized businesses. In moving it, the noble Lord, Lord Mitchell, touched on the wider issues surrounding small business. I do not want to give the Committee another Second Reading speech. A lot of the issues that the noble Lord raised will come up on the various amendments that we discuss today, but I feel that we have done more to help small business than any Government before. This Bill is the latest evidence of that process.
In particular, I refute the claim that the Government are not doing enough to increase lending to small businesses. While the annualised figures remain negative, the tide is turning and there is a significant upward trend. According to the SME Finance Monitor report of November 2014, 71% of all loan and overdraft applications within the previous 18 months were successful. We support small business in many ways. Of course, a recovering economy—which this demonstrates—after probably the worst recession in history is a very important way to help entrepreneurs.
Turning to the amendment, first and foremost, through our industrial strategy the Government are working in partnership with industry to understand the future needs of all businesses and to set the long-term strategic direction. In each of our sector strategies we have joined forces with industry to set ambitions for the sector and our commitment is to invest in helping firms—including small firms—to access finance, skills, innovation and export opportunities so that we can compete internationally. I share the noble Lord’s aspirations for international success.
As well as engagement, we undertake in-depth research and analysis every year to fully understand small and medium-sized business needs. I draw attention in particular to the Small Business Survey, BIS’s flagship annual research project. Results from this are used to develop our business support policy and are also published so that private sector organisations working with small businesses can benefit from the insights. The survey is considered the country’s foremost source of knowledge about small business needs and is widely referenced.
Amendment 1 refers to specific areas of policy relating to small business. This is a good list and I take this opportunity to reassure the noble Lord that the Government are already researching and reporting on the needs of small businesses in these areas. I will give some examples. Last year, the British Business Bank published its strategic plan, setting out a long-term vision for the organisation that will deliver for smaller firms. Only last month, the bank published its first report on trends in business finance markets. The market gaps identified through this in-depth market analysis are feeding into the bank’s product development process. Important and interesting conclusions include the following: more businesses will seek finance for growth; a more diverse and vibrant supply of finance is needed—this Bill helps with that; and awareness and understanding of the range of finance options is not yet comprehensive enough. I am placing a copy of the report in the House Library. We expect future reports to be published on an annual basis.
Secondly, last year, UKTI published Britain Open for Business, an update to its five-year strategy for providing practical help to exporters. UKTI last year worked with 42,684 SMEs to provide a range of services designed to help companies enter new markets. This hands-on relationship allows UKTI to understand and catalogue the needs and challenges faced by these companies and to develop specific programmes to overcome perceived barriers to exporting. Last year, this included a first-time exporter’s package, a medium-sized business programme and an e-exporting initiative.
Lord O'Neill of Clackmannan (Lab)
Does this website cover the plethora of information sources which the noble Baroness has spent the last six or seven minutes identifying? In some respects, the report is just another tome gathering dust, but if we can have a website that is regularly updated and is accessible to the general public, as it were, perhaps that would go some way towards creating a report by other means.
Baroness Neville-Rolfe
I thank the noble Lord for his helpful intervention. Indeed, like him, I feel that we need greater awareness of the potential of GOV.UK and the internet for communicating with business, especially small business, in a much simpler and easier way. That is exactly Matthew Hancock’s intention. The plan is that this website, if it does not do so already, will cover all the sorts of things that you are talking about. Do have a look at it and if you feel there are other things that we should do, I am sure that we can. I am sorry about the parliamentary impropriety of referring to the noble Lord as “you”.
That brings me to a couple of final points. Just last month, which is a year since the publication of Small Business: GREAT Ambition, we announced that we had met a large commitment in that document by launching the Business Growth Service, joining up all of our support available for those businesses that have the right level of ambition, capability and capacity to improve and grow. So we are making progress with this overall and trying to bring together the offer for small business, which I feel is a theme that we will probably agree on in the course of this Committee.
The House can look forward next month to a report by my noble friend Lord Young of Graffham, the Prime Minister’s adviser on enterprise, who will produce his definitive paper on what impact the last five years of government work has had on small businesses in this country. I will ensure that interested Lords receive a copy.
Therefore, while I fully agree with the intention behind the amendments, I agree with my noble friend Lady Wheatcroft that we have enough reports. I do not believe that it is necessary to achieve the outcome that the noble Lord seeks in the way that he has proposed. I hope that he has found some reassurance from my lengthy explanation and is willing to withdraw the amendment.
Lord Flight (Con)
My Lords, I first declare an interest as chairman of the Enterprise Investment Scheme Association. This issue falls under the Treasury rather than the BIS, so it often gets ignored in terms of its crucial importance in raising equity capital for small businesses. Once you have the equity capital, you can gear up with borrowing. EIS, under Governments of both main parties, has raised more than £12 billion since it started; over the past three years, the amount raised has doubled in each of those years and is now well in excess of £2 billion for the current year. When the present Government came into power, one of the constructive things that they did was to go back to negotiate with the EU to widen the parameters of the EIS, which had been unhelpfully narrowed during the previous Labour Government. Equity finance for small business is almost more precious than debt finance, and there is a wider range of providers of debt finance now increasingly available. I want to register the point on a BIS Bill in a BIS debate today that the Treasury and the EIS is crucially important for small business.
Lord Cotter (LD)
Before we move on, I thank the Minister for her response so far. Within the Bill there is this talk about the annual report and the need for the Government to address the issues in that sort of way. On behalf of the small business sector, I feel that we need to continue to look at issues in the Bill—but also particular issues, to one of which I shall refer the Minister. With the annual report, there is a very serious issue with the small business sector and finance, with regard to late payment to them from big businesses. There is a significant issue there, with 50% of big businesses not paying small businesses on time. I hope that monitoring and reporting back on such issues will be something that is ongoing throughout this Bill.
For example, there is a prompt payment code, which is voluntary—or it has been a voluntary code in the past. I very much hope that as part of the annual report Ministers will agree to look at the code and consider whether it is strong enough and whether it has been implemented enough by the businesses involved and by the Government themselves. Late payment is a serious issue when it comes to finance for small businesses; they should have that money available to invest and employ people in the local area.
Lord Mitchell
I must thank everybody, particularly the Minister, for her reply. Of course, this is a probing amendment—and I think that we have managed to probe and get quite a lot out of it that is beneficial. I thank the noble Lord, Lord Flight, too. I absolutely agree that there is a huge issue with equity for small businesses. Since I started studying economics a long time ago, there has always been that equity gap that needs to be plugged. In some ways, I am not sure that a huge amount of progress has been made on it.
I suppose that it depends on how you look at these things. If you go to visit some of the banks, as I do—and I hear what the Minister says in that regard—you could think that after five years it is a golden period for small businesses and that it is all absolutely rosy. You hear stories, such as were mentioned by the noble Baroness, of 71% of all applications being approved. However, it depends what you mean by an application. Many applications fall at earlier levels before they get to the formal point.
All I can say—I shall be speaking a little later about my own experiences with a small business—is that it is incredibly tough for small businesses that have been going for two or three years to raise the money necessary for them to expand, and I am talking about successful companies. Therefore, I suppose that I take a far more pessimistic view than the noble Baroness. More needs to be done to encourage these businesses. Nevertheless, I am somewhat reassured by what she said, and of course I beg leave to withdraw the amendment.
Lord Mitchell
Lord Mitchell
My Lords, I must declare, as I did at Second Reading, that I am the chairman and a shareholder of a graduate recruitment company called Instant Impact Ltd. I also have to declare that this company was founded by my son and a friend, who got to know each other when they were at Cambridge University. I know that this may have echoes of Second Reading about it, but I want to give an example of the sorts of issues that we have encountered. I think that they point towards financing in general and invoice discounting in particular. I shall not detain noble Lords for too long.
Instant Impact has been very successful. After four years of operation, its projected billing for this year is £1 million and its employees now total 22. We should have many more companies like this in the UK—and if we did, maybe some of our problems would be over.
However, success has brought its own issues, and the trickiest of all has been cash flow to support the rapid growth of such a company. In short, we could see that if we continued to grow so rapidly, it would put a severe strain on our bank balance. Therefore, as chairman, I was deputed to find new sources of finance. I was happy to do so but I was even happier for another reason: we talk a lot about small business but, to be honest, it is a long time since I have been in the front line, so it was pretty good to go out there and see what it was like to raise additional funding for a company that is doing quite well.
Eventually, we were successful in that one of the new challenger banks—the noble Lord, Lord Flight, is the chairman of Metro Bank, so I must give him my thanks—offered a superb invoice discounting facility, but not before we endured the lethargy and inflexibility of the traditional high street banks. Of course, as a company we also had to step up our game in credit control and debt collection, and we managed to get an infusion of equity finance.
The high street banks were simply awful. Do not believe for one moment that they have changed. One has the motto, “One for two”: one acceptance for every two rejections. I cannot believe that that is true. All they want is what they have always wanted—bricks and mortar security and personal guarantees. That is not much help to a service business set up by two young men with no assets apart from the business itself.
I went to see the very clearing bank with which I have dealt since I first started working in 1959. It knows my history and my successes inside out. A very senior manager, when I explained our requirements to her, said to me—I am not exaggerating—“Well, it looks like daddy will have to give a personal guarantee, doesn’t it?”. My answer was unprintable and my words should have no place in the august annals of Hansard. I told her that daddy has never given a personal guarantee and certainly did not intend to do so now, or words to that effect.
I have to say, “How dare they?”. After all the banks have been through and after we as a nation have effectively bailed all of them out, it seems that nothing has changed. They tell us that they are in business to support small companies but, when push comes to shove, they revert to their old ways. Too many small businesses when rejected by their own high street bank simply give up. They are intimidated. That is why the new sources of alternative finance—the challenger banks and the peer-to-peer lenders—must continue to be encouraged.
Baroness Neville-Rolfe
My Lords, I was glad to hear of the experiences of the noble Lord, Lord Mitchell, and his success in running a business. Let us hope that there will be success for others in that direction as a result of the changes that we are making in the Bill. Having been brought up on a farm, which I suppose is the ultimate small business—and one that, I am afraid, failed, which is also a relevant experience—and shared a small garden company, I know exactly what the noble Lord is saying about the availability of finance, funding and cash flow. These are always incredibly important issues for small companies.
Turning to Amendment 2, I have some sympathy with the noble Lord’s proposal and general stance, and I should like to reassure noble Lords that the Government are currently consulting on this very issue.
The purpose of our clause is to make it easier for businesses to access invoice finance, which I agree is one of the most important sources of alternative finance around. The effect of the clause is to create a power for the Secretary of State to make regulations which can invalidate contractual barriers that inhibit small businesses’ use of invoice finance in the way that larger companies are able to operate. The Federation of Small Businesses, the IoD and the Asset Based Finance Association have all expressed support for this measure.
In the consultation, the Government outlined their preferred option for using the power, which is to nullify a ban on invoice assignments outright with some exceptions. The Government also requested views on how this measure would interact with supply chain finance, commercial confidentiality, financial services and land interests.
Clause 1 as currently drafted gives sufficient flexibility to allow the draft regulations to be adapted if the consultation provides strong evidence that in some situations an assignment can lead to unintended consequences. Conversely, if we accepted this amendment today, we would remove one possible way of dealing with anti-assignment clauses before having had the opportunity to consider the evidence from the consultation on the best way forward. Our consultation will close on 16 February and a summary of responses will be provided shortly after.
I hope that the noble Lord feels that his probe has been effective, that he finds the explanation reassuring and that he understands that we are on the case in consulting not only in writing but by having stakeholder discussions. On that basis, I hope that he will withdraw his amendment.
Lord Mitchell
I thank the noble Baroness for her reply. Of course, this report will come before the Report stage of the Bill, so we can come back to it as necessary. Again, I thank her. I think that most of her response was reassuring and I beg leave to withdraw the amendment.
Lord Mendelsohn
Lord Mendelsohn (Lab)
My Lords, I shall speak also to Amendments 4, 6, 7, 10 and 11.
We are concerned with the effective operation of the policy in this legislative framework. We have deep concerns that the legislation as drafted will have unintended consequences that will put small businesses in a weaker rather than a stronger position. The Government’s approach addresses only the information asymmetry and addresses insufficiently the market power asymmetry. This means that the Government’s current proposals are likely to benefit larger entities and to provide little for SMEs other than better knowledge of how weak their position really is.
The huge advantage of our proposals is that they use transparency to change culture by enshrining good practice, reinforcing duties and making enforcement attractive to large companies. This will not just address the growing problem and impact of late payments but promote a more competitive and effective market where the velocity of the circulation of cash will have a positive impact on growth productivity and business activity. We have been struck by some of the grumblings around the business discussion paper, Building a Responsible Payment Culture, and the feeling that somehow too much weight was given to the concerns and interests of those with the most interest to protect. Our proposals meet more clearly the overall policy objectives of the Government and are consistent with the central concerns of SMEs.
In considering our proposals and given the range of evidence and data the Government have, in the possible event that they remain unpersuaded by the overwhelming logic and attractiveness of our amendment, could BIS make available the evidence demonstrating that our suggestions would be less effective in achieving the outcomes we share? I think that any independent economic model would strongly endorse the positive benefits of our approach.
I would be grateful, too, if the Government’s current consultation for the Bill, when published, were to detail more clearly where the responses were from—the particular areas and sectors, and whose interests they reflect. I also request that the Minister gives some consideration to making our suggestions available to some key stakeholders to integrate as a small addendum to the consultation.
The model we propose is compelling. Has the Minister any current modelling that should dissuade the Government from accepting our amendments? What assurances can she give that the £40 billion—or £45 billion, or £50 billion—in late payments currently outstanding can come down over time with anything like the scale needed to show that these proposals from the Government will succeed? What is the anticipated decline? How strongly can this be addressed? I would be happy for her to test the efficiency of our model against that of the Government. I am very conscious of the exhortation of the noble Baroness, Lady Wheatcroft, that we need action. Certainly, we need to ensure that any measures that benefit small businesses do so as swiftly as possible.
Our amendments work as a package, reflecting the fact that, as all research and experience shows, late payment might be the most egregious practice but it is not the only one. In may be the easiest to identify and quantify, and it may even have the largest economic impact, but it may not be the worst or most shocking payment practice. Late payment is one element of the payment story. There are problems with withholding payments or fines, and with retrospective charges and retrospective payments.
I thank the small businesses, and their advisers and representatives, who provided us with a great deal of background information. The detailed and voluminous stories we have heard and keep hearing—yet which people do not want to go on the record over—provide some evidence of the weakness of approaching this solely by way of transparency, information and exhortation. I will outline in more detail some of the problems in this area when talking about Amendment 10.
Our amendments on this try to provide a more practical framework to meet the objectives of the Bill. Clause 3 provides that:
“The Secretary of State may by regulations impose a requirement, on such descriptions of companies as may be prescribed, to publish … prescribed information about the company’s payment practices and policies relating to relevant contracts of a prescribed description”.
Amendment 3 changes this “may” to “shall” to make it a firm requirement. By the Government’s own standard, changing culture would require a common series of obligations and practices. Has the Minister any data or economic models that would demonstrate that there is a more effective way of making these changes other than by means of a universal provision?
Amendment 4 is a practical way to make culture change. We propose that rather than the Bill being a way to make it acceptable to complain about late payment, we encourage a business operating culture of paying on time and sticking to contracts. By making this a more clear obligation on the part of the companies that are required to pay, we also meet the problems of dealing with the consequences of poisoning commercial relationships and for the exercise of market power concentration and intimidation to allow poor practices to continue. The amendment requires companies to produce quarterly statements that list all payments to suppliers that have been paid more than 30 days after the suppliers agreed payment terms, without a formal query having to be made. We are aware that concerns have been raised with BIS that unless time limits are properly identified there would be an ever-increasing pressure on small businesses to accede to extended timescales for the settlement of payments. I would be grateful if the Minister would outline how the Government feel this would operate in practice, and how small businesses will be able to resist such pressures.
Amendment 6 asks for assurances from the relevant auditor that the company is maintaining accurate and honest financial records and statements. What is therefore expected of auditors is exactly the same as now. We would require them to exercise broader and clearer judgment in these matters. Confirming that the accounts represent a true picture of the economic position of the company and that it is a going concern should be qualified if the only way it can meet its cash flow or profit targets is by late or poor payment practices.
Amendment 7 would establish that the financial reporting officer shall be liable for false reporting. If there were false reporting, the business would be liable for a fine equivalent to no more that the amount it owed—the overall value of the invoice—and up to a maximum of £10,000 for false reporting. This therefore provides for not just clearer information but also for obligations to pay to be an audit requirement, and for enforcement to be undertaken through existing government agencies. It also makes shareholders and company boards protecting their and the company’s long-term interests hold their executives properly to account on these matters.
Amendment 9 makes it an offence for companies not to fulfil compensation payment plans which have been made by more than 30 days. It has the effect of empowering small businesses, putting the onus on big businesses to report themselves. Failure to complete a quarterly return would be subject to a fine upon conviction.
Lord Flight
My Lords, Amendment 5, and its sister Amendment 25, have been tabled on the back of some excellent research undertaken by Grant Thornton in its impact assessment of the Bill. The research focuses on the fact that some small and medium-sized businesses qualify as SMEs for the purposes of the Government’s definition of those qualifying for R&D tax credits, but for the purposes of this Bill they are treated as large companies. The amounts and definitions here are interesting in that the R&D tax credit definition of a small company is one with a turnover of up to €100 million, assets of up to €26 million and with up to 500 employees. I draw the Committee’s attention to the fact that I believe that there is a printing error in the amendments and a pound sign was inserted instead of a euro sign. For the purposes of the Bill, the definition of SMEs is enterprises with a turnover of less than £25.9 million, assets of less than £12.9 million and a maximum of 250 employees.
The number of businesses to which this point relates is 2,851, according to Grant Thornton, with a combined turnover of £151 billion, an average turnover of £53 million and some 30,000 employees. The key point about businesses in this sector, which I will define as small SMBs, is that they have played the biggest and most disproportionate role in contributing to economic growth in this country. They have outperformed small companies and large businesses on employment growth, profitability growth, R&D and capital investment. This group is arguably more important than the very small SMEs that the Bill addresses.
The challenge that we face here comes under two different categories. First, as the Bill stands, small and medium-sized businesses will not benefit from the new provisions for providing access to finance and credit information, although they need this just as much as very small companies. Secondly, they will face increased regulatory requirements and costs arising from the requirement to publish reports on payment practices and the rather more demanding and expensive requirements in relation to the public register of significant ownership in businesses.
When the Bill was drafted, I am sure that the Government cannot have meant it to have the unintended consequence of being positively damaging to the most important entrepreneurial sector in this country. I am equally sure that the noble Baroness, Lady Neville-Rolfe, who I believe when she was a senior executive at Tesco railed against the ever-increasing amount of regulation imposed on business, will not want to see yet more regulation being imposed on small and medium-sized businesses.
In essence, Amendments 5 and 25 insert the R&D tax relief definition of an SME. To press home the point, under R&D tax relief it is inappropriate for small and medium-sized businesses to report on payment practices. Late payment for them is as much an issue as it is for small businesses. Indeed, medium-sized business find that it takes on average 48 days to be paid, against the average across the G8 of 42 days and only 32 days in Germany. In addition, such reporting on payments would be a costly and tedious regulatory requirement on what are still small companies. Amendment 5 deliberately sets a threshold of 499 employees and a turnover of £100 million, in line with the R&D tax credit, and Amendment 25 similarly defines a limit for the purposes of benefiting from credit information and credit facilities.
I put in a plea for the Government to consider these points. The Bill has a lot of virtue; it is there to try and help small businesses. Its definition of small businesses is, unwisely, too small for the purposes of what really matters. Small SMBs are not just equally important but potentially more important than small SMEs to the fortunes of our economy.
Lord Stoneham of Droxford (LD)
My Lords, I wish briefly to comment on the amendments, particularly following the comments of my noble friend Lord Cotter, who spoke on this issue of late payments.
Obviously, late payments are invidious. They affect small businesses severely, particularly in terms of cash flow. However, in looking at these amendments, there is a balance that we have to get right. There is a danger, certainly in some of the amendments, that we will overregulate. I refer particularly to Amendment 6, which has a requirement for quarterly reports and indicates that all payments to suppliers made more than 30 days after the date indicated have to be listed in some way, unless a formal query has been made on the invoice. The danger is that if one overregulates, all that will happen is that businesses will be inundated with formal queries as a way of avoiding the reporting.
Also important—if one is going to require all this information to be collated—is the reality that in many sectors balancing the payment of bills, whether we like it or not, sometimes protects the cash flow of certain companies that otherwise could be in difficulty. If this information is made more public in detail, there could be consequences for the management of the credit of those companies. So there are problems of overregulation that could be bureaucratic and inflexible, and could damage the businesses that we are trying to help.
Lord Cope of Berkeley (Con)
My Lords, I recognise that late payment has been one of the most stubborn problems affecting small businesses over many decades. It is quite a few decades since I was Small Firms Minister in Margaret Thatcher’s Government, but the problem goes back a long time before that. I congratulate the Government on having found a new method of trying to deal with it, which has been incorporated in these clauses. In principle, that is much to be admired and supported.
I am much in favour of Amendment 5, tabled by my noble friend Lord Flight. Like him, I was much impressed by the Grant Thornton list of companies, which gives very important support to something that we all know—that small and medium-sized firms such as those in this list vary hugely. When you compare the turnover, the balance sheet and the number of employees of the different companies, the huge variety is astonishing. Like my noble friend, I cannot believe that the Government really want to impose this new element of bureaucracy on these companies, some of which have very small numbers of employees. One of them had two employees, and many of them—littered about—have fewer than 10, although they often have very large turnovers and large amounts on their balance sheets. We can imagine what sort of companies they are without following them up. Therefore, I support Amendment 5.
Lord O’Neill of Clackmannan
My Lords, I should declare an interest as president of the Specialist Engineering Contractors’ Group, which is an umbrella trade association in the construction industry. Something like 95% of the businesses in construction employ fewer than 10 people. They are often the weathervane of the British economy, you might say, in so far as they are the first to lay off people and often among the last to get started again.
In a supply chain, small businesses are extremely vulnerable to the problems of payment. In some respects, they are probably not that concerned about the bureaucratic burdens that the people who are not paying them money are going to have to face as a consequence of the amendments that the noble Lord, Lord Mendelsohn, has so eloquently spoken in favour of. I start with that premise, but I make the additional point that regulation is a pain in the neck for the people who undertake bad practice. The rest of the people have nothing to fear from it; the other businesses do not have problems with it. We know that there are always examples of unintended consequence, but if that were the reason why we did not do something, we would never do anything in this House or the other place. I think that it is necessary to have some form of discipline to bring people into line.
One of the great disasters of this Government has been the Green Deal. Noble Lords may recall that this was going to be the mechanism whereby houses would be insulated and new central heating would be made available, and it would all be paid for out of the energy savings, which would then be deducted from households’ energy bills—it would pay for itself. One reason why that did not get off the ground was that among the promoters were to be a number of supermarkets, whose record in late payment was such that the people in the Specialist Engineering Contractors’ Group said, “We wouldn’t touch that with a barge pole. If their payment terms are of the order of 100 days, we don’t want to have anything to do with them”. This early example of a government-led scheme foundering was down to a lack of trust on the part of those small business men—people such as the electrical contractors, the small plumbers, the lads who do the central heating—who were not prepared to enter into agreements with those companies that had a dreadful record of slow payment. The Government have to look at the reasons for some of their own disappointments—I will not put it any more strongly than that.
On supply chains, I credit the Government for following on from what Peter Mandelson started when he was in BIS in trying to ensure that government contracts were paid within 30 days. Part of the problem was, of course, that the main contractor got paid but the money never trickled down the supply chain. That was one of the difficulties and it still exists—which is why the Federation of Small Businesses and other groups are extremely distrustful of the blandishments of Governments of any complexion, because in so many instances they have not been properly thought through.
If we are to have a more transparent and more effective means of securing payment in a prompt way, I cannot see that that is a problem. It may be embarrassing when big companies are named and shamed, but I do not necessarily think that that is a bad thing. We have seen this with those companies which we now know do not pay their taxes in the United Kingdom. Many of us are no longer consumers of Starbucks products. What they do is legitimate—it is just that the law is not very satisfactory here—but we have a choice as consumers, and we choose not to go there.
A lot of people would find it quite embarrassing if the companies that they regard as being good suppliers and trustworthy companies are found to be squeezing these small, vulnerable businesses. When we talk about cash flow in respect of these businesses, we are talking about perhaps somewhere between £5,000 and £25,000—about two or three weeks’ work. It is that kind of thing. We talk about support for small businesses, but they are not philanthropic institutions. They exist in order to do a job of work for which they will be promptly paid, so that they can then pass on that money to their employees.
This is an important set of amendments. It does not matter if, at the end of the day, the Minister says that the wording is wrong. That is the standard reply to any debate at Committee stage: “We like the principle but we don’t like the wording”. The Minister has a plethora of civil servants there who can give the wording and draftspeople who can do the business. Therefore, I do not think, at this stage, that that is a satisfactory response, if I can anticipate what the Minister will say.
I will finish on one last point. I have been at this game a wee while now, and the default for opposition draftsmen of amendments is that wherever you find a “may”, you make it into a “shall”. After May of this year, the tables will be reversed and a number of noble Lords will be learning the ropes of opposition. I have to say that it is not a particularly pleasant job—I had 18 years of it and it was pretty hellish. The point I am really getting at here is that it is a sign of intent. If the Government are serious about one of the fundamentals of the assistance to small business, it is making sure that these small businesses get paid by the larger businesses for which they have undertaken to do work at a fixed price within a reasonable time. They are entitled to no less than that. That is what this suite of amendments from this side of the House, in my view, is designed to do.
There are imperfections in these amendments, but their intention is quite clear. I would like to think that we are not that far away from the Government on this issue. This has to be a consensual matter if we are going to have a continuous industrial strategy that we can all sign up to.
Lord Cotter
Before the Minister replies, I will just follow on from what the noble Lord, Lord O’Neill, said. From his experience, the down-the-line payment is a very important point indeed. It is increasingly incumbent upon government, when it gives contracts to the big contractors, to ensure in some way or other—although we do not want to bring too much regulation in—that these large contractors are monitored in terms of their payment record when it comes to subcontractors. The smaller businesses supplying or helping the main contractor frequently, as the noble Lord, Lord O’Neill, said from his experience, suffer badly because they do not get the payment. The large contractor in that case should not be given contracts in the future if it does not have some form of checking or commitment to ensure that it pays small businesses in the proper manner that is required.
Lord Mitchell
My Lords, I think that the whole issue of late payments is to do with the business culture that exists. As the years have gone by, it has become easier and easier for large companies effectively to bully small companies so that they can maximise their cash flow. In these days of low interest, it is not a question of paying less interest but of being able to conserve cash flow at the expense of somebody else. It is a really bad situation. I am glad that the Government have taken the initiative on it, and we have come up with amendments that we think will help them.
I do not know whether this is true but I am prepared to bet that more than any government support for funding that we have discussed or any new initiative to help small businesses, the one thing that would change the situation and help companies would be an improvement in the culture of late payments. I suspect that in this Room today there are many noble Lords and others who have themselves come from small business backgrounds—perhaps family businesses—or have worked in small businesses. We all know what it is like to sweat while waiting for a payment from a big company, knowing that if it does not come you may be forced into a state of bankruptcy. Therefore, I think that anything that can be done to encourage payments and to reverse this culture of companies taking more credit would be great.
At the extreme, I do not understand why there is any credit on payments. After all, if you or I go into a shop to buy a new computer, we do not say, “Well, you know, it’s going to cost £1,000 and I’d like 60 days’ credit before I pay”. We would be laughed out of the shop. So why it is any different with a business? Why cannot payments be absolutely instantaneous? I know that I am portraying a very rosy situation here but I feel that there should be a move towards a greater reduction in the number of days’ credit that companies take. With the ease of making payments today, it should become lower and lower.
I want to make one plug if I may. I have mentioned before that I am the chairman of a small company. We had two particular debtors who were each not paying us £7,000. The young men who ran the company tried everything they could but the money was not forthcoming. In my role as Jack of all trades chairman, I decided to take on the job of chief debt collector as well and got on to these two companies to get in the funding. It was partially successful but they were very elusive. They said that one company had gone out of business—the usual sort of stuff you get. However, I discovered something amazing. To be honest, I never thought that I would be standing here saying how good Her Majesty’s county courts are. If you look up the county courts online, there is a facility there to issue a county court judgment online and quickly. I have to tell your Lordships that in both cases I did it and got the money plus interest within 14 days.
Baroness Harding of Winscombe (Con)
My Lords, I agree with an important element of what the noble Lord, Lord Mitchell, has just said but I disagree quite fundamentally with the conclusion that he draws as a result. I believe that basically we are talking about how you effect a culture change and, in that, the noble Lord is absolutely right—it relates to big companies, medium-sized companies and small companies. I must declare an interest as I run quite a large company. However, you do not effect a culture change in business by prescribing in detail in legislation what you should report for ever more. In that sense, “may” is a much more important word to include in this legislation than “shall”.
Baroness Neville-Rolfe
My Lords, I thank noble Lords for their amendments and for providing the opportunity for us to debate this important matter of late payment. The Government are taking action to change the culture of late payment, but we know that there is still more to do. It is helpful to have the experience of noble Lords, including that of the noble Lord, Lord O’Neill, of how this has been working. We are serious about changing the culture and it is good to have my noble friend Lady Harding here to bring her experience of culture change. My right honourable friend Matt Hancock has made our intention very clear on a number of occasions and we are busily working on this, as I will explain.
Through the measures in the Bill, large and listed companies will have to publish information about their payment performance and practices. We are also strengthening the prompt payment code, which commits signatories to pay within agreed and clearly defined terms. I agree with the noble Lord, Lord Stoneham, that we have to be careful about not overregulating small business, but action is necessary in this area.
I will take each amendment in turn. On Amendment 3, it is common when introducing new regulations through a power to use the word “may”, but I can reassure noble Lords that the Government are fully committed to introducing a reporting requirement on payment practices. That is why we are already consulting on draft secondary regulations.
Turning to Amendments 4, 6 and 7 regarding the payment performance reports, the noble Lord, Lord Mendelsohn, raises a good point, and I am pleased to be able to reassure him that the clause as already drafted enables these matters to be dealt with by way of secondary legislation as far as they relate to information to be reported. In our current consultation, we are seeking views on many of these issues, for example on the enforcement regime. We will be considering carefully the arguments made, both here in this House and through our consultation, before deciding how best to proceed.
Our consultation document, Duty to Report on Payment Practices and Policies, published on 27 November, merits perusal. We are very open to comments and ideas, and noble Lords will see that good and bad supply practices would become public, company by company, every quarter in a preordained format on each company website. This transparency will change the culture in a way in which earlier measures have not succeeded in doing. We look forward to the responses and, as the noble Lord, Lord Mendelsohn, suggested, we will make sure that we look at who the responses are coming from, because obviously there are different interests here. We will publish a detailed summary of responses, once the consultation is closed, before the end of this Parliament.
To complement the consultation on paper and the discussions here in the House, we will hold a number of consultation round tables, which Matt Hancock will lead. We are having meetings with stakeholders, which will include small business groups and large business groups, and business representative bodies. The meetings will start next week and will run until 2 February, when the consultation closes. They will look at specific subjects of interest to the stakeholders who are gathered together, and will include the content and scope of reporting requirements, enforcement and monitoring of those requirements, supplier lists—an issue that has been mentioned—and how invoice dates should be tackled.
I am grateful to my noble friend Lord Flight for tabling his Amendment 5, and to him and my noble friend Lord Cope for their comments. Our prompt payment consultation also seeks views on which companies should be subject to the reporting requirement. We propose to exclude small and medium-sized companies from this obligation, using the definition in the Companies Act 2006. We chose this definition as businesses will already be familiar with it, making it easy for them to comply with it. Stakeholders advise us that if instead we relied on the definition used for research and development tax relief, as my noble friend proposed, it would reduce the number of companies in scope from around 18,000 to around 15,000.
My noble friend Lord Flight also mentioned Amendment 25, which relates to the definition of small and medium-sized businesses used for the credit data provision. I understand that that proposed definition is the one used by Her Majesty’s Revenue and Customs for the purposes of the research and development tax credit. We were planning to talk about this under Amendment 25. My noble friend Lord Newby hopes to be here for that, but he is detained on the Pension Schemes Bill; he has a rather awkward situation today, boxing and coxing with the other Bill on the Floor of the House today, as I hope the Committee will understand.
To conclude on Amendment 5, mandatory company reporting requirements are drawn largely from existing company legislation. This is why our starting point was the precedent that UK companies will be familiar with. In addition, given the scale of the problem—I think somebody mentioned £46 billion a year—and the relatively low estimated cost of this measure, at £33.8 million over 10 years, the Government think that it is important that as many companies as is proportionate should be required to report on payment terms. We are consulting on the issue and will consider all alternative proposals. In the mean time, it would be premature to accept the amendment.
On Amendment 9, many respondents to our 2013 discussion paper felt that introducing further penalties would be unlikely to tackle the problem of late payment. The Government also consider that the amendment could lead to wholly undesirable consequences if businesses lengthened their payment terms to avoid paying interest. In the other place, the Government committed to holding a round table on automatic payment of interest to test our current assumptions. We will report back on that issue before the end of March. In any case, by forcing companies to publish comparable information on their payment practices as I have described, we will put pressure on them to improve those very payment practices.
On Amendment 10, late payment legislation already sets a maximum 30-day period to quibble after the receipt of relevant goods and services. Stakeholders to whom we have spoken are unsure that additional legislation would achieve real change, but we will consult stakeholders to understand any concerns around quibble times.
As for unilateral changes to payment terms, it is poor payment practice to ask suppliers to accept blanket changes to payment terms, but in practice such requests are of course not imposed unilaterally. Rather, they are changes made with the agreement of both parties, even if the smaller party may feel that they have no option other than to agree. That was the problem described earlier. I am afraid that a ban as proposed in Amendment 10 would probably not prevent the practice, but we agree that more must be done to tackle exploitation of small suppliers. As I said, our current consultation proposes that companies should report on whether standard and maximum payment terms should be amended during each reporting period to help shine a light on such behaviour. I emphasise that that is out for consultation.
The practice of large companies asking existing suppliers to pay to join or remain on a supplier list, mentioned by the noble Lord, Lord Mendelsohn, is deeply concerning. As a result, we are currently consulting on the issue to understand how widespread concerns are about this and whether action should be taken. Obviously, a ban would apply economy-wide, because that is the nature of the provisions that we are debating today. It is imperative that any actions that we take are targeted and do not inadvertently prohibit the use of supplier lists, for example, where they are mutually beneficial to both parties. I can see circumstances where that might be the case.
Finally, turning to Amendment 11, while we already have a prompt payment code, we can and must do more to strengthen it. We have appointed an advisory board made up of code signatories and business representative bodies to steer this important work. We are currently surveying signatories and non-signatories to the code to test our initial proposals for strengthening its enforcement mechanisms, and considering whether it should have a maximum payment term. Introducing a maximum payment term would be a significant shift for the code. It is right that we use this consultation period to understand how all the options would work in practice.
I turn now to the proposals regarding writing to FTSE 350 companies. Perhaps I may mention that my right honourable friend made a commitment in the other place to write to all those companies to ask them to join the code. I just want to say that he will fulfil this commitment before the end of this Parliament, and of course I will be happy to write to noble Lords to inform them when that has been done.
I hope that the noble Lord feels reassured that we are making a lot of changes and that we are proceeding, albeit by secondary legislation, to do many of the things that have been discussed today. I hope also that he will agree that the amendment should be withdrawn.
Lord Mendelsohn
My Lords, I am encouraged that these amendments have triggered a long and very useful debate on late payment issues. I was struck by my noble friend Lord O’Neill, who spoke so persuasively about the central principle behind our amendments, which is to ensure that measures designed to help small businesses really and truly do so. It is in that context that the objections raised by the noble Lord, Lord Stoneham, around over-regulation have to be seen. There is no point in legislating if the legislation does not achieve its aims. When we look at the size and scale of late payments, the extension of how long it takes for payments to be made and the drift over a number of years, unless we have measures that really will change this situation, we will fail to achieve those aims. It is important that what we do is effective and I do not think that an objection to making something effective is simply to say that it constitutes over-regulation.
Important points have been raised about some companies where there are consequences and cashflow difficulties, but the comments made by my noble friend Lord Mitchell are important. The price is the price and the time you should pay is the time you should pay. If there are problems, there should be an opportunity for companies to talk together and address them, but it should not be a case of taking unilateral measures or that these issues can be dealt with only through lawyers and the courts. We suggest that there should be effective discussions between the parties and that power relations which affect that sort of discussion should not be exercised unilaterally.
The noble Lord, Lord Cope, raised a number of points which address some of the issues, but they did not fundamentally address the problems that we are trying to deal with—namely, the asymmetry of power. In relation to the issue of the burdens, much of what the Government are proposing and we are proposing could actually be achieved through software packages that are already available. I think that the preparation of these reports would be a lot more pleasurable than VAT returns on a quarterly basis.
I want to say in relation to Amendment 5 that I was impressed with the Grant Thornton document. It certainly identified the costs which it suggested could be taken out. I actually thought that it would be the largest beneficiary of those costs, and it is impressive to see an accountancy firm not supporting the position of its own fees. I thought that the document was a very useful introduction to the debate. However, the costs are still significantly lower than the benefits identified by the Government, so I would say even within that context that I cannot see the strength of the case. We therefore are strongly of the opinion that this needs one definition.
I am grateful to the Minister for what she has said. We are encouraged by some things and discouraged by others. We are certainly encouraged that as regards Amendment 3, there is an assurance that “may” will become “shall”, and that it will perhaps morph into “shall” in the drafting. We are also grateful for her reassurances on some particular measures, and in relation to the overall aims that we are both trying to achieve. In relation to the consultation, which we look forward to reading, we would request, however, that we are not looking at an edited summary but more extensive reporting of the fuller sense of the discussions.
I have to say that some of the other measures still do not address fundamental problems. It is not the case that these charges are frequently imposed by consent, as was mentioned in relation to Amendment 10; they are dealt with unilaterally. That has been under-emphasised. On Amendment 9, the responses indicate that penalties would not be of benefit. That is understood within the context where the companies would have to be the ones that tried to achieve those penalties, which would not be of benefit—there is no doubt about that. We are trying to make sure that the obligations are changed so that companies see that it is of benefit to make the payments. In that way, we are addressing the issue of culture change. Transparency and information are a necessary but insufficient condition to make that change, and given the position of small businesses and the amount of money outstanding, we have to be conscious that these measures would succeed significantly in providing economic change.
However, we still have some matters to consider, some responses to receive and some greater opportunity for the Government to look at this matter. Although I am sorry that the Minister cannot accept our proposals, I hope that she can do so in due course. The message that goes out from here should not be that this side is the only one that really believes in getting things done and is on the side of small businesses. I beg leave to withdraw the amendment.
Lord Flight
“( ) it qualifies as a small or medium sized business for the purposes of the Research and Development Corporation Tax relief”
Lord Flight
My Lords, I am not quite clear what the Minister was actually offering here, but I should stress that it is clearly completely inappropriate to treat companies with a turnover in excess of £25 million and more than 250 employees as large companies, which is what the Bill presently does. These small and medium-sized businesses are as much the victims of late payment as smaller companies. It is clear—and I trust that both sides of the Committee would agree—that the definition needs changing to an appropriate size, whether by using the R&D definition that fits reasonably well and on which Grant Thornton has done the research, or another definition. However, the SME definition is clearly inappropriate. I beg to move.
Baroness Neville-Rolfe
My Lords, I have already responded to my noble friend Lord Flight. This matter will be discussed again, not least under some later amendments. We have listened to what he said but, at this point, I would ask him to withdraw his amendment.
Lord Flight
That is not entirely satisfactory but let us wait for further discussions. I beg leave to withdraw the amendment.
Baroness Neville-Rolfe
“( ) Until section 85(2) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 comes into force, in subsection (7)(a), “a fine” is to be read as “a fine not exceeding level 5 on the standard scale”.”
Baroness Neville-Rolfe
My Lords, this group of amendments makes a number of consequential and technical changes to the penalty levels set out in the Bill. The Legal Aid, Sentencing and Punishment of Offenders Act 2012 includes a provision that, once commenced, will remove the upper limit on all fines of £5,000 and above in the magistrates’ courts. The Act also provides a power by order to increase the amounts of maximum fines at levels 1 to 4 available to magistrates for less serious offences.
The Bill was drafted on the assumption that both the £5,000 limit would have been lifted and levels 1 to 4 increased by the time it received Royal Assent. As this is not yet the case, it is necessary for some of the penalties provided by the Bill to be amended to operate satisfactorily whether or not the changes have come into force. The amendments ensure that the penalties in the Bill work whether or not the changes have taken place, without the need for further amendments to the Bill. This future proofing will apply in respect of a penalty for non-compliance with the proposed reporting requirement on payment performance, which we have just discussed.
We have considered carefully the appropriate level of penalties in the Bill. As the majority of the penalties are in Parts 7 and 8, I shall concentrate my remarks on these parts. The penalties in Parts 7 and 8 are designed to be consistent with the level and approach of existing Companies Act penalties. For example, the failure by a company to make its register of people with significant control available for inspection in new Section 790N(2) is subject to a level 3 fine. This is consistent with the existing penalty in Section 114 of the Companies Act for failure to make the register of members available for inspection.
I now turn to Amendments 45, 46, 57 and 58, which affect Schedules 3 and 5 to the Bill. Schedule 5 provides an option for private companies to keep information about their members and company officers on the public register at Companies House instead of having to keep registers containing this information. This option will also apply to the new register of people with significant control in Schedule 3. A company that takes advantage of this option must still keep precisely the same information on the public register as it would keep on its own register. It must keep the information up to date in the same way as it must keep its own register up to date. The aim of the offences and penalties in the new provisions is to mirror the offences and penalties for not adequately maintaining the information required in each company register.
During our review of the penalties, we discovered that there are a couple of instances where the penalties do not mirror each other. Amendments 45, 46, 57 and 58 correct this to ensure that the penalties are consistent. For example, the fine for not keeping a register of members is set at level 3. As currently drafted, the penalty for a company that chooses not to keep a register of members and does not provide Companies House with information about its members is set at level 4. Amendment 58 replaces this with a level 3 fine to ensure that the penalties are consistent. I very much hope that noble Lords will support these essentially technical amendments. I beg to move.
Lord Bach (Lab)
My Lords, I thank the Minister for explaining these government amendments so clearly. She will be relieved to hear that we will not seek to oppose them.
Of course, the Minister is right because, more than 32 months after the LASPO Act received Royal Assent, the Government have not got round to implementing Section 85 of it. That Act was a terrible piece of legislation but the one exception to it was Part 3—in which Section 85 is to be found. While I would very much welcome the chance of explaining to the Committee why it was such a dreadful Act, I will resist that temptation this afternoon.
Part 3 deals with sentencing and punishment of offenders and was widely supported across both Houses. I have two questions for the Minister—I am sure they are both quite easy ones for her. First, why have the Government not acted sooner to implement Section 85? It has been almost three years now and the changes required statutory instruments which have just not been brought before Parliament. An explanation would be welcomed by the Committee. Secondly, what are the Government’s proposals now to bring forward those statutory instruments, and will they be completed by the time that Parliament prorogues for the general election? If the noble Baroness is not in a position to answer those two questions now, she can write to me in due course.
Lord Deben (Con)
My Lords, it used to be thought that it was only on the opposition side that concern about long waits for things that have been promised is to be found. This is an example of something where Governments do not do themselves any favours at all if it seems that they are capable of bringing forth legislation, because they know what they are going to do, but then spend some 30-odd months before they actually do it. I hope that the noble Baroness will be able to give us the answer but that if not—perfectly reasonably, she may not have that answer—she will make sure that we all know about it when she writes to the Opposition, as this is something that worries us all.
Baroness Neville-Rolfe
My Lords, I am grateful to noble Lords for their support for the government amendments. The regulations in question relating to LASPO were laid on 17 December. They are necessary to accompany the commencement of the unlimited fines provision, and before they can be approved, they of course need to be debated in both Houses of Parliament. We hope that unlimited fines can be brought into force before Parliament is dissolved in March.
“Payment practices: retention of monies
(1) The Secretary of State may by regulations impose requirements on certain companies to publish information about their policies, practices and performance in holding, safeguarding and releasing sums withheld by, or in behalf of, a payer from monies which would otherwise be due under a contract, the effect of which would provide the payer with security for the current and future performance by the payee of any or all of the payee’s obligations under the contract (“retention monies”).
(2) The regulations under subsection (1) may prescribe—
(a) the companies or type of companies to which the regulations apply;(b) the information required to be published;(c) the intervals at which, and format and manner in which, publication must take place; and(d) the type of description of contractual provision to which the regulations apply.(3) The restrictions on regulations in section 3(3) shall apply to regulations made under subsection (1) of this section.
(4) The Secretary of State shall arrange a review of the operation of the type of contractual provisions mentioned in subsection (1) after a period of 18 months following the coming into force of the first regulations made under subsection (1), and shall lay a copy of the report of the review before each House of Parliament.
(5) The review provided for under subsection (4) may make recommendations for requirements and obligations to be imposed upon certain types or descriptions of companies in relation to the practice of retaining monies as described in subsection (1).
(6) After public consultation, the Secretary of State may by regulations impose such requirements and obligations on prescribed companies as were recommended by the review, in whole or in part and with such amendments as the Secretary of State believes to be required in order to—
(a) ensure that the practice of withholding retention monies does not give rise to unfair treatment of payees;(b) provide assurance that retention monies are held securely; and(c) ensure that the position of a payee company from whom retention monies are being withheld is protected when a payer company becomes insolvent.”
Lord Stevenson of Balmacara (Lab)
My Lords, I rise to move Amendment 12, which is in my name and that of my noble friend Lord Mendelsohn. I declare an interest in that my wife is a solicitor who deals with construction contracts.
It was a surprise to me to discover that at any one time, according to recently released figures, about £3 billion is outstanding within the construction industry by way of cash retentions. This figure represents the aggregate of monies which have ultimately been provided by small businesses, ostensibly as security in the event they do not return to remedy any defects in their work. I suspect that this process is taken from domestic situations; we are all aware of the problems that can be caused when one tries to get a rogue trader or contractor back to remedy faulty work.
However, in a commercial setting, the situation is surely different. It appears that the main motive for deducting retentions is to enhance the working capital of the party deducting them. Using the FOI Act, the Specialist Engineering Contractors’ Group recently carried out research among public bodies of the use made of cash retentions. It found that 71% of those surveyed added cash retentions to their working capital or admitted that they actually reinvested them while they waited for the evolution of the work process being undertaken by the contractor. The effect is that bodies that are commissioning work are also borrowing from the small firms that are carrying out the work. That is counterproductive to good economic activity at a time when such firms are also having major problems in accessing finance.
The key issue is that cash retentions are being deducted from payments already earned. They are handed over on condition that they are returned only unless they are used to remedy defects in the event that the firm does not do so. However, this is a very unsatisfactory situation, as in the mean time there is no protection for the retained money that will ensure that they will be available for release if, in the event, there are no uncompleted remedial works. We think that there is a good case for any retention funds to be kept separate from working capital and we suggest that there should be some form of trust in which these amounts are held.
These issues apply of course all the way down the supply chain. It is obviously true that for public sector works, small firms operating directly with the public sector are unlikely to see that body go bust, although it is not unknown. However, if they are dealing with private companies that are themselves contracted by the public sector, the firms further down the supply chain are at risk of losing their retentions if their top supplier, for instance, becomes insolvent. On the other hand, a tier-one supplier at the top level does not carry this risk because it will be working with bodies that are unlikely to become insolvent.
Of course, the business department has a construction supply chain payment charter, which was launched on 22 April 2014. In it is expressed the wish that these retentions should be abolished, which, I think, is good news. However, unfortunately the proposal is to wait until 2025. Governments have long aspirations and wide horizons but to wait another 10 years for such an obvious piece of legislation seems a little otiose. I hope that when the Minister comes to respond she can explain exactly why the delay is there and what it is for.
If it were possible for the Government to accept our amendment, this would begin to move us down the process. In particular, if it were appropriate to ensure that money held on retention was, in fact, placed in trust, separate from the working capital of the companies that were involved in it, that would certainly have the advantage of reducing the risk to those lending their money to those commissioning it. The amendment would enable the Secretary of State, through regulation, to be better informed about the extent of the problem and then to issue regulations when the appropriate time came. In this case, we are quite happy for this to be a “may” and not a “shall” provision.
If the amendment is accepted, it will have far-reaching benefits for small businesses throughout the construction industry. It will enable them to provide more jobs and increase their training provisions, and investees in resources will help to improve policy and the timeliness of delivery. How could we be against that? I beg to move.
Lord O’Neill of Clackmannan
I support the amendment and my noble friend. In 2002, I was the chair of a Select Committee that looked at retentions. At the time, it achieved a degree of notoriety in so far as, once the six weeks had elapsed, we got a letter from the department—I should say from the Minister, even though he was a member of the Government of my own party—but frankly it was not worth the paper it was written on. It was the most feeble response on this issue. Therefore, perhaps uncharacteristically, I am not here today to make party points, because my lot were as bad as the other lot. However, the fact was that the civil servants were somewhat uncomfortable when we took them word by word through their communication. Eventually, with them having a second bite at the cherry, we got a rather better ministerial response.
Given the glacial speed at which this matter has been dealt with by the respective Governments, it was not a surprise but a matter of some satisfaction that in 2014 we had the question of retentions being dealt with included in the fair payment charter. Both sides have already spoken today about culture change but 23 years to secure a culture change on a matter as fundamental as payment seems to be a rather relaxed, laid-back approach to this issue. While there is always more rejoicing in heaven when one sinner repenteth—and there seem to be a number of sinners repenting on this issue at the moment—the fact is that the bus to Damascus is taking a lot longer to arrive than it should.
Therefore, I encourage the Minister to look afresh at the dates. The payment charter was important and a significant advance but I do not think that we should rest on our laurels in this respect. A number of businesses are short-changed as a matter of course because of retentions and it is indefensible that the public sector should be part of that. On the other hand, it is almost inevitable because 40% of all construction work in the United Kingdom is paid for by the state in one way or another, whether by local government, the health service or those authorised to do so by other people. There is even a fair amount of work carried out at the behest of regulatory bodies which, although independent of the state, are nevertheless instruments of the state in one way or another.
We should not underestimate the significant contribution that could be made by a Government prepared to increase the pace of change here. While the advance that has been made in the past two or three years in terms of payment generally is to be applauded, this most pernicious form of payment retention cannot be justified. It has been said that this is a means of regulating bad practice, but it is a most unsatisfactory one. There was a time when the supply chain was a somewhat feisty, disagreeable means of doing business, where there was quite considerable ill feeling between relative tiers of that chain. That is no longer the case but a significant minority of businesses is still prepared to hold on to money that legitimately should be given to people who have fulfilled their work.
We could go into anecdotal evidence of this kind of practice. For example, the people who prepare the foundations for a building project are very often still waiting to get paid because the car park turf has not yet been laid. They have long departed the site and finished their work but are still waiting because the project is not completed. That kind of sharp practice should not occur in an efficient economy or decent society. I would like to think that the Minister had a bit of scope here, could take this amendment away and, if it is not quite to her needs, do something more with it. If I were to individually ask the Members of this Committee whether they agree with this practice, think it contributes to the efficiency of the British economy or even think it is fair, they would probably answer that “No” is the only answer. It is not fair and it does not promote economic efficiency. It enhances distrust between sectors of an industry where this Government and their predecessors, through the appointment of a chief adviser on construction and the like, have been trying to bring the parties together to get them to have a concerted approach—that is, the management, unions and various sectors of the industry. As long as we have this kind of practice, we will not have the trust that lies at the heart of an industry that can do so much but sometimes falls at the first hurdle. The first hurdle of any business is payment, as we have said already today.
Baroness Donaghy (Lab)
My Lords, I support my noble friends in this amendment. My experience is really only in the construction industry but there may be issues that are general to other areas where there are a large number of subcontractors. In construction, the retention system—if we can call it that—is about 100 years old, but in practice it is positively medieval. It is holding back money owed for work that has been done and completed. There seems to be little or no recourse because, if a subcontractor tries to take on the principal contractor in public through the legal system, they suddenly find that the work dries up.
I know for a fact someone who is owed £1 million by a principal contractor. After several months and being told that the accounting system had changed—a very common thing to be told—he was then informed that if he paid £50,000 up front, he would get his money. I know another company with a turnover of £45 million that wrote in last November: it has retention outstanding of £762,000. In some cases, as my noble friend Lord O’Neill said, people have to wait for so long for areas that are completely extraneous to their own work, and wait for years until—sometimes—the main contractor has gone out of business and they do not get their money. This encourages a bullying culture: a clamping down from the top so that undercapitalised principal contractors squeeze the next layer down.
That has implications—which is where I come in, if you like—for the way that building workers are treated. They are the ones who, in the end, have to pay for all of this. We as taxpayers have to pay, of course, for failed companies and lost hope and opportunities, but building workers are paying for a system that really ought to be reformed. This proposal is long overdue. Germany manages without such a system, as does Japan. We do not need this system, rather we need a fair system where money goes into a bank on trust and is paid out automatically on the satisfactory completion of a particular tranche of work. That is not a lot to ask for. The noble Baroness opposite talked about culture change, and I agree that that is extremely important. But the only way in which that is going to be done is by making some of these pernicious practices illegal.
Baroness Neville-Rolfe
My Lords, I thank the noble Lord for Amendment 12 on the important matter of retention payments and for initiating an interesting and important debate. Although his proposed new clause is very widely drafted, it is clear from our discussions that the focus is actually on the construction sector. The Government are clear that there are a number of issues with the payment culture in the construction industry. I am also grateful to the noble Baroness, Lady Donaghy, for adding her reflections. Retentions are clearly part of that wider culture. We believe that we are most likely to make progress by dealing with the wider picture rather than focusing on specific details; namely, looking to address the cause rather than the symptoms. That is why we are working with the industry on a number of fronts.
These include the Housing Grants, Construction and Regeneration Act 1996, as amended in 2011, which sets out a statutory framework governing contractual terms on payment. This introduces some basic rights such as the prohibition of so-called “pay-when-paid” clauses and the right to adjudication; that is, a contractual dispute resolution process, which I think we have agreed in other debates in this Room is very important. Recognising the importance of Government in this game because we are such a big customer, as the noble Lord, Lord O’Neill, mentioned, we are using procurement to introduce innovative new practices in our own operations such as the use of so-called “project bank accounts” which will change the payment dynamic on construction projects by facilitating payments directly to sub-contractors. These are a form of escrow account which holds the money that is used to pay sub-contractors as work is completed and is not dissimilar to the trust idea mentioned by the noble Lord, Lord Stevenson.
We are also working with the industry through its Construction Leadership Council and the Institute of Credit Management to implement a payment charter that contains 11 commitments, including one specifically to remove the need for retentions. As we have heard, Amendment 3 aims to introduce a power to impose a reporting requirement on the narrow practice of retaining money, mainly because of concerns about the construction industry. We do not believe that this is necessary. The Government are already able to include a new obligation to report on retention practices through the powers we are taking in this Bill. That deals with the reporting part.
I turn now to the underlying substance of retentions. We are also working with industry through the Construction Leadership Council to move to a position where retentions are no longer necessary by 2025, which is of course an end date. I am sure that noble Lords will agree that removing retentions needs to go hand in hand with defect-free work, particularly on one-off contracts.
Supply arrangements in construction are often project based, frequently short term and can involve payments for partially completed and therefore hard to value work. Clients need some sort of guarantee that, should defects emerge within a reasonable period—and it can be as much as 12 to 24 months, although on one’s own private building work at home it is usually about six months—there has to be some remedy. Retentions were the way devised for dealing with this, and to move forward a workable alternative has to be found. I suspect that that may be something to do with the long timescales that we see here. Moreover, we are seeking evidence on the prevalence of this issue in other sectors beyond construction—but also in construction itself—in the stakeholder groups and on the payment terms consultation that I mentioned in the previous discussion. So we will have a better idea of what the current situation is and how the changes that we propose on the reporting of payment terms and timescales will affect matters, not only in construction but elsewhere. That will help to establish the need for further government action. On this basis, I would ask the noble Lord to withdraw his amendment.
Lord O'Neill of Clackmannan
The Minister made the point that, as the main customer, the Government have started a number of projects with project bank accounts. Before we get to the next stage, could she provide us with an indication of which departments are entering into this? My understanding is that it is fairly patchy and that some departments—for example, the Ministry of Defence—have been somewhat less than enthusiastic about changing their procurement practices. It would be helpful if we could get a picture of what is actually happening. I know that it is limited and I am not going to criticise the Government for the size of the operation; it is about the number of departments that are willing to participate. That is as important as anything. Some of them seem to be enthusiastic while others are a bit less so. It would be useful to find out, and it might even help if we named and shamed them.
Baroness Neville-Rolfe
My Lords, one of the pleasures of this Bill is that I already deal with eight government departments. This will increase the list, and I shall certainly take away that request and write to the noble Lord.
Lord Stevenson of Balmacara
I thank the Minister for her response, although I am a bit disappointed by her willingness to take on board some of the issues. I thought that my noble friend Lord O’Neill made an excellent contribution that endorsed and fleshed out some of the issues. Likewise, my noble friend Lady Donaghy raised them from a different perspective, but with very much a similar line. This is clearly a pernicious activity with medieval origins, possibly even back as far as Damascus, which needs to be looked at very hard. To set a timetable of 2025 will cause flames to emerge from those who are trying to deal with it—but that metaphor is running out fast.
Two things struck me. I do not often hear the words “government” and “innovative practices” coupled together, but I am delighted to hear them. I think that my noble friend Lord O’Neill was right to suggest that we need a bit more evidence of that, and I look forward to the letter being more widely copied than just to him.
The other aspiration mentioned was the wish to see defect-free work. Well, pigs do fly and I have occasionally seen one or two, but I do not think that we are talking about that. Is not the answer, more seriously, that we are trying to get out of this a more robust and resilient construction practice activity within which good clients contract with good suppliers on a basis of mutual trust and organisation? The idea of having a separate escrow account or retentions thing really plays to a lack of confidence and the ability to take action through the courts, which the Government often pray in aid as the answer to all difficulties. Is that really the way forward? If you have good clients and a good contractor and there is a problem, there are arbitration and other systems that well exercise those on their way through. I do not see the case for retaining the retentions system as a way of trying to bolster this up. The Government may want to reflect on that, but I shall read carefully through the Minister’s response and think again about the issue. There is something here that perhaps needs a little more attention but, in the mean time, I beg leave to withdraw the amendment.
Lord Mitchell
“(c) a duty on designated banks and designated credit reference agencies to provide information about the criteria used to calculate the credit score of a small and medium sized business customer to such customers.”
Lord Mitchell
My Lords, 2015 got off to a cracking start for me. On 1 January, my football team, Tottenham Hotspur, put five goals past Chelsea. For those who do not follow football, that is as good as it gets. Then, on 2 January, the new rules on payday lending came into effect. Having campaigned on the issue for three years, that was a wonderful outcome.
When I was involved with payday lending, I became aware of how important it is for large banks to share individuals’ credit references with much smaller credit providers. If the credit information is not provided in a timely manner, it is much harder for loans to be advanced. Small businesses suffer from the same malaise. To advance credit, providers need data, much of which are historic. Without data, lenders are simply shooting in the dark. We are very pleased that the Government are addressing this measure but we believe that we can go much further in toughening up its implementation.
These amendments concern the ability of SMEs to work out how their credit rating is calculated and would place a duty on credit reference agencies to increase the transparency around how the scores are worked out. Clause 4 gives the Treasury the power to require banks to share information with credit agencies to increase the likelihood of SMEs accessing finance, even if they are initially turned down for a loan. This is important as there is a growing market of alternative finance providers that can help small businesses get the credit they need. For example, Funding Circle, a major peer-to-peer lender, has provided more than 36,000 loans with a value approaching £500 million, so this is already an important and fast growing market.
We support the provisions in Clause 4 and believe it is crucial that we look at expanding the provision of finance to small business. These amendments are aimed mainly at helping those who are refused access to finance but for whom it is not immediately clear why that is the case. As I mentioned earlier, many small businesses that are turned down by high street banks just turn tail and do not seek alternative providers. We must encourage the small business community to say, “If your bank turns you down, there are plenty of others who can advance finance to you”.
You and I can contact credit reference agencies to get information about our credit scores and, in so doing, can find out more detail about how we might improve them—for example, by using a certain type of credit judiciously over a period of time. This process is also important for correcting mistakes when they affect a credit score. All businesses need the same ability to find out why they are struggling to obtain credit. In the first instance, the information lets a small business know whether or not the fault lies with its business or results from a change of policy at the bank. If the fault lies with the business, it can look at taking steps to remedy it, such as making changes to the business plan.
This amendment is also important in terms of working out whether being referred by a bank to a credit agency and alternative sources of finance will affect a business’s credit score. If it is not accepted, the effectiveness of the change which, as I have said, has our support, will be difficult to judge. For instance, if the initial rejection raises the cost of lending, a business would have been better off seeking alternative finance. That does not seem to be the Government’s intention. The amendment would ensure that the change has the effect that the Government intend. This change is supported by the Federation of Small Businesses, which says that it,
“would also like to see a duty included in the Bill which requires banks and credit reference agencies to provide information about the criteria used to calculate the credit score of the small and medium sized business customer. This would increase transparency and guidance to help small firms to understand their credit score and to help them take steps to improve it. The customer would request this information in writing and no charge would be made for providing it”.
We have also included in this group of amendments a safeguard to ensure that only data relevant to this process is shared, and that it is shared only with the permission of the business. Without such a safeguard, there will be understandable reluctance among many businesses to have possibly sensitive data circulating without their express consent. I hope the Government can accept this improvement to a clause that has widespread support, to ensure that no opportunities to improve access to finance for small business are missed.
Finally in this group there is also a probing amendment on the likely costs of the process laid out in the clause. This is purely designed to ask the Minister to provide a little more detail than is currently available in the impact assessment as to where the costs of this change are likely to fall. I beg to move.
Lord Newby (LD)
My Lords, as a Leeds United supporter, I begin by congratulating the noble Lord, Lord Mitchell, on the success of Spurs. As a young boy, everybody in my class supported either Wolves or Spurs, as this was a time when Spurs were doing rather well in the FA Cup more generally. I supported Spurs. This was a time when no one who lived in Leeds supported Leeds United, because they were not worth supporting. I graduated to better things but am very pleased that Spurs are still doing well. I also congratulate him on the work that he did on payday lending and getting the current legislation in place. I am sure that all noble Lords agree that that has been a beneficial change, and he was absolutely instrumental in bringing it about.
I am also grateful for the opportunity to discuss the issues raised by this group of amendments. I absolutely understand what the noble Lord is seeking to achieve, but I am not really convinced that they are necessary. Taking them in turn, Amendments 13, 14 and 15 would require that designated banks and credit reference agencies provide information about the criteria used to calculate the credit score of a small or medium-sized business customer. The Government agree that it is vital that businesses have the information they need in order to maximise their chances of securing finance. However, I believe that this is best achieved by improving transparency in the banking sector and by educating businesses to help them understand the impact their behaviours have on their credit scores—not through legislation.
The Government have introduced measures in order to make the banking industry one of the most transparent in the world. These include the requirement on the largest banks to disclose lending by postcode areas, the Federation of Small Businesses’ and British Chambers of Commerce’s new Business Banking Insight survey, commissioned by the Chancellor, which helps small businesses see which bank is best for them, and the independent appeals process, which allows any SME rejected for a loan to get a second chance.
There is a wealth of information in the public domain which businesses can use to understand the impact their behaviours have on their credit scores. This includes the information provided by the CRAs themselves, the Money Advice Service, the British Business Bank, charities and other information providers. An excellent example is the Business Credit Scoring Explained pamphlet produced by Professor Russel Griggs, chair of the independent lending appeals process, which is available on GOV.UK and the British Business Bank website. It is a surprisingly easy to read document. I would have thought that any small business seeking to understand how credit scoring worked would find it immensely useful. It is this wider sort of information that is most valuable and useful to SMEs, in our view, when they are considering how to improve their options for accessing finance.
The Government intend to continue to work closely with business groups, banks and CRAs, to build on the existing good work in this area, to help promote existing material and to create new, informative aids for businesses. However, CRAs and banks compete on the accuracy of the models and methods they use to assess risk. An obligation to reveal this proprietary information could undermine the competitive nature of these markets, which would be in nobody’s interest. Just as importantly, I am concerned that detailed models produced by banks and CRAs would be of little use to the average SME. Examples such as the pamphlet I have just referred to are much more suitable in my view and are of course already available.
Amendment 17 is intended to restrict the information that may be shared under the regulations to information specifically identified by the business. I assure noble Lords that this is already the policy intention. Clause 4 requires that businesses must have agreed to have data provided to CRAs. Our intention is that this agreement will have been given when signing the terms and conditions for a financial product, which is the process that businesses are used to. Therefore, we believe that this amendment is simply not necessary.
Amendment 18 aims to ensure that the Government analyse the costs of the measure. The Government have already published a regulatory impact assessment setting out the impact of the changes on banks, CRAs and businesses. It concluded that banks would incur upfront IT costs of £10.5 million and that CRAs would incur upfront IT costs of £3.5 million but that any ongoing cost of sharing these data would be negligible for established lenders. It also concluded that the measures will increase competition in the CRA market and the market for lending to SMEs, which would produce a downward, not upward, effect on prices charged for credit scores and the cost of lending.
I hope that I have been able to assure the noble Lord that these amendments are not necessary and that he will agree to withdraw the amendment.
Baroness Byford (Con)
My Lords, the noble Lord mentioned the whole question of the security of data sharing. I should just like to have confirmation from the Minister that Clause 4 covers that. There is sometimes a risk in sharing data that it can be to the disadvantage of a company, and that would be very unfortunate if it were to happen in this case. I was not sure whether the Minister’s response to the noble Lord, Lord Mitchell, covered that and therefore whether the Bill covers that point.
Lord Newby
The important thing is that information which a company has and which might be shared is shared only with the explicit prior approval of the company. As I was saying, this is one of the things that is often included in the terms and conditions of any agreement or relationship that the company has with the bank. Unless the company has explicitly said that it is prepared to have its data shared, they will not be shared. More generally, all the activity that we are talking about is covered by normal Data Protection Act safeguards.
Baroness Wheatcroft
My Lords, I just wish to raise a slight qualm that I have on this issue. I applaud the idea of data sharing and the theory that it would enable small firms to shop around for credit more easily in the Funding Circle that the noble Lord, Lord Mitchell, mentioned—it is one of those organisations that can respond very quickly if it gets the data that it needs—but Amendment 17 seems to offer the possibility of small firms picking and choosing which bits of the data are made available. We all support small firms but some do not always behave entirely honourably, and I would be very nervous about a proposal that allowed a small firm to say, “This little bit of the verdict on what I do can be relayed to a potential lender but not that little bit because that little bit tells a very different story”. Therefore, I think that we need to be clear that when we are saying that a small firm, or indeed any firm, can give its permission for data to be shown to an alternative lender, it needs to be the whole picture, otherwise we are in danger of getting to where we have got to now—with references to individuals, for instance—where the reference is meaningless. You are very lucky if the reference says, “You would be very lucky to get this person to work for you”, which of course can be interpreted in two different ways. People are now very nervous about committing anything on the basis of just a corporate reference.
Lord Newby
I think, my Lords, that that concern is dealt with by the fact that approval or agreement that data might be shared tends to take the form of being included in the standard terms and conditions of the bank, so one will not be able to pick and choose. One will be presented with a standard form that states, “You agree to the following forms of data being used”. There will not be much scope for negotiation as to which data are open for discussion.
Lord Mitchell
I should like to respond to the Minister by thanking him for his support on the subject of payday lending. There were some dark days in this three-year campaign, and he and I had private meetings in which he gave me a lot of encouragement. Me saying that from this Dispatch Box will have totally ruined his career, but he was very supportive and for that I am grateful. I thank him for the points he made, which are helpful. We will, of course, come back to all this on Report. I beg leave to withdraw the amendment.
Lord Newby
Lord Newby
My Lords, these amendments make a number of technical changes to Clauses 4, 6 and 7 to ensure that the credit data and finance platforms measures work as the Government intended. The amendments also specify the commencement date for the Government’s cheque-imaging provisions.
Beginning with the amendments to credit data and finance platforms, Amendment 16 is a clarificatory amendment to Clause 4 to ensure that banks do not deliberately circumvent their obligations to share credit data with credit reference agencies. Amendment 20 would ensure that the regulations under Clause 4 may require credit reference agencies to provide all the data obtained by them under the credit data measure to the Bank of England, not only data provided by designated banks.
Amendments 22, 23 and 29 would allow the Government to accept the recommendations of the Delegated Powers and Regulatory Reform Committee that any future change to the regulations made under Clauses 4, 5 or 7 be subject to the affirmative rather than negative procedure.
Amendments 27 and 28 would ensure that providers of invoice discounting and factoring services are covered by the definition of “finance provider”. This allows them to benefit from government measures to improve access to credit data and to implement platforms for rejected small business finance applications. Providers of invoice discounting and factoring are a key part of the financing landscape for smaller businesses and it is essential that they are able to benefit from these measures.
Finally, Amendment 103 specifies the date for the commencement of the provisions enabling cheque imaging in the UK as 31 July 2016. This amendment will therefore help ensure the banking industry delivers this payments innovation to customers as quickly and ambitiously as possible. The Government are tabling this amendment to help ensure that the benefits of cheque imaging are delivered to a clear, fixed and timely schedule. I beg to move.
Lord Stevenson of Balmacara
My Lords, the Opposition are happy to accept the great majority of what has been produced in this group. We see the logic of the amendments and understand their rationale. It is sometimes amusing to find the Treasury in a situation in which it appears not to have been quite as convincing as it ought to have been in its submissions to the DPRRC. The noble Lord made a good fist of it but it must have been a bit galling to realise that in some ways the mighty writ of the Treasury, which normally runs everywhere, got washed away by the firm rebuttal of the idea that somehow a Henry VIII clause, when introduced by the Treasury, was okay but not when it was introduced by others. I am glad to see that the changes made here bring back a more coherent and consistent approach. Other than that, this is a welcome step forward.
Lord Leigh of Hurley
“impose a duty on the finance platform to offer specified information to a designated financial adviser.”
Lord Leigh of Hurley (Con)
My Lords, as disclosed on the register of interests, I declare that I am a senior partner at Cavendish Corporate Finance (UK) Limited, and my involvement with BIS, which I shall amplify in a moment. Like the noble Lord, Lord Mitchell, I very much welcome the Bill as further evidence of this Government’s commitment to SMEs, and in particular to providing assistance for SME finance. Unlike the noble Lord, I would say that the Government have done a huge amount to assist SMEs on finance not just in the UK, but overseas as well. I should particularly mention the pleasure of working with BIS, and I actually travelled to China with the Prime Minister on his trade mission. That jumbo jet was full of SME businessmen. The Prime Minister made a point of taking SME businessmen to help their export trade, and as I travel around the country, I have businessmen telling me how dramatically different the Foreign Office is when working in conjunction with BIS to assist SMEs.
This clause in particular should, it is hoped, have a radical effect on assisting SMEs in the procurement of finance in difficult circumstances for them. I welcome the clause. My amendment relates to a particular and specific circumstance where an SME has gone to its local high street bank and, for whatever reason, that bank has rejected the loan. That is, of course, a minority of situations. The proposal suggests that at that point, the high street bank should put the customer on to a finance platform in order to allow other alternative sources of finance to provide the loan. I welcome the regulations that were published just in time for a Christmas read, and in particular that the Treasury has now agreed to consult the British Business Bank specifically on who will be the designated platform. I firmly believe that the BBB understands who would be the appropriate platform.
I do not intend this in a pejorative sense, but my concern is that the use of “may” in Clause 5(4) means that within the terms of paragraphs (a) and (b), only lenders will have access to those finance platforms. I believe that it would be much more helpful to SME businesses to allow them the opportunity to take advice and have access to advisers who can guide them towards the right source of such loans. Indeed, many lenders to SMEs, because of the nature of the small amount of money involved, will look at loans only if they are packaged in a particular prescribed format. The SME will not have the skills and expertise, or indeed the time, to package up the proposal in a format that suits each possible financial provider. Furthermore, some financial platforms have in mind a large number of lenders, as many as 130, while others have only four or five in mind. If the potential borrower finds himself on the wrong financial platform, he will either be too restricted in the number of lenders he can talk to or possibly overwhelmed by the number of financial providers who contact him to offer their loans.
We are talking here about businesses that range from wanting a loan to finance a small residential development to one that wants to borrow the money needed to buy a forklift truck. Of course, the nature and type of lender will vary enormously according to the circumstances and, indeed, to the geography. My amendment would allow the potential borrower to have access to an appropriate adviser, which is, of course, an adviser that would be approved by the Treasury—which means, in fact, the British Business Bank—to facilitate greater choice for businesses. Let us not forget that these businesses have just suffered a rejection of their loan application and, sadly, they are probably not blessed with a munificent and successful father along the lines of the example we discussed earlier. They therefore need an appropriate level of advice. I beg to move.
Lord Stevenson of Balmacara
My Lords, we have a few amendments in this group and I will speak to just a couple of them. Two of them deal with matters to do with the Regulatory Reform Committee, which I think will be dealt with by the Minister when he comes to respond. The amendments would simply implement the proposals that have not already been dealt with by the previous discussions.
Amendment 19 is a probing amendment. In this set of amendments we deal with the third leg of a three-legged stool that tries to address a set of arrangements around the failure to commit to a financing model for small businesses at the individual level. This is a different attack on the same problem we have talked about throughout the whole of this afternoon: why finance does not flow as well as we would all like to this sector of our economy. The amendment is designed to suggest to the Government that there would be merit if one could extract some lessons from the process, whether or not it also includes the proposals just spoken to. That would add another dimension. We will see how the Government respond to that.
In the context of there being a small business in need of financing, a set of traditional lenders to whom it may or may not have applied, alternative suppliers and others who have expertise and knowledge about that, it would make sense for there to be some lessons learnt from these processes. The suggestion is made in the amendment that the Government might wish to think about providing an annual report to Parliament so that we have a sense of how these things operate. This is to some extent uncharted territory. It may feel like another administrative burden. In some senses, being a probing amendment, the wording is not to be taken at face value. However, this is interesting and new ground. We need to learn the lessons from it and to get the information that we gather out to as wide a group as possible. I hope the sensibility of that would commend it to the Government in some way. I look forward to a response on that.
The converse side of this argument is to be found in Amendment 21. This was slightly touched upon by the noble Baroness, Lady Wheatcroft, who I am afraid is not now in her place. I recognised what she said in her intervention on the last group. We would all be worse off if the credit referencing agencies and those others involved in this stool of three legs that I have talked about were fed information that was wrong. There has to be some means or mechanism for those who feel that the information held on them in these agencies is correctable. The noble Baroness was right to say that this has a sense of the googlisation issue, where you might have the right to correct your own information if you do not like it, but that is not where we are here. We are saying that if it is factually incorrect or in some senses paints a distorted picture, there ought to be some redress mechanism.
There are probably already reasonable direct relationships that could be invoked for that. Of course, there is the Financial Ombudsman Service, which plays a great part in dealing with many issues. I suspect that the people we are talking about in the SMEs, particularly the smaller ones, would find it helpful to have a body like the FOS to which they could pray in aid for help to correct information, question whether information held is correct and iron out any problems. The amendment is there as a suggestion, to the extent that there may even be other systems that would be better able to take this on. If there are not, why should the FOS not be invited to do so? The reason for tabling the amendment was that, in researching this, it turned out that there is a rather low limit for the size of institution that can approach the FOS. It would perhaps be helpful if, as a result of this discussion, the Treasury took this back and looked at it again. It seems wrong to cut off an area that is clearly effective in trying to get things resolved and to get the economy moving and things going. I hope that that is a helpful contribution.
Lord Flight
My Lords, as I have already pointed out, Amendment 25 really goes with Amendment 5. Very simply, and hence why it comes up in this section of the Bill, it endeavours to slightly widen the size of SME which can benefit from the provisions on credit information availability by substituting the R&D tax credit definition of an SME for the definition currently pertaining in the Bill.
There is quite an important point here, which is that the crucial measure of the ability of a company to command lending services is really its EBITA. Most companies with an EBITA below £5 million have problems in sourcing capital investment finance. Basically, the argument runs that the definition used for an SME is really too small and that small and medium-sized businesses are in just as much need of assistance in sourcing credit and investment as are smaller companies.
Lord Newby
My Lords, I begin by repeating that the Government are completely committed to ensuring that SMEs can access the finance that they need to grow and create jobs. That is why the Bill seeks to build on the progress that the Government have already made on this agenda by bringing forward further innovative solutions to ensure that businesses can borrow and succeed. These include ensuring that alternative lenders can access credit information on smaller businesses to help them make lending decisions, and creating a new process for rejected smaller businesses to be offered the opportunity to use government-designated platforms that will help match them with alternative lenders. I will go through the amendments in turn.
Amendment 18A relates to providing financial advice as part of the finance platform offer. The new process provided for by Clause 5 has been designed to address a specific problem affecting smaller businesses’ ability to secure finance: namely, the evidence suggests that a smaller business will go straight to its main bank when it needs to borrow. If the banks says no, the business will give up its search there in the belief that it is already at the end of the road, as the noble Lord, Lord Mitchell, pointed out when we discussed an earlier amendment. However, alternative sources of finance for smaller businesses are coming on stream all the time.
The new process will address this problem by requiring banks to offer businesses that they reject for borrowing a new option alongside making an appeal or going to see a broker. To be clear, going to designated platforms will be a route that rejected businesses can take alongside or in tandem with existing avenues available to them, such as seeking professional advice. It is right therefore that the platforms process remains focused on addressing the issue of access to finance, which is where the real problem is. Of course, platforms will also be able to add additional services on top of the minimum legislative requirements—the Government want to give platforms freedom to compete with each other to offer the best possible service. My noble friend will therefore be pleased to know that the Government’s discussions with the industry have indicated that the majority of providers interested in securing designation intend to support advice for businesses as part of their value added services. However, we do not believe that adding the specific amendment that he suggests is something that we should contemplate at this point.
Amendments 19 and 24 relate to parliamentary scrutiny. I hope that noble Lords will be reassured by, and be happy about, the government amendments that we have just debated, which accept the recommendation of the Delegated Powers and Regulatory Reform Committee to move to the affirmative procedure. The only thing I would say about Amendment 19 is that, in speaking to it, the noble Lord said something slightly different from what the amendment says. The amendment says that the Government should report on the number of times the regulations are used within a year. It does not say that it should be a broader report of the sort that he suggested in his speech. It is unlikely that these provisions will be used many times in a typical year, and the very fact that they will now be dealt with by affirmative resolution means that Members of both Houses will have a much clearer sense of exactly what has happened in any given year, because those who are interested in them will have been debating them.
Lord Stevenson of Balmacara
My Lords, I understand the logic of what the noble Lord is saying and the rationale for what the Government are doing, and that there will be consultations around this. However, the point that he has just made surely exposes the gap. If a medium-sized company, not a microbusiness, has a CRA purporting to report on it in a way that is factually incorrect or gives the wrong impression, is the only redress to take it up directly with the CRA?
Lord Newby
Going to the CRA is the logical first port of call, is it not? We are talking about cases here where a company believes or knows that the CRA has incorrect information about it on its books, and it will be in the interests of the CRA to correct any mistakes. As I say, the complaints procedure is part of the designation. We are making sure that the CRAs are open to complaints and have a proper way of dealing with them. The other limb to the argument relates to the role of the Financial Ombudsman Service. The noble Lord is suggesting an extension to the remit of the FOS in terms of businesses, which is a considerable change that you would contemplate only as part of a larger possible review of the role of the FOS in terms of businesses more generally. This is a very narrow area, and to extend the remit of the FOS in respect of firms just for this, and to nothing else, would look slightly odd.
Amendment 25 relates to the definition of small and medium-sized businesses. I apologise to the noble Lord, Lord Flight, that I was unable to be here for the earlier discussion broadly around this issue. The definition that he is suggesting is the one used by Her Majesty’s Revenue and Customs for the purposes of the research and development tax credit. Although I hear his arguments, I would point out that the £100 million figure is very much the outlier in terms of accepted definitions of SMEs. The definition used by HMRC for R&D tax credits is tailored to that one specific policy and flows from the fact that most research and development is done by larger companies. I do not believe that it would be appropriate here.
The turnover figure used in the current definition in Clause 7 is widely accepted as the threshold for an SME. It is used in the Companies Act, by the Bank of England for reporting purposes, and for the Funding for Lending scheme. It is used by various government schemes such as the lending appeals process and is used by the British Business Bank. There is no rationale for dramatically expanding it to businesses with a turnover of up to £100 million. As noble Lords will be aware, these measures are designed to address market failures that disproportionately affect the smallest businesses: namely, a lack of credit information and a lack of awareness of alternatives. These problems do not affect larger companies in the same way. The Government have proposed and consulted on a measure aimed at small and medium-sized businesses. This amendment would go considerably beyond that.
The existing simpler definition in the Bill, based on turnover, mirrors that used by the Bank of England. We believe that it is the most appropriate definition for legislation that applies to banks as they have visibility of the turnover through the company’s primary account and are already used to applying the similar definition used for the Funding for Lending scheme. I would note, however, that even larger companies outside the definition of SME businesses will benefit from the measures in the Bill. For example, a larger company will still be able to apply directly to a designated platform to seek a finance provider. The Government therefore consider that the existing turnover threshold of £25 million is the appropriate place to draw the line for the legislation. I hope, therefore, that the noble Lord will be willing to withdraw his amendment.
Lord Leigh of Hurley
I thank my noble friend the Minister. I hear what he says but I would make the point that, as the noble Lord, Lord Stevenson, said, we are entering uncharted waters here. We really do not know how this will work. My amendment would therefore allow for the possibility that the system was not working well, with unhappy companies that want to borrow money the second time around finding the system to be too complex and too much of a muddle and being hassled, shall we say, by too many finance providers. It would simply allow the Treasury the option to suggest that advisers are included in their options. I would encourage the Minister to reflect upon that, but for now I beg leave to withdraw the amendment.
Lord Newby
Lord Newby
Baroness Neville-Rolfe
(b) ”
(c) provides, arranges or facilitates invoice discounting or factoring in the course of a business,”
“( ) Prior to the commencement of this section, the Secretary of State shall—
(a) commission an independent assessment of the functions and powers of UK Export Finance (“UKEF”) and UK Trade and Investment (“UKTI”);(b) make a report to Parliament of steps to be taken in response to the findings of the assessment referred to in paragraph (a);(c) commission an assessment to determine actions to improve the awareness of UKEF and UKTI to small and medium sized enterprises.”
Lord Stevenson of Balmacara
My Lords, in moving Amendment 31, I will also speak to Amendment 32. Together, they relate to UKTI and UKEF.
The UK is subject to international human rights obligations under customary international law and as a result of the international legal instruments we have signed and ratified. Human rights obligations generally apply only within a state’s territory and jurisdiction. Accordingly, there is no general requirement for states to regulate the extraterritorial activities of business enterprises domiciled in their jurisdiction, although there are limited exceptions to this, for instance under treaty regimes. The UK may also choose as a matter of policy in certain instances to regulate the overseas conduct of British businesses.
The UK has specific laws protecting human rights and governing business activities. As with all UK law, these are set out in legislation and are sometimes protected by common law rules as well which, taken together, ensure certain rights and liberties. Some of these provisions have been in place for many years, will be familiar to business and are well respected by it.
Like all states, we need to continually reassess whether the current mix is right, what gaps there might be and what improvements we can make. The UK has ratified a series of international treaties and agreements—the ILO eight core conventions, the International Covenant on Civil and Political Rights, the International Covenant on Economic, Social and Cultural Rights and the European Convention on Human Rights, which enshrine human rights and fundamental freedoms and have been given effect through the law of this country.
The Human Rights Act 1998 ensures that individuals in the UK have a remedy for the breach of rights which are protected by the European Convention on Human Rights. It applies to all public authorities and other bodies performing public functions, as private companies sometimes do. The relevant legal framework in the UK includes employment regulations—requiring companies not to discriminate against employees on grounds of sex, race, sexual orientation and religious belief—and environmental regulations. Examples of wide-ranging legislation protecting human rights in the business context include the Health and Safety at Work etc. Act, and the Data Protection Act, which applies to companies and ensures respect for the privacy of individuals. Legislation has also been passed to plug specific gaps in the protection of workers under the law such as the Gangmasters (Licensing) Act 2004, which created an agency to prevent the exploitation of workers in agricultural work et cetera.
The UK has created or endorsed a number of instruments that motivate different aspects of good corporate behaviour and respect for human rights. These include: the UK Bribery Act where, in line with our OECD commitments, UK companies are now liable in the UK for acts of bribery committed anywhere in the world; the Declaration on Fundamental Principles and Rights at Work adopted in 1998 and the eight core ILO conventions ratified by the UK on labour standards; the OECD Guidelines for Multinational Enterprises, where the UK has established a national contact point; and Section 172 of the Companies Act 2006, which makes clear that, in fulfilling their duty to act in a way which they consider would be most likely to promote the success of the company, directors must have regard, among other matters, to the impact of the company’s operations on the community and the environment, and the desirability of the company maintaining a reputation for high standards of business conduct.
Baroness Neville-Rolfe
My Lords, I am grateful to the noble Lord for setting out his thinking on these amendments. I shall comment in turn on the two amendments, taking Amendment 31 first.
The powers in Clause 11 are deliberately drawn as widely as possible to enable UK Export Finance to provide wide-ranging and flexible support, and to respond quickly and imaginatively to changes in market conditions. Our intention is for UK Export Finance to have the widest possible ability to support UK-based firms in their involvement with exporting, whether these firms are existing exporters, those in exporting supply chains or aspiring exporters.
The current requirement for a connection between the department’s support and an actual or contemplated export has made it difficult for the department to respond to the needs of exporters in certain cases, especially in relation to support for the general business of an exporter or a supply chain company. We share the aim that has been expressed today of maximising government support for exports and of maximising the awareness of that support among UK businesses. However, by delaying commencement, this amendment could serve to delay the introduction of new facilities for UK businesses to seek new opportunities and win export contracts that would help us increase UK trade, the aim set out in the Britain Open for Business update announced by the Prime Minister last year.
In view of the points that were made earlier by the noble Lord, Lord Mitchell, I should say that when it comes to promoting British exports, this Government have done an enormous amount. I pay tribute to my noble friend Lord Popat, who is playing an important part in the passage of this Bill. It was on his recommendation that your Lordships’ House established a Select Committee under the chairmanship of my noble friend Lord Cope, who spoke earlier, examining the ways that the Government could support and encourage SMEs to export. That was a very valuable initiative, which reported in March 2013. The Government accepted all 23 of its recommendations, including measures on credit risks for SME exporters and better publicity for services provided by the Government.
We are absolutely committed to increasing British exports to rebalance our economy. As recently as the Autumn Statement, the Chancellor outlined a £45 million package to increase exports, including £20 million for first-time investors. That is in addition to work to increase UKTI’s presence in emerging markets and our work since 2010 to put a much greater emphasis on trade and economic growth in our diplomatic relations. The additional funding that this Government have provided for UKTI has allowed it to double the number of businesses helped since 2010, and we are on track to support more than 50,000 businesses this year. I echo the points made by my noble friend Lord Leigh of Hurley about the export effort for SMEs that he observed on his trip to China with the Prime Minister. Less glamorously, I saw the results for myself on a week’s visit to China in September. I was impressed both by the programme and performance of UKTI and by the scale of business involvement. Again, it was a mixture of SMEs, larger businesses and legal experts.
UK Export Finance is referred to several times in these amendments. In 2011, the Government reintroduced, after 20 years, UK Export Finance support for goods usually sold on shorter terms of credit—mainly those supplied by smaller companies. So far in this financial year, around 120 companies have benefited from direct UK Export Finance support, and almost 80% of them are smaller firms. Companies in the supply chains of exporters benefit indirectly from UK Export Finance support. We want them to benefit directly, hence the provisions in the Bill. UKEF is keenly aware of the need to improve awareness of it among smaller exporters. Last year, the British Exporters Association scored the product range of UK Export Finance at nine out of 10, while the Global Trade Review voted UK Export Finance the world’s best export credit agency. So we are making progress. Awareness of UKTI has also increased significantly over four years, from an average of 51% in 2010 to 65% now.
The noble Lord spoke at greater length to Amendment 32, touching on a very important area. It is of course government policy, informed by an extensive public consultation conducted in 2009-10, that UK Export Finance will comply with international agreements which apply to export credit agencies. UK Export Finance complies with the OECD common approaches, which set out how export credit agencies should undertake due diligence on the environmental and human rights impacts of projects falling within their scope. The OECD common approaches make reference to the UN guiding principles. In undertaking environmental and human rights due diligence in line with the common approaches, it is the practice of UK Export Finance to apply the 2012 performance standards of the International Finance Corporation. These are recognised as comprehensive standards. UK Export Finance is taking an active and leading role in further OECD consideration of human rights issues, which will inform possible changes to the OECD common approaches, should they be agreed.
I pause to comment on the example of fossil fuels given by the noble Lord, Lord Stevenson. UK Export Finance has not supported any transactions in violation of the coalition agreement’s pledge to support green technologies rather than invest in dirty fossil fuel energy production. The Secretary of State made it clear in a Written Ministerial Statement in July that “dirty fossil fuel” should be taken as referring to projects that produce pollution in excess of international environmental standards. The practice of UK Export Finance is not to support such projects.
As I have already said, UK Export Finance complies with the OECD common approaches and has a dedicated environment advisory team that reviews the environmental, social and human rights issues of projects covered by the common approaches prior to the department agreeing to provide support. I hope that gives some comfort. Against this background, the Government consider it neither necessary nor appropriate to impose a statutory duty on the Secretary of State to have regard to only one set of principles—which are, in any case, already taken into account through UKEF’s adherence to the common approaches.
On the second part of the amendment, the common approaches set out how export credit agencies such as UK Export Finance must take account of environmental, social and human rights issues. In line with this, UKEF requires that projects with significant ethical risks are subject to a full impact assessment and that international standards regarding environmental, social and human rights issues are complied with before it provides export credit finance support. UKEF will also monitor these issues throughout the life of projects where relevant, sometimes over periods as long as 10 years.
I was glad to hear the noble Lord, Lord Stevenson, make reference to various changes and improvements made in recent years, including the Bribery Act. That has been pivotal in clamping down on corruption. UK Export Finance also conducts due diligence on the contracts it supports to ensure that they are not tainted by corruption and that the risks associated with dealing with the parties are acceptable. This includes but is not limited to warranties from exporters and checks against prohibition lists maintained by multilateral development organisations such as the World Bank.
The Secretary of State also benefits from the advice of the independent Export Guarantees Advisory Council, whose remit is to advise on UKEF’s application of its ethical policies. The annual report of the chair of the Export Guarantees Advisory Council is published alongside UKEF’s own annual report, which lists the transactions supported by UKEF each year.
I hope that noble Lords are reassured that UKEF takes appropriate consideration of ethical issues in its decision-making and therefore will agree that it is not necessary to place a new statutory requirement upon the Secretary of State. On that basis, I hope that the noble Lord will feel able to withdraw his amendment.
Lord Stevenson of Balmacara
I thank the Minister for her very expansive response. I appreciate the effort that went into it. I know it is not her direct area of responsibility and I am sure that she received assistance from others. They put together a good response and I appreciated listening to it. I was also remiss in not paying tribute to the work of the noble Lord, Lord Popat, which has been referred to in the Committee before and is worthy of further comment. His is a terrific initiative and is doing well. The noble Lord, Lord Livingston, and his predecessor have also done a terrific job, which we support. The export champions, many of whom sit in this House, do a great job right across the world.
We are all on the same side here. Obviously, we recognise that we need more exports. We cannot become the nation that we want to be or enjoy the economic success that we all think we should have if we do not radically increase the amount and volume of our exports. We can take that as common ground. But—there is always a “but”—while I agree that we need to maximise support for exports and we accept that there is a long way to go, it does not have to be a zero-sum game. It is possible—many countries do this—to have regard to the terrible impacts of extractive industries, the difficulty of ensuring responsible trading and the respect for human rights in all aspects of activity, and not to be guided always by, in some senses, the lure of more arms sales. Of course, we have special regimes for them, but it is still very difficult to get a proper sense of what is happening there because they tend so much to dominate the work of both UKTI and UKEF.
Issues were brought up by my brief example, and there are many others. I accept the fact that since 2012, although that is not a long time ago, UKEF has not been involved in supporting the export of dirty fossil fuels—although I note that the quotation we were both referring to states that the situation is that it has not publicly financed new coal-fired plant overseas,
“except in rare circumstances in which the poorest countries have no feasible alternative”.
That seems to me to be a large door through which many rather undesirable practices may have taken place, but I have no evidence of that. However, it makes the point again that it may be that how we are interpreting things is good at the moment, but without statutory underpinning, how can we give sufficient support to people in order to ensure that good practice continues in the long run?
The proposals set out in Amendment 32 are not onerous. The Minister said that she felt that the amendment simply sets out what is common practice now in relation to promoting UK government adherence to the UN guiding principles. That is fine, so why not let us have that in legislation and all agree on it? Further, preparing a report for both Houses of Parliament might well be a way of bringing up some of the issues that do bear on this debate: for example, what exactly is the interaction between the moral and ethical standards we are looking at on the one side and the success or otherwise of exporting around the world?
However, I hear what has been said and I know that this is a complex and difficult area. The work that is going on in government is in some sense at the right level and indeed is of a standard that the rest of the world could easily emulate. However, we must not lose sight of this because it is important and it will have long-term consequences, both good and bad, if we do not get it right. With that, I beg leave to withdraw the amendment.
House of Lords
Property: London Lettings
Baroness Gardner of Parkes
To ask Her Majesty’s Government, further to the Answer by Lord Ahmad of Wimbledon on 8 December (HL Deb, cols. 1593–6), what assessment they have made of the views of London residents about Clause 33 of the Deregulation Bill and the impact of the proposed changes to controls on London lettings on long-term residents.
Baroness Gardner of Parkes (Con)
My Lords, I declare my interests as recorded in the register.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Lord Ahmad of Wimbledon) (Con)
My Lords, the Government published the discussion document Review of Property Conditions in the Private Rented Sector on 12 February 2014. The document sought views from the general public on whether the relevant provisions of the Greater London Council (General Powers) Act 1973 should be reviewed or updated. The Government are carefully considering the representations we received, and a formal response to the consultation will be published shortly.
Baroness Gardner of Parkes
My Lords, I thank the noble Lord for that Answer, but I do not know why—and so I ask him why—the Government intend to take away London’s powers to have at least some control over this rapid subletting of short-term holiday accommodation. Under the new terrorism regulations, how are the obligations dealt with to ensure that people coming into such blocks of flats are not in any way unsafe for other local residents? Their behaviour when they are in the blocks certainly causes great danger, just on the local level of leaving doors open. Westminster Council has six officers working full-time on this, and they have never yet lost an appeal when they wished to enforce action.
Lord Ahmad of Wimbledon
My Lords, I note my noble friend’s concerns. I also wish to draw noble Lords’ attention to my interests in the register regarding leasehold properties. In response to her question, the Government’s intention is clear. We wish to use the Deregulation Bill to help reform what we believe to be the outdated provisions of Section 25 of the Greater London Council (General Powers) Act 1973. Londoners who want to rent out their homes for less than 90 consecutive days currently have to apply for planning permission. We believe that this does not apply anywhere else in the country, and this brings London in line with other parts of the country. As to her concerns about terrorism and other such acts, of course the provisions and the ability of the police, the local authority and local residents to intervene will still be very much available. We have introduced new safeguards under the Anti-social Behaviour, Crime and Policing Act 2014, which came into force in November last year.
Baroness Donaghy (Lab)
My Lords, the Minister will be aware that when the current legislation was introduced in 1973, it was to protect permanent accommodation. Today, we have a housing crisis, an increase in short-term lets and a threat to permanent housing stock. Why are the Government intent on making a bad situation worse?
Lord Ahmad of Wimbledon
The noble Lady referred to my recall of 1973. I was but a toddler then, but I have certainly read up on it. Let me assure her that the purpose behind the Government’s proposals is not in any way to reduce the housing stock, but to allow Londoners who are home owners and wish to put their properties up for rent on a short-term basis of up to 90 days to do so, without the need for increased bureaucracy. The measure will amend Section 25 to permit regulations that allow genuine householders to supplement their income by renting out their property. As to London’s housing shortage, I of course recognise the importance of London homes for Londoners, and the change will not remove the protection available in Section 25.
The Earl of Lytton (CB)
I am sure the Minister would agree with me that the sort of occupation that would be facilitated by aspects of the proposed relaxation effectively becomes a form of commercial activity, and is treated as such for many regulatory, safety and taxation purposes. Would he not agree with me that, given the implications for the safety and amenity of regular residents, this matter is a proper concern of the development and building control functions that are exercised on a case-by-case basis on behalf of the community by the local authority?
Lord Ahmad of Wimbledon
My Lords, I assure the noble Earl that the Government have clarified that they intend to use the regulation-making power only to allow residents to let their homes on a short-term, temporary basis, such as when they are on holiday, without the need for planning permission. It is not intended to be used on a permanent or commercial basis. On the concerns that the noble Earl expressed, there will of course be safeguards. As he may be aware, provision will be made in the legislation for exemptions for areas and particular types of accommodation, which will be subject to review. Finally, I assure the noble Earl that we are working with local authorities, particularly those that have expressed concerns, to ensure that regulations provide the correct balance by allowing the kind of short-term letting that we wish to see while keeping the safeguards in place.
Baroness Grender (LD)
My Lords, does the Minister agree that for many tenants there remains a significant risk of eviction when asking landlords for entirely reasonable repairs? Does he therefore welcome the amendments from these Benches to the Deregulation Bill, which reflect Sarah Teather’s Private Member’s Bill on revenge evictions, which sadly did not make progress in the other place?
Lord Ahmad of Wimbledon
My noble friend makes an important point. She will be aware that the Government have looked at the issue of evictions carefully and we are generally supportive of the provisions in the Private Member’s Bill introduced by Sarah Teather. We will look carefully at that Bill to ensure that the correct provisions are made when this comes into legislation, but I share the sentiments and concerns that my noble friend has expressed.
Lord McKenzie of Luton (Lab)
My Lords, the consultation that the Minister referred to ended last February, almost a year ago. Why have the Government taken so long to respond to it? If they claim to be in favour of localism and if they are intent on deregulating short-term lets, why should not London local authorities have the right to determine the extent, if at all, to which this deregulation runs in their areas?
Lord Ahmad of Wimbledon
As the noble Lord will be aware, we are working closely with London’s local authorities. As a former member of a London local authority, I can assure him that there is differing opinion between those boroughs within the central part of the capital city and those further afield. As I said earlier, it is important that we strike the right balance, I assure the noble Lord that we are working with local authorities in London to ensure that. We are working in conjunction with them to ensure that the provisions are in the interests both of residents who choose to let their homes and of those who choose not to.
Baroness Hooper (Con)
My Lords, in his answers, my noble friend the Minister has referred to resident home owners letting on short lets. How does this apply to non-resident home owners? I appreciate that this is perhaps a particular problem in London, which suggests to me that London should be made a special case.
Lord Ahmad of Wimbledon
My noble friend makes an important point about non-residents. We have made provisions such that, for any non-resident seeking to take advantage of selling their property, there will capital gains tax and repercussions in that regard.
Economy: Prosperity of Towns
Lord Greaves
To ask Her Majesty’s Government what proposals they have for promoting the economic prosperity of towns that do not form part of city regions.
Lord Greaves (LD)
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I remind the House of my interest as a member of an urban local authority in a non-city region area.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Lord Ahmad of Wimbledon)
My Lords, the Government’s long-term economic plan is already securing a better future and a stronger economy for our country. We have put in place a range of tools and incentives that give communities the freedom and flexibility that they need to drive economic growth. Growth deals build on the success of city deals and mean that every area of England, rural or urban, can benefit from powers and funding devolved from Whitehall.
Lord Greaves
My Lords, that Answer from the Minister sounds very nice, but the reality is that people in those parts of England that do not form part of big city regions—particularly, for example, those in the north of England that are not within the aegis of a handful of large authorities—feel very much as if they are being left in limbo when it comes to the devolution of power and the provision of resources to local authorities. Areas such as west Cumbria, east Lancashire —where I live—and many others feel left in limbo. Does the Minister understand that?
Lord Ahmad of Wimbledon
I am always pleased when my noble friend feels that I am being nice. Let me assure him that this is not about leaving any authority in limbo. The 39 growth deals that have been agreed thus far, and the additional funding for growth deals announced by my right honourable friend the Chancellor of the Exchequer in his Autumn Statement, will ensure that all authorities across the country can apply and can successfully bid for such growth funds. Indeed, Lancashire LEP has already secured £233.9 million from the Government’s local growth fund, which it estimates will create up to 5,000 jobs for the local area, and 6,000 new homes as well.
Lord Wills (Lab)
My Lords, the Minister has just referred to the Autumn Statement. He will be aware that there is a widespread belief that the spending decisions in that Statement were driven at least as much by electoral considerations as by economic considerations. Will the Government now publish the details of the assessments of all the projects that competed for that funding, so that people can make up their own minds about how those decisions were taken?
Lord Ahmad of Wimbledon
Let me assure the noble Lord that this Government put the economy first, and indeed we are achieving success in that regard —I am sure that he appreciates that. As for the announcements on the second bid, I ask him to show a little patience, as we will be announcing those very shortly.
Lord Naseby (Con)
Is my noble friend aware that in England’s largest town, Northampton, economic prosperity is happening? The university on two campuses is now provided with a nice new site on the river, there is a new railway station and a new innovation centre. The local authority, which happens to be Conservative controlled, and the leader of that authority are providing true leadership. None of that would be possible had that authority not been supported by Her Majesty’s Government, and in particular by Her Majesty’s Treasury.
Lord Ahmad of Wimbledon
I totally concur with my noble friend. I could not have put it better myself.
Lord McKenzie of Luton (Lab)
My Lords, one of the acknowledged challenges of supporting growth, whether for city regions or otherwise, is the allocation of funding in what the noble Lord, Lord Heseltine, called “penny packets”. LGA research has shown that central government funding for growth has become even more fragmented, with the number of funding streams now having doubled since the noble Lord’s report. The LGA found that there are 124 funding schemes for local growth, spread across 20 government departments, amounting to £22 billion. On what basis does the Minister claim that this is providing value for money, and how is the related bureaucracy helping SMEs in particular to access support?
Lord Ahmad of Wimbledon
The noble Lord should look at the facts. My noble friend Lord Heseltine has been working very closely with the Government, but I can do no better than cite an area that the noble Lord, Lord McKenzie, knows well. In Luton, there has been a successful LEP initiative on growth funds—with Woodside Link, Bedfordshire, the building of the new link road in Houghton Regis will enable major employment growth and help reduce congestion north of Luton. The noble Lord need look no further than his own town, where he will see the benefits and the results of the Government’s schemes.
Baroness Farrington of Ribbleton (Lab)
My Lords, would the Minister care to comment on the disproportionate allocation of resources and capacity for growth for many of the areas in the north of England, both the north-west and the north-east? This Government are disproportionately favouring his noble friends’ sort of areas at the expense of local authorities such as Preston and Lancashire. Does he agree that one of the most effective things for enterprise is for the local authority to ensure that it can match funding to make areas places that people want to live in, with decent services?
Lord Ahmad of Wimbledon
Suffice it to say that I do not agree with the noble Baroness. The local growth funds have demonstrably shown success up and down the country. I quote:
“Reaching this landmark deal is a real demonstration of central government’s confidence in our economic potential”.
That is from Edwin Booth, the chair of the Lancashire local enterprise partnership. Last time I checked, that was not down south, where the noble Baroness asserts that some of my noble friends may be.
Lord Teverson (LD)
My Lords, what mechanisms do the Government have to allow non-metropolitan local authorities that want to move ahead and work with neighbouring local authorities cost-effectively to move towards greater devolution? Is a channel for them to achieve that open now?
Lord Ahmad of Wimbledon
The essence behind local growth funds is exactly as my noble friend says. It is about empowering people at a local level: local enterprise partnerships, local councils and local businesses coming together to bid for local funds. Demonstrably, the 39 deals agreed thus far—and the new deals that we will be announcing—will reflect exactly what my noble friend seeks to achieve, which is local communities working together to achieve growth and jobs for their local area.
Lord Clark of Windermere (Lab)
My Lords, does not the Minister realise that the noble Lord, Lord Greaves, reflects a view held especially in Cumbria and the north-east of England that, although they support the city regions, they feel left out, especially when the major infrastructure investment, HS2, stops 100 miles to the south of Newcastle and Carlisle in Manchester and Leeds? We will end up with a worse transport service, not a better one.
Lord Ahmad of Wimbledon
We all await the outcome of HS2. I believe that it will be positive for the country and, indeed, for the north. My right honourable friend the Chancellor of the Exchequer has already shown the Government’s commitment in the announcement that he has made in support of the regions across the country, and I am sure that if the noble Lord awaits the outcomes of the second bidding round, some of his concerns will be addressed.
Disabled Students’ Allowance
Lord Addington
To ask Her Majesty’s Government whether any reform of Disabled Students’ Allowance will take full account of the case for encouraging independent learning and study for eligible students.
Lord Addington (LD)
My Lords, I beg leave to ask the Question standing in my name on the Order Paper, and draw the House’s attention to my declared interests.
Baroness Williams of Trafford (Con)
The Government support the case for encouraging more independent study. In future, we expect higher education institutions to consider a more inclusive learning environment as part of their provision of support for disabled students, and our reforms support that.
Lord Addington
I thank my noble friend for that Answer. However, does she agree that at the moment the sector is very worried about what is coming, as it is seen as a cost-cutting exercise? If there were a clear statement that independent learning were to be at the heart of all the changes, it would to some extent head this off and give clarity of direction to the ongoing discussion.
Baroness Williams of Trafford
I understand that any change afoot will engender some sort of worry, but the DSA has not been reformed for several years now. We need to improve value for money within the system and balance the responsibility to disabled students between government and higher education institutions, and to make DSA sustainable, because it is a demand-led provision.
Baroness Uddin (Non-Afl)
My Lords, given the communication difficulties associated with autism, the withdrawal of study assistance with human support could prove disproportionately detrimental to a student on the autism spectrum. What consideration have the Government given to the impact of their reform on students with autism spectrum disorders, the characteristics of which are not considered in the equality impact assessment?
Baroness Williams of Trafford
Dyslexia support is one of the highest funded considerations under the DSA. The noble Baroness referred to non-medical help. There is absolutely no intention to cut that support, but there will be more responsibility on higher education institutions to embrace that assistance because of their duties under the Equality Act 2010.
Baroness Grey-Thompson (CB)
My Lords, I declare an interest as a trustee of the Snowdon Trust, which provides financial support to disabled students. I wonder whether any reform of DSA could also look at providing equal support for postgraduate students. When disabled students move from undergraduate to postgraduate level, the current maximum support drops by 50%, thus preventing some of our brightest and most talented disabled students from reaching their academic potential.
Baroness Williams of Trafford
The noble Baroness makes a valid point. Postgraduate funding is indeed less than undergraduate funding. How the reforms will exactly pan out has been under consultation and the Government will shortly provide guidance to institutions. I hope the noble Baroness has made that point during the consultation process.
Lord Stevenson of Balmacara (Lab)
My Lords, under the new arrangements, each individual student will have to negotiate the package of measures they get from their university. In contrast to what happens at present—where there is a statutory framework—there will be no overarching arrangements. What happens when things go wrong? Who will have rights in this matter and where will the statutory rights be located?
Baroness Williams of Trafford
In terms of recourse if things go wrong, there are two directions in which a student can turn. The first is the Office of the Independent Adjudicator. The second is the exceptional case process, the format of which is under consideration and will be announced shortly.
Baroness Brinton (LD)
My Lords, I follow on from the previous question. How will universities be held accountable to make sure that they are providing the appropriate support under the revised arrangements? Will there be a national benchmark to check that a minimum standard is being provided for students with certain conditions?
Baroness Williams of Trafford
My Lords, the universities—certainly those on the higher fee band—will have to put in place access agreements, which will be monitored by OFFA. As I say, there will also be the appeals process and the Office of the Independent Adjudicator to ensure that these reforms roll out smoothly.
Climate Change: UN Conference
The Lord Bishop of St Albans
To ask Her Majesty’s Government what assessment they have made of the agreement reached at the United Nations climate change conference in Lima in December 2014.
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)
My Lords, we secured the basis for everything that the UK Government want in the final agreement. We agreed that countries’ emissions reductions contributions must represent a progression on their current level of effort and be accompanied by information to facilitate understanding. We made progress in elaborating elements of the draft negotiating text and achieved a good result on climate finance by leveraging the UK’s leadership to help get more from other countries.
The Lord Bishop of St Albans
I thank the Minister for her Answer. I know that many people were very disappointed at the outturn of the talks. Is she aware of the little booklet produced by the Royal Society, A Short Guide to Climate Science, which assesses some of the scientific evidence and answers some of the concerns of those who believe that this is not a significant problem for us today? Can she assure the House that Her Majesty’s Government will give a bold moral lead among the international community as we prepare for the talks in December in Paris, so that we can get a significant breakthrough later in the year based on this solid scientific evidence?
Baroness Verma
My Lords, the right reverend Prelate is absolutely right that we need to show leadership. I am aware of the Royal Society’s recent publication A Short Guide to Climate Science and very much welcome its conclusions. It is an excellent and highly accessible summary of climate science and I recommend that those who are interested in the subject should read it. I would also like to assure the right reverend Prelate that this Government are absolutely committed to taking the lead and securing a science-led, binding agreement in Paris in December. We have worked very hard to ensure that other countries are working with us.
Viscount Ridley (Con)
My Lords, given that the heart of the Lima agreement was merely “an invitation” for countries to define a carbon dioxide reduction target and that “may” was substituted for “shall” throughout the key text, does my noble friend think that sending a delegation to Lima was really worth all that money and aviation fuel? I declare my energy interests as listed in the register.
Baroness Verma
My Lords, I am always grateful for my noble friend’s interventions. I reassure him that to try to bring so many countries from across the globe to a meeting to discuss a point which currently affects us all is most important. Given that we know that sea levels are continuing to rise, polar ice continues to melt and we have increased global temperatures, we need to bring people to the table to discuss such important matters.
Baroness Worthington (Lab)
My Lords, I am encouraged to hear that the Minister thinks that we need to increase current levels of effort. As noble Lords will be aware, we negotiate in climate talks as the EU, and the EU is currently on track to comfortably exceed its current targets. Does the Minister agree that to unlock ambition, it might be time for the EU to review—and be prepared to increase—its 2020 target, which we may meet as early as this year?
Baroness Verma
My Lords, the noble Baroness is right that we need to ensure that ambition is always at the heart of what we do. However, we need to make sure that the rest of the world is coming with us so that we all remain competitive as well. Although the noble Baroness is right that we keep raising our ambitions, we need to make sure that others’ ambitions are raised as well.
Lord Teverson (LD)
My Lords, one of the interesting developments at Lima was the inclusion of a paragraph, in the document to go forward to Paris, saying that the use of fossil fuels should be ended globally by 2050. Do the Minister and the Government welcome that thought which was put forward and promoted very much by the Catholic Church? Is that not a good second bow to the very dry climate-change targets that we have at the moment, important as they are, and a really positive way to go forward?
Baroness Verma
I am extremely grateful to my noble friend for raising an important point. We are weighing up the position of developing and developed countries in trying to get on to the same trajectory, so we need to be sure about the impacts there will be on the developing nations as well as the developed ones. We need to encourage everyone to be less dependent on fossil fuels and to do much more on the renewables sector.
Lord McFall of Alcluith (Lab)
My Lords, Lima did make progress although it also leaves a lot to the imagination. The key is the Paris conference, and as the right reverend Prelate said, that will demand moral leadership. Will the Government therefore endorse the approach of Pope Francis, who will not only address the UN on this subject in 2015 but produce an encyclical to be read at every Catholic church in the world, urging everyone that it is their responsibility to take action on a moral and a scientific basis?
Baroness Verma
The noble Lord raises a very important point—that it is an individual responsibility for us all to take. Collectively, that is what Lima managed to do—to bring countries around the table to move forward on the contributions they will make. I agree with the noble Lord that we need to look at it both as individuals and as countries. The Pope and many other leaders across the globe are taking climate change issues very seriously, and I am really pleased that it is now on the top of most agendas.
Lord Vinson (Con)
My Lords, whatever the Government decide, does the Minister agree that it is important that the measures taken should have a measurable effect on world CO2 levels and that we do not put our efforts into things that are merely tokenist? To that first end, will the Minister assure the House that the Government are looking seriously at the development of small, modular nuclear reactors, which are inherently safe, can be factory built and cost a fraction of what the main, larger nuclear plants currently cost? That would ultimately give us endless forms of electricity, totally CO2 free.
Baroness Verma
My noble friend raises another very important point—that we need to look at a diverse range of energy sources, as we do. The Government are always looking at how to ensure that we have the most efficient and cost-effective measures in place to deliver secure energy to all people all the time.
Lord Rooker (Lab)
While we are on the subject of morality, can the Minister explain to the British public, whose support is required, the morality of the ludicrous position of paying tens of millions of pounds to the owners of wind turbines in order to stop them producing electricity? It is ludicrous and will lose public support for many measures relating to climate change.
Baroness Verma
My Lords, it has always been the case, even under the previous Government, that when there is spare capacity it is cut off and the providers are paid for it. It is nothing new; I have not brought anything new to the table, and the noble Lord is not raising anything new. He might have an aversion to wind farms, but this has always been done, even under his Government.
Lord Cormack (Con)
The fact that it is not new does not mean that it is not stupid.
Lord Avebury (LD)
My Lords, has my noble friend looked at the study by Oxford University’s department of engineering which showed that the development of tidal power in the Pentland Firth could supply 42% of Scotland’s electricity? Will she therefore encourage the development of these resources and promote them in other parts of the United Kingdom?
Baroness Verma
My Lords, I know that we have steered slightly away from the Question on the Order Paper, but I suggest to the noble Lord that this Government are looking at all types of energy to ensure that we have a diverse mix of energy so that we are not dependent on having to bring energy from abroad but can supply our own energy at a cost-effective rate to the British public.
NHS: Accident and Emergency Services
(9 years, 4 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)
My Lords, I shall now repeat as a Statement the Answer to an Urgent Question given in another place by my right honourable friend the Secretary of State for Health on major incidents and A&E performance in hospitals. The Statement is as follows.
“Mr Speaker, I welcome this opportunity to come to the House and make a Statement on accident and emergency services.
First, we must recognise the context. The NHS always faces significant pressures during the winter months, but with an ageing population we now have 350,000 more over-75s than four years ago. As a result, we are seeing more people turning up at our A&Es, with 279,000 more attendances in quarter 3 of this year compared to last and a greater level of sickness among those who arrive, leading to an increase in emergency admissions of nearly 6% on last year. This picture is reflected across the home nations, with A&Es in Wales, Scotland and Northern Ireland all missing key performance standards as a result.
A number of hospitals have declared major incidents over the past few days in what is traditionally a particularly busy time in A&E. A major incident is part of the established escalation process for the NHS and has been since 2005. This enables trusts to deal with significant demands, putting in place a command and control structure to allow them to bring in additional staff and increase capacity. It is a temporary measure taken to ensure that the most urgent and serious cases get the safe, high-quality care they need.
The decision to declare a major incident is taken locally, and there is no national definition. We must trust the managers and clinicians in our local NHS to make these decisions and support them in doing so by making sure that there is sufficient financial support available to help deal with additional pressures. I chaired my first meeting to discuss that support on 17 March last year. On 13 June, we gave the NHS an additional £400 million for winter pressures, topped up in the autumn by £300 million to a record total of £700 million, ensuring that local services had the certainty of additional money and time to plan how it should best be used. The NHS started this winter with 1,900 more doctors and 4,800 more hospital nurses than a year ago. This planning and funding has been widely welcomed by experts in the system, including NHS England, NHS providers, the College of Emergency Medicine and the NHS Confederation.
The funding that the Government have put in, which is on top of the year-on-year real-terms increases in funding, is made possible by a strong economy and will pay for the equivalent of 1,000 more doctors, 2,000 more nurses and 2,000 other NHS and care staff, including physiotherapists and social workers. It will fund up to 2,500 additional beds in both the acute and community sectors and provide £50 million to support ambulance services.
However, the NHS also needs longer term solutions to these pressures. We are providing £150 million through the Prime Minister’s Challenge Fund to make evening and weekend GP appointments available for 10 million people, with over 4 million already benefiting from this. Our better care programme integrates, for the first time ever, health and social care services in 151 local authority areas, with plans starting in April to reduce emergency admissions to hospitals on average by 3%. We have funded the NHS’s own plan to deal with these pressures, the five-year forward view, with an additional £1.7 billion for the NHS in 2015-16 and £1 billion of capital over the next four years to improve primary care facilities.
Let me finish by thanking hard-working NHS staff across the country for the outstanding care that they continue to deliver under a great deal of operational pressure”.
That concludes the Statement.
Lord Hunt of Kings Heath (Lab)
My Lords, I join the Minister in paying tribute to the staff of the NHS who are facing such a pressurised situation at the moment. Does he accept that, for all the actions that he has listed today, the fact is that too many vulnerable people are currently being exposed to too much risk in the NHS as a result of the crisis in A&E? How many hospitals have declared major incidents in the past two weeks? Does he agree that the crisis has been caused principally by the savage cuts in social care and the chaos caused by NHS reorganisation? Why have the Government overseen the closure of dozens of NHS walk-in centres? Why did the Government oversee the replacement of qualified NHS nurses in NHS Direct by unqualified call-centre staff in NHS 111, who have computers programmed to encourage people to go to A&E? When will the Government get a grip?
Earl Howe
My Lords, the noble Lord will understand that I am under instructions to keep my answers brief, in the nature of Urgent Questions. To cover his main points, though, we have made social care a priority at the same time as protecting the NHS budget and reducing the deficit. Since 2010 we have allocated additional funding from the NHS each year to support social care worth £1.1 billion in the current year and £2 billion next year. With regard to walk-in centres, there is no evidence that the closure of those centres, where that has occurred, has resulted in additional A&E attendances. A Monitor report in 2013 found that closures were often part of reconfigurations to replace walk-in centres with urgent care centres co-located with A&Es. On NHS reorganisation, I simply point out to the noble Lord that the pressures that we are seeing in the English health service are replicated just as strongly in the NHS in Wales, Scotland and Northern Ireland. Our A&E departments are in fact coping even better than those in the devolved Administrations.
Lord Tebbit (Con)
My Lords, I wonder whether my noble friend will give consideration to helping those people who could not get appointments to see their general practitioners, some of whose surgeries were closed for five days over Christmas, by allowing or encouraging hospitals to set up general practices alongside their A&E departments, which would be open seven days a week, 24 hours a day, for people who registered at the hospital general practice. That would mean more funds for the hospital and less funds for the general practices that chose to close up in that manner.
Earl Howe
My noble friend has made an extremely important point. I have visited hospitals where that very model has been in place, for example, in Luton, where I went not so long ago. More and more hospitals are adopting this suggestion so that when people turn up at A&E they can be triaged immediately into urgent and less urgent cases, often to be channelled through to the GP service.
Lord Kinnock (Lab)
I endorse the sentiments just expressed by the noble Lord, Lord Tebbit, unusual though that may be. I ask the Minister to commend those hospitals and health authorities that have introduced GP services as part of their A&E emergency response. I also draw his attention, if he has not seen them already, to the statements of the Royal College of Nursing and the College of Emergency Medicine. Both said emphatically that a substantial part of the reason for the present pressures is the effect of the reduction of local authority funding which means, in the words of one of the college leaders, that there is no community care. That has meant that people have to be accommodated in hospitals who would otherwise be in either their own homes or local authority homes. Is it not the case that the savage cuts imposed on local authorities, which have had a direct impact on commitment to care for the elderly especially, are to blame for a substantial part of this crisis? Will the Government consider, in addition to NHS funding, reversing at least some of those cuts?
Earl Howe
My Lords, I thank the noble Lord for his endorsement of the model which my noble friend proposed for GP presence in or alongside A&E departments. I fully agree with him on that. It works well. As regards local authority funding, social care expenditure, in particular, has decreased over the past three years. Obviously that has had an effect on the NHS. It would be idle to pretend that it has not. However he will know the very constrained funding environment in which we stand, and I understand that the party opposite has not undertaken to reverse the reductions in funding to local authorities for understandable reasons. That means that we have got to think clever, and one of the initiatives that we are launching next year is the better care fund which will bring together the NHS and social services in a meaningful way. By far the lion’s share of the funding in the better care fund will go to social services.
Baroness Barker (LD)
Since 2010 there has been an average decrease in social care funding in local government of 26%. Are the Government tracking the coincidence of reductions in budgets for things such as continuing care beds and increased attendance at A&E?
Baroness Finlay of Llandaff (CB)
Can the Government confirm that they are working with the College of Emergency Medicine—and I declare an interest as a fellow of that college—to manage their STEP programme? It requires sustainable staffing levels within emergency medicine departments, renegotiation of the tariff to make sure that they are adequately funded and dealing urgently with exit block. The college has calculated it would free 20,000 bed days if delayed discharges from the rest of the system were able to happen on time. The “P” of course is for primary care co-location which has already been addressed. Does the Minister recognise that these departments are working incredibly hard? Although people are waiting longer, by and large they are managing to protect outcomes for individuals who are severely ill and who are seen.
Earl Howe
I am grateful to the noble Baroness. It is worth observing that while the standard is that 95% of people arriving at A&E should be seen and treated within four hours, that standard has not been met in recent weeks. Nevertheless, on average, hospitals are seeing and treating around 90% of patients. The department is working closely with the College of Emergency Medicine. Indeed, I have the college’s paper in front of me. I am well aware of the issues that it has identified, but it is worth noting that the college says that the latest figures show that in England hospitals and their staff have coped extraordinarily well.
Baroness McIntosh of Hudnall (Lab)
My Lords, can the Minister confirm that staffing, particularly of emergency medicine doctors, is acute in the sense that probably enough are being recruited but not enough are being retained in emergency medicine and that there is a significant loss of those qualified practitioners overseas? What is being done to address that?
Earl Howe
I recognise that issue. Having said that, we currently have a record number of A&E doctors in the NHS, which is good, and across the system we have 1,800 more doctors and 4,700 more hospital nurses than we had a year ago. However, being an A&E doctor is a stressful occupation, and doctors are sometimes tempted to go overseas. We are concerned about the loss of any A&E doctor, and that is being looked at in conjunction with the royal colleges and the BMA.
Baroness Knight of Collingtree (Con)
My Lords, there can be no doubt that the figures which we have been given by the Minister need to be looked at very carefully. It would be a miracle if this enormous demand could be faced with no financial troubles at all. However, does he recognise that there is quite a bone of contention, and that the argument is building up that those who bear the heat and the burden of the day working in A&E departments seem to get a fairly small salary compared to the enormous sums that are paid out to managers within the health service? I do not know whether it would be possible to rein that back a little, but if that is the case, it seems very unfair.
Earl Howe
I am grateful to my noble friend. Of course, rates of pay are a sensitive matter, and it is true that the constraints on pay rises over recent years have had an effect on the attractiveness of particular careers in the health service. We can do little about that in the short term, but there are ways and means of improving the work-life balance and working lives of those who work in the health service, even if we cannot increase their pay at the current time.
House of Lords (Expulsion and Suspension) Bill [HL]
Stormont House Agreement
(9 years, 4 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State, Wales Office (Baroness Randerson) (LD)
My Lords, with the leave of the House, I will now repeat a Statement made earlier today by my right honourable friend Theresa Villiers, the Secretary of State for Northern Ireland. The Statement is as follows.
“I would like to make a Statement on the political talks in Northern Ireland which culminated in the Stormont House Agreement on 23 December. When I last updated the House after the visit to Belfast of my right honourable friend the Prime Minister and the Taoiseach, Enda Kenny, I reported that 10 weeks of talks had so far failed to deliver consensus on any of the key issues. I made clear that the stakes over the coming days were high and that without an agreement before Christmas we were unlikely to get so close again for months, or even years.
Further intensive discussions duly took place on Wednesday 17 December and continued on Thursday and Friday of that week. Resuming on Monday 22 December, negotiations continued overnight, concluding some 30 hours later at around lunchtime on the 23rd. At that stage, we presented the parties with a final heads of agreement, reflecting many weeks of discussion and with the input of both the UK and Irish Governments, in accordance with the three-stranded approach. Key issues covered included the finances of the Stormont Executive, reform of the devolved institutions, and the legacy issues of flags, parading and the past. I will take each in turn.
The agreement sets a path for the Executive to put their finances on a sustainable footing for the future, averting the impending budget crisis which was threatening the stability and credibility of the devolved institutions. That includes the implementation of welfare reform, with certain agreed adaptations paid for out of the Northern Ireland block grant, alongside efficiency measures and reforms to the public sector. Measures to improve the way the devolved institutions work, including provision for an official Opposition, a reduction in the number of government departments, and a cut in the number of MLAs by 2021 are also part of the agreement. A commission on flags, identity and culture is to be established by June and, based on the party leader discussions in the summer, proposals are set out by the Government which open the way for a devolved system of adjudicating on parades, to replace the Parades Commission.
Crucially, the agreement also sets out broad-ranging new structures to deal with the legacy of Northern Ireland’s past. These include an oral history archive, a new historical investigations unit to look at the deaths that occurred as a result of the Troubles, and an independent commission for information retrieval established by the UK and Irish Governments. All of these bodies are required to operate in a fair, balanced, proportionate, transparent and accountable way, preventing any group or strand of opinion from being able to subvert the process or try to rewrite history.
The new system puts the needs of victims and survivors centre stage and has reconciliation as a key goal. Consensus on how to deal with Northern Ireland’s past has eluded successive Governments since the Belfast agreement was signed 17 years ago, so the significance of the progress which has been achieved should not be underestimated. The Government have agreed to contribute £150 million over five years to help fund the structures dealing with the past, meaning that the PSNI can devote its efforts to policing the present rather than the past. That funding forms part of a wider package of significant financial support from the Government amounting to £2 billion of additional spending power. That is made up of a combination of new funding and important flexibilities in relation to existing resources and it is targeted at Northern Ireland’s specific circumstances—the legacy of its past, its divided society and its overdependence on the public sector.
Last, but certainly not least, the agreement paves the way for legislation to devolve the power to set the rate of corporation tax for Northern Ireland. A Bill will be presented to the House shortly for First Reading. If the Stormont parties press ahead on agreeing their final budget and on delivering welfare reform legislation, the Government will use all their best endeavours to get the legislation on to the statute book before Dissolution. The parties in Northern Ireland have made it clear that corporation tax devolution can help them to rebalance the economy and attract investment because of Northern Ireland’s unique position of having a land border with the Republic of Ireland. I welcome the fact that it is this Government who are delivering that momentous and transformative change, subject to the important conditions contained in the agreement, and I call on the Opposition today to commit to supporting the Bill as a key part of the Stormont House agreement.
The agreement involves compromise on all sides. It is fair and balanced and it has been widely welcomed. First Minister Peter Robinson hailed it as “a momentous step forward”. Deputy First Minister Martin McGuinness described it as “a remarkable achievement”, and,
“a fresh start we need to seize with both hands”.
President Obama said that Northern Ireland’s political leaders have shown that,
“there is a way to succeed for the benefit of all”,
and Secretary of State Kerry called their actions “statesmanship, pure and simple”. But securing an agreement is not the end point—far from it. There is much work ahead on implementation for the Executive, for the UK Government and, where appropriate, for the Irish Government. However, I give this assurance: if the parties in the Executive press ahead on that, the Government will implement our side of the agreement and we will do it faithfully and fairly. There are no side deals.
In closing, I pay tribute to Minister Charlie Flanagan for his crucially important contribution to the process. I would also like to thank the US Administration, and in particular Secretary Kerry’s special representative, Gary Hart, for their support. I thank all the officials at the Northern Ireland Office who worked on this process. Above all, I would like to record my appreciation for the leadership provided by the five Northern Ireland Executive parties.
In the Government’s view, the Stormont House agreement represents a genuine and significant step forward for Northern Ireland, offering the prospect of real progress on some of the most intractable issues we face there—problems that have defied multiple attempts to resolve them over the years. The agreement gives the five parties in the devolved Executive the chance to refocus and work together with renewed confidence for a more prosperous, more stable, more united and more secure future for the people of Northern Ireland. I urge them to seize the opportunities it presents to build a brighter future for Northern Ireland, and I commend the agreement to the House”.
Lord McAvoy (Lab)
My Lords, first, I thank the Government for making advance sight of the Secretary of State’s Statement available to us. Her Majesty’s Opposition welcome many aspects of the agreement that the Minister has outlined to the House. It is not perfect, but it is a genuine advance on the stalemate of the past two years. We congratulate the Secretary of State, the Parliamentary Under-Secretary of State and her counterparts in the Irish Government on their painstaking and, I am sure, at times painful facilitation of the talks.
Throughout the political impasse of the past two years, we have repeatedly called for a more active role from the Government. We hope that the right lessons have now been learnt about the consequences of disengagement for political stability and momentum in Northern Ireland. I am sure that the Minister will agree that there is no room for complacency. As we have seen in the recent past, unresolved issues such as parades and flags have the potential to fuel public concern and disorder, and therefore ultimately lead to political instability.
Her Majesty’s Opposition also pay tribute to Northern Ireland’s political leaders for stepping back from the abyss and restoring some level of public confidence in their capacity to move Northern Ireland forward. It is acknowledged that they face unique challenges in managing the transition from a society scarred by conflict and sectarianism to a normal society. However, this acknowledgment does not mean exemption from difficult political choices about priorities, or any expectation of blank cheques from this or any future Westminster Government.
Turning to the agreement itself, Her Majesty’s Opposition welcome the adoption of a viable budget for the next financial year. It is right that this includes some elements of welfare reform while excluding the pernicious bedroom tax, which an incoming Labour Government will scrap.
However concerns remain about the Government’s rush to introduce legislation on corporation tax devolution, a decision that will have profound implications for Northern Ireland and the rest of the United Kingdom. There should have been a proper consultation process, including an analysis of the financial impact of significant reductions in corporation tax on Northern Ireland’s block grant, before introducing legislation in Parliament.
It is good news that a comprehensive system has been agreed to deal with the past. It is to be hoped that, over time, victims and their loved ones will develop confidence in the integrity of the new architecture and get the truth and justice they have been denied for too long. We also support the Government’s decision to make new investment available to boost integrated education, which is one of the most powerful manifestations of what a shared future can mean.
However, I have a number of questions for the Minister. First, what assessment have the Government made of the impact on the block grant for Northern Ireland of reducing corporation tax to the levels in the Republic of Ireland? Secondly, what criteria will be applied to determining whether penalties will be levied by the Treasury next year in connection with welfare reform? Thirdly, what is the timescale for the creation of a new system to deal with the past? Fourthly, what negotiating process will now be put in place to deal with unresolved issues such as parades and flags, and other identity issues such as the Irish language? Fifthly, what process has been agreed to monitor the implementation of this agreement?
These are genuine questions, to which we hope the Government have turned their mind. We do not want a situation where we are not totally and fully prepared—as far as possible—for any particular new situation in Northern Ireland.
Baroness Randerson
My Lords, I welcome the broad support of the noble Lord and, in particular, the appreciation he has expressed for all of those involved in this process and the statesmanship that has been shown. However, I have to say yet again in this House that I reject all notions that the Secretary of State and the UK Government have been in any way disengaged from the process. The Secretary of State has been involved throughout the past two years in the processes that have gone on to reach agreement.
What changed significantly was that in the summer the leaders of the political parties asked the Secretary of State to become directly involved. Prior to that they were having discussions and negotiations—and, indeed, slowly making progress—on these issues but had failed to reach an agreement. It is significant that 12 weeks of intense discussions and negotiations, led by the Secretary of State and with the involvement, where appropriate, of the Irish Government, have led to this important agreement.
I regret that the noble Lord has not given the full support of his party to the proposal to devolve corporation tax to Northern Ireland. The desire for this across the community in Northern Ireland appears to unite both the political parties and the business community. They believe it is a significant issue for their future prosperity.
The noble Lord asked me a number of questions and I fear that I may not have been able to take down the full details. Obviously, I will review the record and write to him if necessary. However, I emphasise that the Government are keen to get working on the issues and with the bodies associated with the past, but I should point out that this needs Westminster and Assembly legislation. In contrast, we would expect the work on flags to be up and running by June. We are expecting the Executive to introduce legislation relating to welfare reform this month.
The noble Lord also asked me about corporation tax and adjustments to the block grant. There will of course be adjustments but precise details will have to wait until we know the rate and the precise shape of the plans for the devolution of corporation tax. As there has been with the Scottish Government and the Welsh Government, there will be appropriate discussions with the devolved bodies prior to the devolution.
Lord Mawhinney (Con)
My Lords, reflecting on the Statement just made by my noble friend, it is quite easy to understand why Peter Robinson and Martin McGuinness would be pleased to have an extra £2 billion a year to spend. I was less clear about what my noble friend meant when she said that this £2 billion a year would help to wean the Northern Ireland economy off its overdependence on the public sector. Will she explain what that means?
Baroness Randerson
Perhaps I may first make clear to noble Lords that the additional funding is not £2 billion a year. It is £2 billion over a number of years in excess of five years. It is not £2 billion of additional money; it is £650 million of additional money over that period. The money beyond that is spending power associated with additional flexibilities granted for the Executive’s budget. The noble Lord asked about the efficiency of the public sector. The reforms that have taken place within the Civil Service and in the public sector generally in the rest of England, Scotland and Wales have not taken place to the same extent in Northern Ireland. Therefore, it is suffering from severe financial pressures. Those reforms need to take place. It is a condition of the additional funding that the Northern Ireland Executive embark on those reforms and we expect them to do that imminently.
Baroness Garden of Frognal (LD)
There is time. I suggest we hear from the Liberal Democrat Benches and then the Cross Benches before we come back to the Labour Benches.
Lord Shutt of Greetland
I welcome the Statement. I trust we are moving forward and that deadline diplomacy has worked. As ever, it is sad that we have to consider so much about the past. In the 75 paragraphs in the Stormont House agreement, 40 refer to flags, parades and the past. I note that the agreement establishes six new bodies; namely, a commission on flags et cetera, an oral history archive, a mental trauma service, a historical investigations unit, an independent commission on information retrieval, and an implementation and reconciliation group. It would be splendid if these bodies took matters forward, but of course they do not come for free. The document suggests that £150 million will be available over five years to help with these new bodies. What will the total cost of the new bodies be?
In particular, I welcome paragraph 69 under the heading “Outstanding Commitments”, which makes it seem just an afterthought. It talks about,
“initiatives to facilitate and encourage shared and integrated education and housing”,
and matters such as social inclusion. If we are really to see integrated services in Northern Ireland, what cost savings does the Minister believe there will be? It will be interesting to note, on looking further into the past, the contrast between the costs that we may well have to expend and what can be achieved in the future if we are to see some real integration.
Baroness Randerson
The noble Lord refers to the issues related to the past. As was made clear in the Statement, issues associated with the past in Northern Ireland are really the biggest factor that has eluded previous agreements. If this set of bodies proposed here are established and are able to work effectively, clearly considerable progress will have been made. Noble Lords will have noted that there are measures built into this to monitor progress; significant effort is being made to make sure that progress is monitored on a regular basis.
The overall cost of establishing those bodies is not of course precisely known. The £150 million in the agreement is the UK Government’s contribution to that cost but, since those bodies touch upon devolved issues, it is entirely reasonable and totally expected that the Northern Ireland Executive will contribute to their cost. Present arrangements are not necessarily working very well and cost money—so this is not entirely new money.
The noble Lord referred to the costs of division. He knows from his considerable experience that various estimates of the costs of the divided society in Northern Ireland have been made. They are variable, but they all show significant cost to that society every year.
Baroness Garden of Frognal
Could your Lordships keep their remarks short? There will be time for everybody. I indeed gestured in that direction and apologise if that was the wrong thing to do.
Baroness O'Loan
My Lords, thank you. I have four simple questions.
First, a number of cases are currently excluded under the Stormont House agreement from the work of the historical investigations unit. Those cases were previously investigated by the historic inquiries team. However, Her Majesty’s Inspectorate of Constabulary has said that many of these investigations were most unsatisfactory. Can the British Government ensure that they will not be embarrassed in future because our Article 2 obligations are not being complied with?
Secondly, can the British Government and the Minister assure us that the Government will ensure that the historical investigations unit has access to all intelligence and information, particularly that held in this part of the United Kingdom by the security services, the Armed Forces and GCHQ?
Thirdly, what actions will the Government take to ensure that the historical investigations unit has the full legal powers that it needs?
Fourthly, does the £150 million have to provide for victims, or will they be provided for separately? On the matter of trauma services there is a massive unmet need in Northern Ireland: that is a costly and lengthy process.
Baroness Randerson
The noble Baroness first asked a question relating to human rights obligations. I am sure that she has noted the reference to that in the agreement. There is an awareness by the UK Government, and indeed all those involved, of the need to ensure that the processes abide by human rights obligations. Therefore, there is work to be done, in particular by the Executive but also by the UK Government, to smooth that process.
In relation to access to intelligence information, and indeed access to information in general, the UK Government will of course ensure that the required information is made available, while balancing the need to ensure the safety of individuals, which is an obligation that is always the case in these situations. It is our intention that the bodies concerned will have the powers they need to do an effective and efficient job, particularly on a timescale satisfactory to those who suffered during the Troubles.
Lord Dubs (Lab)
Will the Minister confirm that the historical investigations unit will not be constrained from looking at any of the significant cases in the past? I could mention Ballymurphy and Finucane. Will it be able to look at those in the detail that it needs? Secondly, what is the relationship between the outcome of such investigations and the possibility that there might be recourse to the courts as a result?
Baroness Randerson
It is expected that when there is a need for recourse to the courts, obviously there will be police investigations and decisions by the DPP on whether to prosecute in the normal manner. There is certainly no concern about that process in our minds. I am sure the noble Lord will understand that there is work still to be done in ensuring that the detail is fully fleshed out with regard to the bodies outlined here. Your Lordships will see that although there is significant detail in the agreement and it has been well thought-through, obviously there is a lot of work still to do on the day-to-day way in which these bodies are to operate. It is expected that there will be a meeting later this month where work will progress further on the bodies suggested in the agreement.
Baroness Harris of Richmond (LD)
My Lords, £150 million is indeed a significant sum to deal with the past. But I ask my noble friend the Minister: if at the end of those five years significant inquiries are still to take place that have not been resolved, what will the Government do then?
Baroness Randerson
The noble Baroness refers to the timescale that we are envisaging. For example, we hope that the historical investigations unit will be able to complete its work in five years. The Government of the day will have to consider the situation at the end of that time. It will be for the Government of the day to make that decision.
Lord Kilclooney
My Lords, I was involved in the talks leading to the Belfast agreement and representatives of all political parties with elected Members were involved in those talks. Why on this occasion were the elected representatives of one-third of the Unionist voters excluded from the talks that led to this provisional agreement? Is that the basis on which to get all-party support in the future?
When it comes to corporation tax, I very much welcome the views expressed by the noble Lord, Lord McAvoy. Of course businesses in Northern Ireland have welcomed the move because they will be paying less tax. But the Minister has confirmed—at last—that if the Northern Ireland Assembly reduces corporation tax in Northern Ireland, the block grant will be reduced. That will mean less for hospitals and education. It will be rejected by many people across Northern Ireland.
Baroness Randerson
The noble Lord referred to the reduction in the block grant. That process is taking place with the devolution of other taxes. It is, of course, a decision that the Northern Ireland Executive would take in the light of their decision to pursue corporation tax devolution because the purpose behind pursuing it is to create a more prosperous society and to encourage the establishment of further businesses and further inward investment.
The noble Lord refers to the parties at the talks. I am sure that he is fully aware of the background details of how the talks developed over two years. It is therefore the case that the leaders who were there believed that at that time there was purpose in talking together.
Lord Christopher
My Lords, my question is extremely short. If I were a chief executive of a successful plc registered in London and corporation tax dropped to 12.5% in Belfast, as it is reasonable to assume, what reason would I give my shareholders for not moving my office to Belfast?
Baroness Randerson
The noble Lord raises a legitimate issue which the UK Government have considered and which I know the Northern Ireland Executive is bearing in mind, but it is something for the corporation tax Bill when it comes before this House.
Lord Morrow (DUP)
My Lords, can the Minister give an assurance today that the proposed new historical investigations unit will not equate criminals and victims as coequals, that innocent victims will be afforded the respect and regard they deserve and that a clear distinction will always be maintained as the HIU takes forward its work?
Baroness Randerson
The historical investigations unit is being set up in a way which ensures that there will be cross-community support. I think that answers the point of the noble Lord’s question.
Lord Cormack (Con)
My Lords, when I chaired the Northern Ireland Affairs Committee in another place, it became increasingly clear to us over the five years we were working that there had to come a time when a line was drawn. I ask my noble friend to bear that in mind in conversations with the Secretary of State. We have another five years, but we cannot have another five years after that and another five years after that. The people of Northern Ireland deserve to live in the future, not in the past.
Baroness Randerson
While entirely supporting the final sentence of my noble friend’s comments, I ask him to bear in mind that it takes a very long period of time to turn around a society as divided as that of Northern Ireland.
Lord Bew (CB)
My Lords, on the issue of the past, I welcome the Minister’s explanation that there will be careful monitoring of the results produced by this process. In the light of Mr Adams’ statement a mere three weeks or so ago that the IRA had no corporate memory and therefore could not, in the context of the Maíria Cahill case, contribute in any meaningful way to the work of historical recovery, it is slightly difficult to see how we can have, in the words of the Statement by the Secretary of State for Northern Ireland, a process which is “balanced, proportionate, transparent and accountable”.
One hundred and fifty million pounds is a lot of money. It is 20% of the amount allotted for the Northern Ireland Civil Service early retirement scheme. The taxpayer is entitled to reassurance that there will be careful monitoring of this process and that for this £150 million there will be something approaching a real, balanced process. This cost is proportionately far more than the historical aspects of the Bloody Sunday inquiry, which is reputed to be so highly expensive.
Baroness Randerson
The noble Lord points out the complexities of dealing with the range of issues that this agreement covers. The number of bodies being set up is significant. They fulfil a whole range of functions. It is intended that one of them should be established as an international body. It is intended that some of them operate completely independently of political representatives. Others do not, but there is always that balance when there is elected political representation.
It is important to bear in mind that the agreement makes provision for an implementation and reconciliation group to oversee the bodies and the work being done on the past. It is important to bear in mind also that the British and Irish Governments and the Northern Ireland Executive are committed to regular, six-monthly monitoring meetings to ensure that things are proceeding in the fair, balanced and transparent manner that I mentioned.
Lord Forsyth of Drumlean (Con)
While understanding the particular circumstances in Northern Ireland, does not my noble friend think that there is a danger in this piecemeal constitutional reform? For example, what are we to say as unionists to the nationalists in Scotland who are demanding corporation tax powers on the grounds that it will help their economy when my noble friend is justifying corporation tax in Northern Ireland being set on precisely the same basis? Should we not be careful in moving forward with devolution that we do so on a basis that is balanced and clearly thought through? Is not my noble friend’s answer that she is not yet able to tell us what the effect on the block grant would be deeply worrying in the context of further devolution of tax powers?
Baroness Randerson
The noble Lord points out that there is of course an inevitable read-across from one devolved nation to another. That is something that we are all very conscious of in relation to both Wales and Scotland. I should point out the one unique feature in relation to Northern Ireland: Northern Ireland shares a land border with the Republic of Ireland, which has a very much lower rate of corporation tax. Therefore, competition to attract business is very much more intense for Northern Ireland than it is for Scotland, Wales and England. It is important to bear in mind that unique position.
Pension Schemes Bill
Lord Bradley
“Decumulation
(1) A qualifying money purchase scheme may not sell annuities directly to anyone who has saved with the scheme unless this is the recommendation of an independent annuity broker.
(2) A relevant scheme may provide an independent brokerage service itself.
(3) A self-provided annuity brokerage service will be considered independent for the purposes of this Act if the provision of its services is subject to the direction of independent trustees.
(4) Pension schemes shall ensure that any brokerage service selected or provided meets best practice in terms of providing members with—
(a) an assisted path through the annuity process;(b) ensuring access to most annuity providers; and(c) minimising costs.(5) The standards meeting best practice for annuity brokerage services shall be defined by the Pensions Regulator after public consultation.
(6) The standards set out in subsection (5) shall be reviewed every three years and, if required, updated.”
Lord Bradley (Lab)
My Lords, decumulation is the process of converting pension savings into retirement income. I hope that, as we deliberate in Committee, we will try to avoid as much jargon on pensions as we possibly can to make it understandable not only to ourselves but to the public outside.
Our new clause on decumulation is aimed at protecting savers who default into an annuity with their same savings provider. At the start of Committee stage it is important to note that we are in a pretty dramatic and fast-changing environment for pensions. We must not forget those parts of the pensions market that are not currently working for consumers as well as they should. The amendment would provide safeguards for those who do not take advantage of the new flexibilities provided by the 2014 Budget changes, and for whom an annuity remains the best product. This may be the case for some who feel that they would still prefer the security of a product that guarantees them a set income for their entire lives, without the difficulty of making predictions about life expectancy. That can still be a very attractive option.
The ABI code of conduct requires members to encourage savers to use the open market option when choosing an annuity. However, 50% of savers still buy an annuity from the company they have already saved with. This situation could be further exacerbated by auto-enrolment, under which the majority will be enrolled by inertia. We know that, as a result of not shopping around, many get a much worse deal than they could have had, so this could have a serious effect on the size of their annuity. The National Association of Pension Funds estimates that those who do not shop around get up to 20% less in their annuity. The Financial Conduct Authority estimates that consumers could be missing out on up to £230 million in additional pension savings because they are not shopping around in the most effective way.
We know that this market has not served consumers well in recent years, and the process remains complex. The Financial Services Consumer Panel recognised this in December 2013, and said that a “‘good’ annuity outcome” might well require expert help. Our new clause would require the recommendation of an independent broker to sell an annuity to someone who has saved with the same scheme. This would protect consumers from getting a bad deal when taking a crucial decision in their lives. As was made clear in Committee in the other place, pension schemes should ensure that any brokerage service they employ on behalf of their members meets best practice in terms of providing members with an assisted pathway through the annuity process, ensuring access to most annuity providers and minimising the costs. Pension schemes have a duty to get the best possible deal for their members, or to do it themselves in-house. Such good practice can be found in pension schemes such as the Royal Mail and the National Employment Savings Trust.
That view flows partly from the significant evidence that the best way to get value for money on an annuity is to “bulk-buy” that annuity on behalf of the cohort of scheme members who are going to retire. For example, let us look further at the National Employment Savings Trust, which requires annuity providers to make sealed bids to provide annuities for those who have saved with NEST. It takes the cohort coming up to retirement and says to the providers, “We have X people. Given their personal circumstances, and taken together collectively, what offer of an annuity will you make?”. This seems a sensible way to proceed. It has the advantage of scale, and the expertise of the same pension scheme that built up the pension pot is used to turn it into a retirement income.
This is a brief opening amendment in the form of a new clause, so I shall summarise the position now. Annuities as they are currently constituted have not been delivering value for money for the whole of the market. The fundamental reason is that half of those coming to the point of annuitisation—turning their pension pot into an income—do not shop around for the best deal because it can be a complex, confusing and difficult process. Because of that and because of the advantages of bulk-buying by a professional expert, it seems sensible, for the consumer to get it right for their retirement income, to empower pension schemes to undertake that responsibility. As the new clause draws on best practice, I hope that the Government will see its merits. I beg to move.
Baroness Drake (Lab)
My Lords, I have some sympathy with the thrust of Amendment 1, under which my noble friend seeks to protect pension savers from purchasing an annuity which is not good value for money or appropriate to their needs. If there was any doubt about the nature of the problems in the annuities market, the recent FCA report has clearly put those to rest. It makes evident the need for assisted paths for consumers through the annuity process. Notwithstanding the new freedoms, annuities still have an important role to play in securing retirement income, and we need the FCA urgently to push ahead with tackling the conduct of providers in the market. With the new freedoms and the anticipated product innovations that will flow from that, the Government and the saver are still very dependent on the market to make them a success and mitigate consumer risk.
The issue of assisting the consumer through the annuity process—the role of the employer, the responsibility of the saver and the role of the provider—is complex. No doubt later in Committee—at least, I hope we will; I hope that an amendment is winging its way—we will debate a second line of defence provision to control the conduct of providers selling retirement income products, including annuities, trying to enhance consumers’ protection when they are in the purchasing process. I hope that we can pursue in more detail how the Government can mitigate the pension saver’s risk when purchasing an annuity, when, I hope, we can get into a wider debate on a second line of defence across all retirement income products.
Lord Bourne of Aberystwyth (Con)
My Lords, in opening for the Government on this, I welcome the comments of the noble Lord, Lord Bradley, regarding jargon. We certainly agree on that and I suspect that we will agree on much more as we proceed through the Bill. I, too, will try to avoid jargon and too many acronyms, which seem also to be a feature of the pensions landscape.
We fully appreciate the intention behind the amendment and agree that consumers must be given the necessary information and support on their retirement choices in this new flexible landscape, which I think we all welcome. As the Financial Conduct Authority’s Thematic Review of Annuities and recent published findings from its market study concluded, competition in the annuity market is not working effectively—as the noble Lord, Lord Bradley, said. That means that many consumers are not getting the most out of their hard-earned savings.
To be clear, annuities can be good value where the individual member selects a product that meets his or her needs. That is why the Government are legislating in the Bill to deliver a service providing the public with guidance. That will ensure that individuals can access the support that they need to understand and navigate their retirement choices—for example, to help them decide whether an annuity product is the right choice for them at all. Where they decide to purchase an annuity, they must be encouraged and supported to shop around for the best deal. Those are key objectives for the guidance and the Financial Conduct Authority’s rules will underpin it. I will come back to those issues shortly.
Turning to the specifics of the noble Lord’s amendment, I am not convinced that imposing additional costs on either some schemes or members is the best way to facilitate the increase in shopping around. The amendment would effectively require all schemes that offer an annuity to provide or source an independent annuity broker run by independent trustees and overseen by the Pensions Regulator. What is less clear from the amendment is who is to meet the extra costs of this provision. Although some 52% of schemes already offer an annuity broker service, requiring all schemes that provide annuities to their own members to offer or source such a service must come at an extra cost. These additional costs must either be met by all the members of the scheme, whether or not they use the service, or by those members who do so, on some kind of fee or commission basis. If it is the former, then clearly scheme costs increase for all members even if they were going to go and purchase their annuity or other product elsewhere. If it is the latter, then the effect would be to increase the costs of selecting annuities from certain schemes, making them less attractive, or requiring members to pay fees for a decision that they may have made in any event.
Lord McKenzie of Luton (Lab)
My Lords, can I probe the Minister on his response? It seemed that he was praying in aid the guidance service as an alternative to the proposition advanced in the amendment. We will obviously come on to discuss the guidance service more fully on Monday, but I understand that this is, effectively, an upfront and one-off sort of offer. With increased flexibility, are we not likely to be in an era where people will no longer necessarily make the cliff-edge decision on an annuity on day 1 of retirement but will wish to address that some time later during the course of their retirement? In those circumstances, if somebody was looking to purchase an annuity five years after retirement, and having had some income draw-down or other product in the interim, what would be in place to protect people in the annuity market at that point, as the Minister suggested, and not on day 1? Presumably, the guarantee will not be available to be provided on a free basis.
Lord Bourne of Aberystwyth
If I might first take the noble Lord up on one point, what is being proposed by the noble Lord, Lord Bradley, opposite is an alternative to the guidance service which is in the Bill. The guidance service will guide people and there will be a wake-up call via the literature provided before a member’s retirement telling them of the guidance service and with clear signposting to it of the options that face them on retirement and afterwards. It will not just be explained what you can do on day 1 but later on. We anticipate that many people will take that up. Some will not choose to do that, but it is clear that that sets out the pathways for the future. It is only guidance; any advice taken, whether immediately or later on, will of course be subject to the market. We believe that the choice being offered here—supported, as I understand it, by the Opposition—is important and that we can depend on a developing market with innovative products, in which members will be able to shop around not just on retirement but afterwards. All this will be set out in the wake-up call and the guidance that will follow once a member retires.
Baroness Drake
If I may presume to comment on my noble friend’s amendment, the Minister made the comment that it was being proposed as an alternative to the guidance. I do not think that it is. It is basically saying that guidance is guidance; that is what you would receive but you then move into the purchase or decision activity which flows from that guidance. It is what happens at that stage—the relationship between the consumer and the person providing the annuity, whether it is a scheme or a retail provider of retirement products—which is causing a lot of people anxiety. Some refer to it as the second line of defence; this is another way of addressing that. It is trying to regulate the quality of the exchange between the provider of the product, be it an annuity or in some other form, and the consumer at that point. That is a post-guidance activity, not a substitute for guidance.
Lord Bourne of Aberystwyth
I take the point that the noble Baroness, Lady Drake, is making on this issue, but it is clear that the guidance will set out the options available on annuities and, where appropriate, signpost people to taking advice. If they want to compare the annuity product being offered by their own provider with that of somebody else, all that will be set out. Whether it is an adjunct to or a substitution for it is somewhat academic. There is a cost associated with this and we believe that the proposals in the Bill, setting out the opportunities for guidance which will come at no cost to the consumer, are the right way forward. They will set out the options available to the consumer on retirement.
Lord McKenzie of Luton
If I may come back on that point, setting out the options available on retirement is one thing, but what happens if someone does not wish to annuitise on day 1? Five years down the track, their life circumstances may have changed dramatically—they may have married, there may have been a death in the family and all sorts of things may have happened to their life—which might mean that the original guidance is not as relevant as it might have been. What is going to protect people, as my noble friend Lady Drake said, from the issues of how the provider is acting at year 5 in those sorts of circumstances?
Lord Bourne of Aberystwyth
Clearly, any form of guidance is not going to be appropriate for ever on specific issues. The guidance is not intended to address the specific situations of every consumer; that is the purpose of advice. The guidance is indicating to people what they should do in their particular circumstance, at that stage, to look at the future. It is for those consumers to decide whether to take that option or not; that is the purpose of the guidance. It is not specific in the way that the noble Lord, Lord McKenzie, is suggesting.
Lord Bradley
My Lords, I am grateful to the Minister for his comprehensive reply on the new clause. The whole purpose of this and of many of the amendments we are tabling in Committee is to assure the public of their protections and to ensure that they have the information and that it is communicated effectively to them so that they can make proper choices at a crucial moment, or moments, in their retirement or post-retirement period. While we have immediately—probably quite rightly—started to discuss the guidance guarantee, I did not expect to start that process within 15 minutes of the start of the Committee stage. That will be an incredibly important part of our deliberations and, while it is very useful for the Minister to start to lay out the purpose and detail of that guidance, I know that we will have many opportunities to expand on that as we progress through the Bill.
The Minister has raised a number of fears about this new clause, which I will look at and reflect on carefully in order to ensure that the issues he has raised will be comprehensively covered by the range of activities to protect the consumer in the way that we want. I am grateful for the comments of my noble friend Lord McKenzie in support of the general thrust of this amendment, which is another attempt to get belt and braces around the advice and guidance to ensure that people are making sensible decisions.
As my noble friend Lady Drake said, we will be bringing forward the issue of a second line of defence, which is relevant to this general debate, again on the basis that we want to ensure that the public have confidence in the new arrangements that are being put in place and feel that there is protection for the decisions that they make. We will come back to whether guidance is sufficient to achieve that objective, but we need to look at these elements as a comprehensive package of attempts to achieve the objectives I have set out. However, in the light of the Minister’s comments and the opportunity to reflect on those for a later stage, I beg leave to withdraw the amendment.
Lord Bradley
“( ) A statutory instrument containing regulations under subsection (3)(b) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.”
Lord Bradley
My Lords, Amendment 2, which is in my name and that of my noble friend Lord McAvoy, flows from the recommendations of the Delegated Powers and Regulatory Reform Committee’s 12th report of Session 2014-15. It should be stated at the outset of our deliberations in Committee that the ability to scrutinise this incredibly important piece of legislation, affecting millions of people already in a pension scheme, about to retire or starting the process of accumulating a pension pot, has clearly been limited by a number of factors.
First, many new clauses and amendments were introduced at a very late stage in the other place, so hampering its ability to scrutinise those aspects of the Bill. Secondly, to date, no draft statutory instruments are available for scrutiny alongside this piece of primary legislation, when that legislation relies on secondary legislation to make meaning of many of the proposals in the Bill. Thirdly, there is an incredibly short timetable to get this legislation through Parliament—I understand that implementation is still due to begin at the start of April, barely three months away. Fourthly, this is one of a number of pension Bills and Acts—I think we are up to four, but I am thinking particularly of the Taxation of Pensions Act—that this Bill is inextricably linked to. It is important that we are able to ensure that there are no tensions between the different Bills and Acts and that the freedoms and flexibilities do not in any way contradict the ability to have security of retirement income in future.
Lord German (LD)
My Lords, I have considerable sympathy with the amendment before us, not least because the chair of the Delegated Powers and Regulatory Reform Committee of your Lordships’ House would be very upset if we did not make sure that the report was brought before your Lordships’ House.
Pension Bills in the past—the report quotes pension Bills from the 1990s—were frequently used, with very much of the detail coming in the following regulation. However, as we know from the debates and discussions we have already had, there are no drafts available; we have had outlines and a sense of direction, but at the moment we do not have substantial amounts of supporting legislation drafts before us, as we might have had in much further primary legislation relating to welfare. The recommendation in paragraph 6 of the report of the Delegated Powers and Regulatory Reform Committee is clear. It says that,
“in view of the potential for the power to be exercised in a way that could significantly alter the constituent benefits included in the definition”,
of collected benefits,
“we are unpersuaded by the DWP’s explanation … why it considers the negative procedure to be an adequate level of Parliamentary control”.
Perhaps my noble friend the Minister in his response might tell us whether the Government will accept this report, and it might also help us if they say whether they would accept the other recommendations about the negative and affirmative resolution and first exercise recommendations which are in that report. That might save us a little time in the future.
Baroness Drake
My Lords, for the purposes of all of today’s business on the Bill I refer to the interests which I have registered as a remunerated trustee of both the Telefónica O2 and Santander pension schemes and the board of the Pensions Advisory Service, and as a non-remunerated member of the board of the Pensions Quality Mark and a governor of the Pensions Policy Institute. I am also a member of the Delegated Powers and Regulatory Reform Committee. That is like an act of cleansing; I hope that I have stated all possible interests that could appear to conflict with anything I might say today.
I support Amendment 2 and very much share the spirit of the contribution made by the noble Lord, Lord German, particularly his comments about the estimable chair of the Delegated Powers Committee. I accept that it will be a very significant challenge to get collective benefit schemes established in the first instance. As we heard from the NAPF and the ABI, there is little observed appetite from providers or employers, certainly at this stage, for engaging with such schemes.
There are other barriers and constraints to be overcome because collective benefit schemes require an assured flow of new members, excellent governance and full transparency, and the new freedoms with their emphasis on individual freedom rather than risk-sharing may well act as a further deterrent. None the less, for those of us who are genuinely interested in seeing the development of more efficient ways of risk sharing, the Bill provides the opportunity to set the founding legal framework and is therefore worthy of proper scrutiny. In fact, not to scrutinise would be a failure to engage with the work that has been done by the Minister for Pensions and the Department for Work and Pensions.
However, Clause 8 is a key and critical provision because it sets the definition for what are collective benefits, on which the rest of the clauses in Part 2 and many of the associated delegated powers depend. That is why it is so critical in its construct and its definition of the delegated powers associated with it. In my view, the power to set regulations under Clause 8(3)(b) should be subject to the affirmative procedure because the definition of what is or is not a collective benefit makes it so critical to the scope of the whole of Part 2, which deals with collective benefits.
Clause 8(2) defines what a collective benefit is but Clause 8(3)—the subject of this amendment—defines what it is not. It is not a collective benefit if it is a money purchase benefit or, more particularly, some other benefit of such a description to be specified in regulation.
I understand the Government’s reasoning when they indicate that with-profit arrangements, for example, provided by some insurers should not come within the definition of a collective benefit scheme. It is perfectly reasonable for the Secretary of State to want some flexibility to respond as the market develops and innovation occurs in scheme or benefit design.
Clause 8(3)(b) would allow the Government to use regulation to avoid schemes being subject to the expense of meeting the detailed requirements set out in Clauses 9 to 35 if they are deemed not to be proper collective benefit schemes. But the clause, in granting the Government power to significantly alter by regulation the constituent benefits that are not included in the definition of collective benefits, has the ability therefore to potentially remove members of schemes out of the protection of the requirements in the other clauses in Part 2.
This, of course, could have considerable implications for members and the scope of the whole of Part 2. The potential of this regulation to remove members from the protections they may already have by being in a designated collective benefit scheme, which subsequently a change of regulation deems that they are no longer in, makes it compelling that this remains a power that should be subject to the affirmative procedure. This should be as a general practice, not just in first use, because if collective benefits take off—one hopes that they do and we therefore have wide coverage and scale—any review or change to the definitions of the benefits embraced by such collective schemes will be of outstanding importance to the members.
Lord Bourne of Aberystwyth
My Lords, I confirm to the House and to the noble Lord, Lord Bradley, that the measures under the budget flexibilities are still intended to come into effect for April 2015. This is not the case for the measures relating to collective benefits.
The Bill is deliberately a framework Bill, which is generally the case with pensions legislation. As my noble friend Lord German indicated, it is not unusual to have significant delegated powers in pensions legislation; it is often the norm. The Delegated Powers and Regulatory Reform Committee has made recommendations concerning the powers in Part 2, and I will come on to look at those. I share the enormous respect in which the noble Baroness who chairs that committee is held by the House.
I confirm that the Government accept the views of the committee in respect of the powers in Clauses 9, 10, 11 and 21. We intend to table amendments on Report which will make regulations under those clauses subject to the affirmative procedure the first time those powers are used, as the committee recommended.
This amendment relates to the committee’s recommendation about the power in Clause 8(3)(b). This power allows regulations to specify benefits that are not to be considered collective benefits and therefore exclude such benefits from the provisions of Part 2, as the noble Baroness, Lady Drake, just indicated. The committee recommended that this power be subject to the affirmative procedure. I will now explain how we are unable to accept that recommendation in full, although we recognise that there is a strong case for affirmative procedure on first use. We have therefore accepted that.
Let me first give some background on collective benefits. Collective benefits are provided on the basis of investing members’ assets on a pooled basis, in a way that shares risks across the scheme’s membership and has the effect of smoothing out fluctuations, to a degree at least. The collective asset pool is managed on behalf of the members by trustees, or, in non-trust based schemes, by managers. We intend to use powers under Clause 9 to require that there will always be a target attached to collective benefits and that initial targets need to be achievable within a specified probability range. We will ensure that schemes offering collective benefits operate in a transparent and accountable way using a range of powers we have taken in Part 2, together with regulation-making powers in existing pensions legislation. Decisions about the rate of benefit ultimately paid to the member will be for the trustees or managers to make in line with their policies. We will consult fully on how best we use the powers in Part 2 to provide the appropriate framework for these benefits and to ensure good governance.
As the Government set out in the memorandum to the Delegated Powers and Regulatory Reform Committee, there needs to be flexibility to respond to new developments in scheme and benefit design that result in benefits falling within the definition “contrary to policy intention”, as I believe the noble Baroness, Lady Drake, recognised. This power was included in the Bill to ensure that, from the outset, the definition of collective benefits would not catch any personal pension schemes set up by insurers that offer with-profits arrangements that might otherwise fall within the definition.
The Government recognise that the committee rightly considers this a key provision, as it frames all that follows in Part 2 and defines it scope, that should be subject to parliamentary scrutiny. However, there are circumstances where the Government may need to use the power at a later date if new developments in scheme and benefit design result in benefits falling within the definition “contrary to policy intention”. This latter use of the power might require a very quick response to avoid members’ benefits being affected and to avoid schemes being subject to expensive requirements around the setting of targets, actuarial valuations and so on, which are not appropriate. I trust that noble Lords can see that the affirmative procedure could result in delay, leading to significant distress for members, who would wish the matter to be resolved as quickly as possible. This is why we believe that the affirmative procedure is inappropriate across the board.
As I have indicated, the Government therefore propose that, as with the powers in Clauses 9 to 11 and 21, the power in Clause 8 should be subject to the affirmative procedure on first use, allowing Parliament the opportunity to debate the scope of the collective benefits provisions when the regulatory framework is first set up, but that subsequent use should be subject to the negative procedure so that the Government can act quickly if necessary.
Turning to the noble Lord’s amendment, I hope that I have clarified the Government’s position on the Delegated Powers and Regulatory Reform Committee recommendations and my commitment that the Government will return on Report with amendments that will implement its recommendations on Clauses 9 to 11 and 21 in full, and in Clause 8 in part. I hope that the noble Lord will feel able to withdraw his amendment.
Baroness Drake
I come back to the point on which I was seeking clarification. If the affirmative procedure is used in the first instance on something quite straightforward, such as that an obvious with-profits policy arrangement is not to be included in collective benefits, but the subsequent use of the regulation under the negative procedure went to the heart, such as saying there is an existing collective benefit scheme and we take the view that it should cease to be a collective benefit scheme therefore retrospectively those members would lose the protections under Part 2, could the regulations not be used to weaken the protections that scheme members had?
Lord Bourne of Aberystwyth
The noble Baroness will be aware that the negative procedure will still provide a measure of protection. We are concerned about the protection of members where there is a need to move quickly. In those circumstances, retaining the negative procedure is the appropriate protection for those members.
Baroness Drake
I push the point as a courtesy because I care about establishing collective benefit schemes. I am assured by the chair of the Delegated Powers Committee—I wish he were standing next to me—that even under the affirmative procedure there is a provision which allows us to move quite quickly.
Lord Bourne of Aberystwyth
That would be an exceptional procedure. It is important for the industry and pensioners that we can provide assurance now that, where there is a need, there is provision to move quickly to ensure that collective benefit schemes are successful. I share the noble Baroness’s feeling that it is important that we give this a fair wind. We therefore recognise that there will be circumstances where the negative procedure is appropriate because of the great need to move quickly.
Lord Bradley
I thank the Minister for his explanation, for his more wide-ranging response to the report of the Delegated Powers Committee and for explaining the Government’s intentions in regard to the range of issues discussed and the recommendations made by that committee. It may disappoint him that that does not necessarily mean that we will not debate the clauses to which these regulations apply. There are wider points around those clauses which are not only about whether the regulations should be affirmative or negative. I hope the Committee will show tolerance as we go forward on that matter.
As my noble friend Lady Drake clearly and concisely laid out, Clause 8(3)(b) goes to heart of the definitions of collective benefit schemes. We need to be absolutely sure that, through debating the regulations, we understand fully the consequences of the schemes and how they will apply to the public who might rely on them. I accept entirely the need for flexibility, but I remain to be convinced that moving towards a negative position rather than a positive position through an affirmative vote in this House is the way to achieve that. As my noble friend Lady Drake pointed out, where there is a need for quick action to apply, there are procedures within the House to enable that. We are trying to support collective benefit schemes, and we want to ensure that they are properly scrutinised on behalf of the public.
However, the Minister said that he will be bringing forward amendments on Report. We shall reflect on the comments he has made on the issue and on why the Government consider that the negative procedure is appropriate. We shall think further about whether that is an acceptable position or whether we want the opportunity for further scrutiny through the affirmative procedures of this House. In the light of the comments made and the opportunity for further debate at a later stage, I beg leave to withdraw the amendment.
Lord Bradley
Lord Bradley
My Lords, the three amendments in this group stand in my name and in the name of my noble friend Lord McAvoy. Amendment 3 would remove the words “or managers” for collective schemes. In doing so, trustees would be required to be in place. Amendment 20 to Clause 37 would require managers to act in the best interests of members of the scheme, which seems an absolute minimum if they are to be relied on. Our proposed new clause sets out that trustees shall have a,
“fiduciary duty towards members of the scheme”.
That is an issue which will be debated here and further, and we believe it is essential for the confidence of schemes going forward.
It is my contention that the Bill does not go far enough on governance. The highest standards of governance are needed for schemes that could be even more opaque to their members than DC schemes are now. They have to manage pooled assets and, within that, conduct smoothing arrangements for the benefit of all members. This silence in the Bill occurs despite the Government’s consultation entitled, Reshaping Workplace Pensions for Future Generations. Paragraph 22 states:
“Collective schemes are complex and can be opaque—because of the indirect relationship between contributions and benefits. This necessitates strong standards of communication and governance. We intend collective schemes to be overseen by experienced fiduciaries acting on behalf of members, taking decisions at scheme level and removing the need for individuals to make difficult choices over fund allocations and retirement income products”.
Failure to require all schemes to have high-quality trustees means that we potentially have some collective DC schemes run by trustees and others where private firms offer them. They could seek to maximise short-term returns that are not necessarily in the best interests of all members. We have consistently argued that all workplace pension schemes must be run by trustees and have a legal duty to prioritise the savers’ interests.
Our proposed new clause would require pension schemes to appoint a “board of independent trustees”. Those trustees would have a fiduciary duty to pension holders that would take preference over any duty owed to shareholders. This change in governance is designed to ensure that members of pension schemes get far better value for money. For example, in its market study, the Office of Fair Trading said that savers were not getting value for money in a contract-based market. A significant reason for that was shareholder interest in contract-based schemes predominating over the interests of savers. Not enough information is available on how schemes are operating and what is available. As has been said, it can be complex and difficult to understand, which is what stops this market functioning in order to bring down those costs.
International evidence, such as that laid out by Chris Curry, director of the Pensions Policy Institute, during the evidence sessions, suggests that a trust-based approach to schemes is preferable and leads to better governance. It would not require a large number of trustees to implement. Of the 200,000 schemes currently estimated to be in place, many are under the management of four or five insurance companies and therefore would be covered by governance boards made up of trustees attached to those boards. Of the remaining pension schemes, progress to trusteeship might be slower. Equally, it might be aided by the amendment to be discussed later when we will encourage scale in terms of pension schemes.
Through these amendments we want to ensure that there is strong and effective governance, that the trustees have a fiduciary duty to look after the interests of members as a priority, and that customers are treated fairly to ensure that their interests are prioritised over those of shareholders where there may be a conflict. The new clause that we have suggested would help to rectify the current shortcomings in governorship and, with the ability to appoint high-quality trustees in whom the members can have absolute faith, strengthen the whole process. I beg to move.
Baroness Drake
My Lords, I rise to support and speak to Amendment 10 in particular. I expressed the view at Second Reading that at some point, unfortunately probably later rather than sooner, the Government will inevitably have to place in statute a clear fiduciary duty on pension providers and asset managers to put savers’ interests first.
Why one goes through all the regulatory complication of setting up independent governance committees, giving them fiduciary responsibilities to monitor the behaviour of private pension providers, while exempting the private providers themselves—the people who make and implement the decisions—from such responsibility is a little beyond me. If the responsibility of the independent governance committees is an attempt to align scheme governance with the interests of savers, why should that responsibility not be put directly on to the decision-makers in the pensions industry? But we are where we are.
John Kay, in his review commissioned by BIS, also concluded that all those looking after someone else’s money or advising on investment should be subject to fiduciary standards of care. Many times from these Benches I have argued the case for extending a clear fiduciary duty to those who have discretion over the management of other people’s money. It is a principle that the Australian financial regulatory system has embraced and applies to retail pension providers, including an unequivocal requirement that conflicts of interest must be resolved in the beneficiaries’ interests.
Each time I try to present the arguments in a slightly different or novel way but increasingly the FCA appears to be providing the arguments for the proposition. We have had numerous reports on how the market is not serving pension scheme savers well, be it legacy schemes, annuities, lack of transparency on charges, and many other examples. The new FCA study, which examined how market conditions may evolve from April 2015, found that greater choice and potentially more complex products will weaken the competitive pressures on providers to offer good value. The chair of the FCA has said that the increase in regulatory rules has failed to prevent misconduct and does not seem to “prevent further problems arising”. The FCA director of enforcement and financial crime, Tracey McDermott, speaking at the FCA’s recent enforcement conference in London, referred to the need for a cultural shift among firms similar to the change in public attitudes whereby drink- driving was, in the past, avoided through fear of being fined, but is now seen as a moral issue.
It is clear from the flow of pronouncements from the FCA that the behavioural and cultural challenge within the pensions industry remains a major issue. They are telling us and demonstrating to us that regulatory rules have failed to deliver the cultures that embrace the ethic of care towards the customer. Time after time, reports, reviews and investigations confirm that the private pensions market is dysfunctional, with a weak demand side that cannot be expected or fails to self-remedy, and where the process of trying to provide for the savers’ interest in a competitive fashion does not work well. One is tempted to ask: how many reports of market failure in the pensions market do we have to receive before it is accepted that writing yet another set of rules will not solve the problem? What is needed is a game-changer to force the pace of change in providers’ behaviour by strengthening in law the principle that they must act in pension savers’ interests.
The advent of auto-enrolment raises the bar. At the heart of the governance structure for the private pension system must be the interests of the pension saver, and the law must require that providers identify and manage conflicts in favour of the saver. An alignment of interests is not sufficient. The saver’s interests must come first. It will be a major regulatory failure of public policy if millions of citizens are auto-enrolled into pension schemes but Parliament has not ensured that sound governance is in place.
Turning specifically to collective benefit schemes, which Amendment 10 targets, the case for the oversight of the management of such schemes resting with trustees with a clear fiduciary duty to the members of the scheme that takes precedence over other interests is even more compelling. Collective DC schemes are more complex in that they are designed to smooth income and manage intra- and intergenerational risk-sharing between members. The individual does not have a well defined pot over which they have individual ownership. Consequently, transparency is a key challenge and provides a potential breeding ground for conflicts of interest. Collective benefit schemes do not automatically guarantee higher retirement incomes. In order to be sustainable, collective DC schemes need scale, an assured flow of new members, full transparency and, in particular, excellent governance. If these schemes are not well run or if risks are unfairly shifted—for example, across different age cohorts—young savers could be subject to lower payouts.
The Bill has a significant number of delegated powers so there is much still to be understood. On governance for collective DC schemes particularly, the Bill is largely silent. But the complexity of what needs to be addressed is captured in Clauses 9 to 18. The Government appear to recognise the particular nature of the governance challenge in collective benefit schemes and the possibility that things could go wrong because they have added Clause 37 to enable the Secretary of State to impose a duty on managers of collective benefit schemes to act in members’ best interests. But that is not sufficient. If the Government are serious about encouraging and building collective benefit pension provision, the governance rules have to be robust right from the very beginning. The risks are too great to do otherwise and that means requiring a body of independent trustees with a clear fiduciary duty to the members of the scheme, which takes precedence over any other duty, to oversee the running of such collective benefit schemes.
Lord Bourne of Aberystwyth
I thank noble Lords who have participated in the debate on these amendments. The amendments in this group all relate to governance, and the Government recognise and agree that governance is key to effective choice in the pensions arrangements that are being brought forward. The amendments relate to governance in relation to various types of pension schemes in some way, shape or form, and, as I say, the Government recognise and agree that this is important. However, we believe that the new measures that we are delivering under the Bill, under the Pensions Act 2014 and under the Financial Services and Markets Act, as well as the proposed draft Financial Conduct Authority rules, seek to address the concerns raised in the most appropriate way.
Lord Bradley
I am grateful to the Minister for giving way. I want to be absolutely clear on the point that he was making about the regulations that have been brought forward for implementation from April 2015. They will apply to the new arrangements in the workplace schemes and the board of managers or trustees who will be responsible for them. First, will they be comprehensive in their coverage at that point, including any new collective benefit schemes that come forward soon after April? Secondly, will there be a fiduciary duty on that body to act in the best interests of members, as opposed to other interests?
Lord Bourne of Aberystwyth
I shall deal with the second point first. As the Minister knows, there will be a contractual obligation with contract-based schemes, but there will not be a fiduciary duty. This is because the essence of a fiduciary scheme with trustees is that fiduciary duties are held by those trustees. A contract-based scheme will have contractual duties which may be greater or lesser than the fiduciary duties, but they are somewhat different. Perhaps I could come back later to the noble Lord with a detailed answer on his point about collective schemes, because I am not quite sure of the scope of that particular aspect.
Coming back to the serious point that I was making, this reformulation of ownership of funds could result in significant obligations. We need to be clear that, if this is the approach of the Official Opposition, then those are radical changes that will require quite an upheaval in the ownership of the way that the market is organised at the moment. I am not quite clear whether the Government have got it right that that is the basis of the amendment and the Opposition are going that far.
Turning to the point that I think the noble Lord, Lord Bradley, was making, we do not want to dictate that non-trust based schemes should no longer have a part to play in pension provision in the workplace. I am not sure whether I have understood that correctly and that is indeed the position of the Opposition. We want to make sure that there is appropriate protection in occupational and personal pensions, trust and contract-based schemes. We want to encourage innovation and not necessarily restrict to a single structure, because we think we can provide appropriate protections across the piece. Similarly, under the provisions of this Bill, schemes offering collective benefits and defined ambition schemes can be trust or contract-based, and can be occupational or personal pensions. It has been suggested in discussions outside this House that such schemes should be restricted to trusts—I do not know whether that is the Opposition’s position. Again, we recognise and respect the concern about and focus on governance—that is quite right—in respect of these provisions, but we do not wish unnecessarily to close down options for how such schemes must be set up in terms of trustees. We have already made separate governance provisions for these benefits and schemes, recognising the new types of risk that they bring. Instead, we want to encourage providers to consider entering this space with innovative products that consumers want, and we have separate, parallel governance provisions for this which we will come on to later.
On the point raised by the noble Lord, Lord Bradley, independent governance committees apply to money purchase benefits. We have other requirements for collective benefits under clauses in Part 2 and in Clause 37, to which we will come later.
It is important to be clear that a requirement to have trustees is not a panacea for the myriad of governance issues that we are debating today. Let us not assume that all trust-based schemes are always better governed than contract-based workplace pension schemes. While we value the role of the many good, indeed excellent, trustees running occupational schemes, we recognise that schemes are variable and the presence of trustees is no panacea for poor governance. There is no evidence that one governance structure necessarily or always delivers better outcomes than another. We consider that factors such as scale—which we will consider later—good governance and charge levels are among the key determinants of member outcomes, not whether a scheme is contract or trust based.
The governance of contract-based schemes has grown significantly stronger in recent years, led by the FCA with the “treating customers fairly” principles which have formalised firms’ responsibilities to their customers. The introduction from April 2015 of independent governance committees with a duty to act in members’ interests will further strengthen the governance of contract-based schemes. These points taken together are why we strongly believe that current measures and independent governance committees, rather than trustees, are the right response to money purchase contract-based or personal pensions.
The proposed new clause would also be a significant cost and burden for workplace personal pension schemes. Data from the National Association of Pension Funds show that just under half of the 1,200 schemes that it surveyed in 2013 had independent trustees and that trustee salaries range from about £10,000 to £35,000 a year, although it is true to say that not all trustees or trustee chairs are paid. Therefore, as your Lordships can appreciate, there would be considerable cost involved in increasing this figure particularly over the short term. It could even mean that trust-based schemes had to replace their existing trustees.
We have made separate provision for governance measures for collective benefit and defined ambition schemes, so we do not need independent trustee committees as well. The independent governance committee measures will apply to money purchase benefits, but we have made separate provision for the other schemes. Generally, provisions under Part 2 set out a number of regulation-making powers to make requirements in respect of key governance features: investment, factors affecting benefits, policies for dealing with deficit and surpluses, transfer values and so on.
More specifically, under Clause 37, referred to by the noble Baroness, Lady Drake, we have a regulation-making power that may require managers in non-trust based schemes to have a duty to act in the best interests of members when taking specified decisions in shared risk schemes and schemes offering collective benefits. This is because of the new types of risks that may arise in these new types of shared risk schemes and schemes offering collective benefits, which are different from money purchase benefits or defined contribution schemes. Therefore, Clause 37 takes a regulation-making power to impose a duty on managers of non-trust based schemes to act in the best interests of members when taking specified decisions.
Lord Bradley
On Clause 37 and the Minister’s assurance of the robustness of the independent boards, why is he resisting our amendment which says that managers “must” take those powers and apply them in the best interests of members, rather than only “may”?
Lord Bourne of Aberystwyth
This is probably the main difference between the approaches of the Government and of the Opposition. I do not think that we are miles apart on our desired outcome, but we believe that working with the industry, consumer groups and pension groups to achieve the best interests is the right way forward. If we can achieve the same end without making it mandatory, we believe that that is the right approach. It is probably at the root of the difference between the two parties that we believe that we are achieving the result without having to make it mandatory.
I recognise the spirit behind the amendment that has been brought forward and the Government accept the need for the appropriate corporate governance. Whether it is in relation to trust-based schemes or to contract-based schemes, we want the similar result of the managers or the trustees acting in the best interests of the pensioners. I want to reassure noble Lords that the matter that this clause deals with is of great importance to the Government, and we are working with the industry and the Financial Conduct Authority to ensure that we get the approach right.
On Amendment 3, which would change Clause 9, let me set out some context on Clause 9 and why we think that the amendment would undermine a key governance provision. Clause 9 sets out a regulation-making power which may require trustees or managers of schemes offering collective benefits to set targets in relation to any collective benefits that may be provided by the scheme. Ensuring that there is a target in relation to collective benefits offered by the scheme should enable the member to have a realistic picture of the benefits that they are likely to receive. This is important, as the member is handing over control of their investments to those running the scheme. A target will also help those who wish to plan for their retirement income to do so meaningfully.
Removing the ability to require managers to set targets, which is what the amendment would do, would undermine a key provision which provides additional governance and transparency about members’ collective benefits. The requirement to set targets in relation to collective benefits in Clause 9 works closely with the other aspects of the governance regime set out in Part 2 of the Bill. For example, it is our intention that the probability of meeting the targets will be assessed annually in a valuation report to identify whether it falls within a specified probability range. If it falls outside this range, this will trigger the scheme’s policy for dealing with a “deficit” or “surplus”.
I think that we all agree that good governance of pension schemes is essential. That is why the Government’s new governance standards, applying across all workplace pension schemes in respect of money purchase benefits, will protect members by ensuing that schemes are run in their interests. It is also why we have introduced Clause 37: to ensure that there is extra protection for members’ interests.
However, the Government are taking a proportionate approach and seeking to allow constructive forms of innovation by pension providers, as well as retaining flexibility to ensure that regulation remains up to date with changing requirements. On that basis, I respectfully ask noble Lords not to press their amendments.
Lord Bradley
Once again, I am grateful to the Minister for the comprehensive nature of his reply. I am sure that Hansard will correct that I am not the Minister—sadly—and probably never will be. We have slightly strayed into the next amendment, Amendment 4, on targets, so I will return to that when we debate that amendment to Clause 9.
Our purpose throughout is to ensure that members’ interests are protected, as the noble Baroness, Lady Drake, has clearly and effectively outlined. We are trying to ensure sound governance. The Minister has given assurances that the proposals being brought forward will achieve the same objective as our amendment. I will reflect on the issues that the Minister has raised and his sense that our views about trustees are not as soundly based as we believe they are. There will be an opportunity for that reflection before Report. In the light of those comments and the strong feelings on this side of House regarding trustees, at this stage I beg leave to withdraw the amendment.
Lord Bradley
“( ) A statutory instrument containing regulations under this section which is the first exercise of such a power may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.”
Lord Bradley
Amendment 4 stands in my name and in that of my noble friend Lord McAvoy. Again, it flows from the recommendations of the Delegated Powers Committee. We have already had a response from the Minister about how the Government are handling this, but in the light of his preliminary comments about targets I think it is still worth our having a brief debate on this amendment.
The Delegated Powers Committee suggested that because of the nature of the powers in clause 9, which may require the trustees or managers of a pension scheme to set targets in relation to collective benefits, the affirmative procedure on first use would be most appropriate.
This clause is particularly important, as it raises many of the key areas that we wish to discuss around CDC schemes; indeed, we have already started to discuss them. These are issues such as the balance of intergenerational risk-sharing, the communication of the “risks of risk-sharing”, the importance of good governance in these schemes so that they can command sufficient trust from their members—a subject about which we have already had some discussion—and the role that actuaries are likely to play in the process.
The Secretary of State is here given the power to require a target that meets a set probability. For instance, if the probability was set at 98%, the target would have to take that into account and be set at such a level that there was only a 2% chance that it would be missed. To reflect on the most controversial aspect of CDC schemes—as I have made clear, the Opposition support these schemes—we have to look at what happened in Holland, where because of the financial crisis, pension payments had to be reduced. It is therefore important for us to look at targets and ranges, so as to give assurance to the schemes.
The Minister in the other place said that the regulations produced under the powers conferred by Clause 9 were to be subject to consultation. Can the Minister provide any further detail on when the consultation is likely to begin, and say whether the Government will be expressing a preferred option and asking for comment on that—and if so, what the preferred option is likely to be?
Because of the reasons that I have set out, communication to scheme members about how the target level is set and what factors could lead to it being altered is particularly important for these schemes. Can the Minister provide us with any more details on how the Government believe this can best be expressed to give scheme members confidence in the decisions being made?
This issue also takes us into the area of governance. The kinds of decisions that have to be made about targets and probabilities, and about how all this translates into the level of pensions paid out in a CDC scheme, require a high level of trust in the process—the kind of trust that is more easily established through a scheme being overseen by trustees rather than managers. But we have already rehearsed that argument, and I shall not go over it again.
Can the Minister provide us with any more detail on the interaction between the actuaries and the trustees or scheme managers under this provision? For instance, if the actuary gives advice that the probability of meeting a target falls outside the probability level set by the regulations, what options will be available to the trustees, in terms both of the action they can take and of how they communicate this to the scheme members? I acknowledge that this is a complex area, and the challenge of adequately communicating why a certain decision has been made is often considerable.
We understand that the Government cannot pre-empt a consultation that has not begun, and also that this Bill is not unique in being a piece of pensions legislation that confers a wide degree of delegated powers. However, it is still unsatisfactory if those powers are not before the House to be debated alongside the primary legislation. The huge range of options left open by this clause means not only that it should be subject to the affirmative resolution when the Government produce regulations on the matters within it, but that it would be useful if the committee were able to piece together the picture that the Government expect and hope will be in the regulations tied to the primary legislation, and see how they would impact on the important issues identified in Clause 9. I beg to move.
Lord Bourne of Aberystwyth
My Lords, I thank the noble Lord, Lord Bradley, for his comprehensive coverage of Clause 9. I shall deal first with the recommendations of the Delegated Powers and Regulatory Reform Committee, because that is the specific issue raised by the amendment. I shall then come back to some of the issues that the noble Lord raised in relation to the consultation process.
Clause 9 sets out a regulation-making power which is a key aspect of our approach to collective benefits. The issue of parliamentary scrutiny was considered by the Delegated Powers and Regulatory Reform Committee, and as I said before, we accept its recommendation on this matter.We intend to come back to it on Report and table amendments to ensure that the first time the powers are used will be subject to the affirmative procedure.
I confirm that the Government intend to have full open consultation on the regulations, which is expected to include discussions before the formal consultation takes place. Timelines will need to be agreed in due course. I suggest to the House that we come back to this subject in more detail on Report, so that we can consider the position in the round. Given the undertaking that we will table an amendment on Report on the specific issue addressed by Amendment 4, I invite the noble Lord to withdraw it.
Lord Bradley
Again, I am grateful to the Minister for his comments, and I welcome the fact that before Report stage we will get the detail that I sought through the amendment. It is important that we have that timeline for the consultation, so that there is clarity, both in the House and outside it, about what the process will involve. As the Minister has recognised, Clause 9 is crucial to this part of the Bill, and we need as much information as possible, and the opportunity to debate it, before the Bill passes through all its stages in this House. In the light of the Minister’s assurances, I beg leave to withdraw the amendment.
Lord McAvoy
“( ) A statutory instrument containing regulations under this section which is the first exercise of such a power may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.”
Lord McAvoy (Lab)
My Lords, I shall speak to Amendments 5 and 6. They follow recommendations made by the Delegated Powers and Regulatory Reform Committee, which suggested that, on first use, the affirmative rather than the negative resolution process should be used. We agree. Despite the Government’s claim in the delegated powers memorandum that Clause 10 does not require affirmative resolution as the amendments would be “technical” and “procedural”, it would be good to hear further detail about the circumstances in which it could be used. Does the Minister see the power as a backstop that can be relied on in the event that a scheme manager is not considered to be acting in the best interests of the scheme members or has taken a decision that is likely to disadvantage them?
Clauses 10 and 11 are part of a larger group of clauses introduced on Report in the other place. As a result, on that and other points it is up to this Committee to ensure adequate scrutiny and ensure that there are no flaws in the drafting. In debating the provision, the Minister in another place said:
“We cannot do an impact assessment because we have not yet written the regulations”.—[Official Report, Commons, 25/11/14; col. 805.]
That is a slightly unsatisfactory way to legislate. Likewise, in explaining why so many amendments were produced late on, the Minister relied on the need to alter the Bill dramatically following the introduction of pension freedoms in Budget 2014. The fact that that was not anticipated suggests that something was left to be desired when it came to joined-up government thinking. We want parliamentary debate and scrutiny of the regulations published under the clauses following the conclusion of the Government’s consultation. On that basis, I beg to move.
Lord Bourne of Aberystwyth
My Lords, I thank the noble Lord, Lord McAvoy, for introducing the amendment. First, I confirm that the Government agree with the recommendations of the Delegated Powers and Regulatory Reform Committee. We will be tabling amendments on Report to make the powers in Clauses 10 and 11 subject to the affirmative procedure the first time that they are used. Regulations made under Clause 10 will require trustees or managers to set out and follow their policy for how the collective pool will provide collective benefits to individual members.
There is another high-level requirement on which we may wish to regulate for which we have set out powers in Clause 10, and that is the matter of how each benefit is determined. The effect of regulations under Clause 24, which we will come to later, will be that trustees or managers must use the funds held for the provision of collective benefits—less any specified scheme expenses—to provide collective benefits. How the amount paid to a member is determined is the issue to be addressed. We expect the scheme to set out the rules as to how it will operate. The way that the scheme manages certain matters will need to be clear.
Regulations made under Clause 10 will therefore require trustees or managers to set out and follow their policy for how the collective pool will provide collective benefits to members. That is because, although with a collective benefit there is no certainty about what a member will receive, we want to ensure that decisions about how benefits are calculated are transparent. Transparency is of the essence. That is not to determine benefit design but to recognise that with a collective benefit there may be redistribution of assets between members, smoothing of returns and so on, and we want that to be an open process.
The specific clause, however, focuses on policies applied to determine each benefit. Regulations made under the clause may set out matters that the trustees or managers must take into account, or principles they must follow, in formulating the policy. We might want to use this power, for example, to require that trustees or managers have regard to the level of contributions paid to the scheme by members. Although the level of contributions towards collective benefits made by an individual member is not the only factor that will determine what the level or amount of that member’s benefits will be once they come into payment, it is important that there is some link between the level of contributions made by or on behalf of the member and the level or amount of benefit that the member receives from the scheme. That is how we hope to address that point.
As with the other requirements for scheme policies outlined in Part 2, the regulations made under the clause may also require the trustees or managers to consult about the policy and make provision about the content of the policy and about reviewing and revising the policy. I hope that I have explained how the powers in Clause 10 will help to ensure consistency in how the scheme will operate and give clarity to members and prospective members about how their share of the collective pool will be calculated.
Lord McAvoy
My Lords, I thank the Minister for his lucid explanation of the clause and his response to my amendment. I very much welcome the pledge to move amendments at a later stage that will keep the spirit of these amendments.
This is the first time that I have moved an amendment to legislation from the Dispatch Box, and I feel that I should now just pack up and go home—I have done enough to escape without criticism. I appreciate the Minister’s attitude and flexibility on this and beg leave to withdraw the amendment.
Lord Bradley
“Scale of pension schemes
(1) The fiduciary duty of pension scheme trustees shall include a duty to consider whether the scheme has sufficient scale to deliver good value for members.
(2) Where trustees take the view that the scheme has insufficient scale, they must consider whether merger with another scheme would be in the members’ interests.
(3) The Pensions Regulator shall have power to direct merger of pensions schemes where it would be in the interests of the members of each of the relevant schemes for merger to take place.
(4) The Pensions Regulator shall exercise this power in accordance with a methodology on which it has publicly consulted and which has been agreed with the Secretary of State.
(5) The methodology set out in subsection (4) shall be kept under regular review and revised when necessary, subject to further consultation and agreement from the Secretary of State.”
Lord Bradley
The amendment is in my name and that of my good colleague, my noble friend Lord McAvoy, who will continue to support me through the process of the Bill. This is also the first day that I have been at the Dispatch Box moving amendments, though we are a double act that flowed through the other place for many years.
The amendment is encapsulated in its first line:
“The fiduciary duty of pension scheme trustees shall include a duty to consider whether the scheme has sufficient scale to deliver good value for members”.
Our proposed new clause would give the Pensions Regulator, along with the trustees of such pension schemes, the power to consolidate pension schemes.
The Pensions Regulator has been clear that scale is to be encouraged as it enables schemes to achieve better value for money, higher-quality governance and economies of scale. Scale is very important in reducing the cost of intermediation. The key report by John Kay for the Department for Business, Innovation and Skills recommended a reduction in intermediation. He made it clear that there were far too many intermediations and scale could be a trigger for in-house asset management. Evidence from abroad supports this view. For example, in Canada, scale means that schemes do not necessarily have to pay private equity houses and agents in order to buy private equity.
There is a general view that there are currently too many schemes—around 200,000, it is estimated—and the proposed new clause would enable this to be reduced by giving trustees the power under their fiduciary duty to recommend merger if it is in the best interest of the scheme, and enables the Pensions Regulator to take action if it believes small schemes are not obtaining value for money. Currently, the Bill contains no measures which would help promote scale, which most independent observers believe is necessary for collective DC schemes and work-based pensions in general to do the best for their employees. We have long argued that measures to promote scale are vital to ensure the best outcomes for savers, and those measures deal with the important issue of finding high-quality trustees. If there are fewer schemes, there is less need for a large number of trustees and we therefore address the quality as well as the quantity in schemes that are currently in place. The Government could, for example, require that automatic transfers default into aggregators, and the criteria necessary for qualifying as an aggregator could include scale.
The House of Commons briefing note on the Bill states:
“However, certain conditions such as large scale and strong governance appear necessary for DC schemes to operate successfully”.
Further, three-quarters of respondents to the consultation prior to the Bill thought there was a need for government intervention to create the scale necessary for schemes to offer proper guarantees.
To sum up, it is our view and the view of the Pensions Regulator—which was set out in evidence—that there has to be a scaling up of the UK pensions industry. At the moment there are far too many schemes. We want a process in place to try and reduce that and build up scale. Our proposed new clause would not by any means reduce the number to a handful but it would make a start by giving powers to trustees and the regulator to promote scale. It would be a sensible addition to the powers of trustees and the regulator. Given the widespread consensus in the pensions industry that scaling up will have to happen, and that in so doing costs would be reduced and there would be a better outcome for savers, I believe that the Government will wish to support this amendment and therefore I beg to move.
Lord German
Perhaps I might pose a number of questions about this amendment. My noble friend the Minister or the noble Lord, Lord Bradley, might like to reflect on them and give me an answer. First, the trend towards larger-scale pension funds is growing. I understand that the number of smaller schemes is declining. I wonder whether one or other of the noble Lords could tell me what the pace of that change has been and whether forcing mergers is necessarily the right thing if that pace of change is already accelerating. Secondly, when mergers are forced, the question is who that merger is with. Who will be found as a necessary partner to move in that direction? If that partner were a smaller-scale operation as well, forcing those two to move together might not necessarily provide the right output. Finally, scale does have merit and is worthy, but that does not mean that small scale is always bad. I wonder whether we should always look for quality rather than scale or the force to make companies move together. Those are fundamental questions which I hope one or other of the noble Lords will be able to answer.
Lord Bradley
If I might comment briefly, as the amendment says, any merger has to be in the best interests of the members. It is not being forced if that is not in their best interests. I am not aware of the pace of change; what I am saying is that the industry is looking at those measures. The fundamental point is that it is in the interest of the members, not the scheme itself.
Baroness Drake
My Lords, I have sympathy with the thrust of my noble friend’s Amendment 7. Scale can be very important in influencing efficiency of pension provision and value for money for the pension saver. We also know that there is a significant tail of small DC and DB schemes which could actually increase if we begin to see an accelerated closure of trust-based DC schemes in response to the new freedoms. That is a problem to be monitored and addressed as part of protecting savers’ interests.
In principle, putting small inefficient schemes into large efficient schemes is a good thing but as the noble Lord, Lord German, flagged, the path to achieving that can sometimes reveal some real difficulties. As a trustee I have experienced this. The problem arises when considering what a small scheme is transferred into. In real life, some real pressures come to bear. For example, an employer may be keen to see members of a closed, small, trust-based DC scheme bulk transfer into a contract-based product, but if that product is a personal pension which falls outside the scope of the new charges cap or the quality standards, the value for money and governance benefits on transfer may not be so clear-cut. Equally, the trust scheme rules of small schemes, even in DC, may have some beneficial provisions. For example, the employer may meet the administration costs, so some of the costs of that DC provision are met by the employer. What happens to that protection on transfer?
Certainly, the principle of promoting scale consequentially to promote value for money is a good one. However, if there is to be a provision to require trustees to transfer their schemes in certain circumstances, there needs to be regulatory clarity about the standards of schemes into which schemes can be transferred or directed by the regulator—whether there are nominated aggregators or whatever into which a regulator could so direct if it felt that something was quite small and unsustainable. The principle is sound but, like any principle, the path of getting there sometimes needs some additional support. I flag those up as issues that would need to be captured in making any regulatory provision about forcing the pace on scale.
I can speak only from an anecdotal basis to the point made by the noble Lord, Lord German, about evidence. I cannot provide any evidence. I can provide only experience. As employers have tackled their big DB benefits and addressed auto-enrolment, I think they are looking to consolidate or transfer out small schemes, so I expect this to be a growing issue—but I express that view on an anecdotal basis.
Lord Bourne of Aberystwyth
My Lords, I thank noble Lords who have participated in the debate and I welcome the opening remarks of the noble Lord, Lord Bradley, who is part of a dream team with the noble Lord, Lord McAvoy—a dream team for the Opposition, if I may correct my earlier slip of the tongue. In response to the point that was dealt with by the noble Baroness, Lady Drake, and raised by my noble friend Lord German, I am told that there are no published figures on mergers but, anecdotally, it certainly seems the case that there is a trend. Whether that would continue with the new reforms is another issue but I think that there is, anecdotally, such a trend at the moment.
The amendment would impose a fiduciary duty on trustees of pension schemes to consider whether the scheme is of a scale to deliver good value to members and, if not, to consider a merger with another scheme. The Government are interested in scale, in so far as it may help schemes to improve quality and lower charges, and to be fair, I am sure that that is what inspired Amendment 7. However, we are not interested in scale as an aim in itself. The Government believe that forcing scale does not necessarily drive good governance, investment expertise or low costs. Big is not necessarily beautiful, as my noble friend Lord German correctly suggested. On occasion, many small schemes are delivering very effectively.
Our analysis of the current defined contribution landscape shows that there are already effective benefits of scale operating within the marketplace, including significant consolidation of schemes. We have no precise figures on that but we expect this to continue and probably to accelerate as smaller employers are brought into automatic enrolment. Indeed, we have already seen smaller employers moving towards larger arrangements such as group personal pensions, master trusts and the National Employment Savings Trust. They can also access the benefits of scale by purchasing investment or administration services from a large provider, falling short of a full merger.
Noble Lords may find it helpful if I try to explain to the House why we believe this amendment to be unnecessary and why the matter is not as straightforward as it may at first appear. A significant push to force consolidation would come at a financial cost which would be borne by members—at least the initial cost. Agreeing what “sufficient scale” means and policing it would be difficult. The amendment would create some inconsistency across the regulatory landscape as it would bite on trustees of trust-based defined contribution schemes but not on the managers of non-trust based schemes that are either a shared risk scheme or a defined contribution scheme. Significantly, and certainly from my point of view most importantly, it also cuts across trustees’ existing fiduciary duties to act in members’ best interests.
Trustees are already required to pay particular attention to governance standards—for example, internal controls, investment governance and decision-making, administration practice in record-keeping, and preventing fraud and so on. As part of that, they may well consider the benefits of scale. Some employers may prefer a smaller scheme that can deliver bespoke investments and communications to their workforce which a larger scheme might not be able to do.
The Government believe that their flagship reforms of introducing, for the first time, minimum governance standards to ensure that schemes are well governed with low and fair charges for members is the correct approach to drive better member outcomes. We do not believe that it would be right to interfere with how the marketplace is evolving, bearing in mind the existing fiduciary duties that trustees are acting under. It would be strange if trustees were not already considering the viability of the trust and the benefits of scale as they assess its workability.
Finally, the amendment would give the Pensions Regulator a new power to compel a merger, if it would be in members’ interests to do so, and provide for the Pensions Regulator to use this power in accordance with methodology on which it has publicly consulted and which is agreed with the Secretary of State. The amendment requires this methodology to be kept under regular review. This, too, would impose new burdens and is unnecessary. Agreeing what “sufficient scale” means in members’ best interests, and measuring and policing it, would be very difficult. We believe that new governance standards from April 2015 will mean that trustees and managers will have a general legal responsibility to ensure that the schemes are well governed in members’ interests. As I say, it would be unusual if they did not consider, as part of this, the possibility of merger and the benefits of scale. In addition, the Pension Regulator’s existing regulatory strategy and activities include providing guidance and e-learning resources, and helping trustees to demonstrate that they meet the required standards of their defined contribution quality features. The regulator will also take enforcement action where necessary, under existing powers. This ranges from advice letters, warning letters, statutory compliance notices and monetary penalties to criminal prosecution.
We believe that our focus on ensuring that schemes are well governed and deliver good quality and low charges to their members, regardless of size, is the correct approach to drive better member outcomes, while recognising that on occasion scale is of importance and that trustees should be considering that, as should managers. On that basis, I urge the noble Lord to withdraw the amendment.
Lord Bradley
I thank the Minister for his response to the amendment and I welcome the comments made by the noble Lord, Lord German, and my noble friend Lady Drake on the issue of scale. There is no intention in the amendment to force anything. Subsection (2) of the proposed new clause is clear. It states:
“Where trustees take the view that the scheme has insufficient scale, they must consider whether merger with another scheme would be in the members’ interests”.
That is the crucial point. It is not forcing it but looking at what is in the members' interests. The relationship between the trustees and members on governance is very important. This is about a mechanism to ensure that it is considered and that it is in the best interests of the members. We are not saying that big is necessarily beautiful but that, in certain circumstances, bigger might be better—better value for money for the members of the scheme.
There is clearly some difference between the Government and the Opposition on this issue. I do not want to caricature the Minister’s response but he was basically saying that the market will decide and that mergers will happen because the market will determine that they happen.
Lord Bourne of Aberystwyth
I appreciate that the noble Lord was not intending to caricature my response and that I have cut in before he finished but I said that although we believe that the market is driving things in the direction of scale, it is the case that managers and trustees should be considering this as part of their duties. We are not simply saying that it is all about the market; we believe that the framework is already there.
Lord Bradley
I am grateful to the Minister for that clarification and I certainly was not intending to misquote what he was saying. However, there seems to be a difference between the active consideration of mergers and the more passive position from the Government in that determination “may” be governed by the influence of the market rather than through what we are saying in this amendment. Again, it is absolutely crucial to us on this side of the House—whether it be on governance, transparency or the way in which duties are imposed on trustees—that while being mindful of previous situations regarding pensions and difficulties in the market, we are always looking to get best value and protect the interests of the public throughout this process. However, in the light of the comments that the Minister has made and the opportunity for further consideration at a later stage, I beg leave to withdraw the amendment.
Lord McAvoy
Lord McAvoy
My Lords, I shall also speak to Amendment 9. I do not have the reputation of having an unlimited supply of charm, so I shall use what I have left to try to work the oracle on these two amendments.
Clause 14 allows for regulations to be made requiring scheme trustees or managers to prepare an investment strategy. Specifically, the regulations may include requirements on the content of the statement and on the reviewing and revising of the statement. Clause 15 allows for regulations to be made requiring the trustees or managers of a pension scheme to prepare a report about the performance of collective benefit investments. The regulations may include how often these reports need to be obtained and who the reports should be obtained from.
The amendments to each of the clauses simply change the stipulation that the regulations “may” require this to a stipulation that the regulations “must” require this. In doing this, we inevitably return to the nature of the delegated powers in Part 2. The question is whether the Government can imagine leaving some of these powers unused when they come to issue regulations under this part of the Bill and, if so, which ones.
The investment strategy for collective benefits is obviously a crucial part of these schemes. We have already discussed the fact that collective defined contribution schemes have the potential to offer investment strategies that perform better than individual defined contribution schemes. It is also important because research on the subject by the Institute for Public Policy Research showed that the feeling that contributions might be invested badly on savers’ behalf, leaving savers with relatively smaller rewards than they were expecting, can serve to disincentivise savers. As with other aspects of governance, trust in investment strategies is essential.
Will the Minister say, first, whether the Government can imagine a circumstance under which they would not issue regulations requiring a statement of investment strategy to be prepared? Will he provide the Committee with any more detail on what the trustees or managers are likely to be required to do with the statement of investment strategy? Will it need to be made available to scheme members, for instance? The amendment to Clause 15 is in a similar vein. Can the Government imagine any reason why the regulations issued under this clause would not require an investment performance report to be produced by a trustee or scheme manager?
There is also considerable concern about the wider question of what kind of information is made available in investment reports. For instance, the Minister in the other place was usefully able to say that information was likely to be available on transaction costs, but, less usefully, was unable to give any details as to which transaction costs would be laid out in an investment report. Ideally, we would like trustees to have access to enough information to be able to judge whether the investment is being managed as efficiently as it should be. I hope the Minister is able to shed a bit more light on that aspect of the clause. I beg to move.
Baroness Drake
My Lords, I support Amendment 8, which would require trustees or managers of a collective benefits pension to prepare a statement of their investment strategy in connection with any of their investments. The issue here is not that they “may” be required but that they “must” be required—that is the straightforward proposition in the amendment.
The reason I came in when I read the amendment is that it seems to me pretty inconceivable that a collective benefits scheme would be allowed to operate without the preparation of such a statement, particularly given the way in which such a scheme is managing risk on a collective basis across and between different generations of savers, and where the individuals in the scheme do not have a well defined pot over which they have clear and individual ownership. I have to ask the Minister: when would one ever conceive of a situation where a statement of investment strategy was not required in a collective benefits scheme? An increased return on savings is not an automatic product of collective benefits schemes. Sound governance is the essential ingredient, which must include transparency and clarity on investment strategy.
Lord Bourne of Aberystwyth
My Lords, I thank noble Lords who participated in the debate on this amendment. The Bill sets out a regulatory framework for collective benefits. Part 2 defines collective benefits and provides for a number of regulation-making powers. The Government’s intention is to produce a comprehensive set of regulations governing the day-to-day running and decision-making in schemes that provide collective benefits. This will include detailed provision around the statement of investment strategy and the investment performance reports that are the subjects of these amendments.
The powers in Part 2 generally have been developed in consultation with the industry. While the Government have laid out an overarching regulatory structure for collective benefits, the consultation process will not stop with the introduction of primary legislation. The Government will continue to listen to industry views and the views of pensioners and take into account the experience of European pension systems. We have heard mention of the Netherlands and Denmark as well as other systems—Canada, for example—where collective arrangements are already in place.
Members will be handing over control of their assets to the trustees or managers running the scheme in a way which differs from individual defined contribution schemes, where the members will usually have some direct choice and options. Also, because members collectively, rather than individually, bear the investment risk, there is a less direct relationship, compared to individual defined contribution schemes, about how the returns are attributed to individual members. It is therefore important that key requirements about investment are applied appropriately. It is important that there is clarity about what the investment strategy is, so that members can be clear about how their money will be invested collectively.
That is why Clause 14 may require the trustees or managers of a pension scheme to prepare a statement of their investment strategy. This clarity is important, as those running the scheme will need to decide on the appropriate balance to be struck between risk where the returns are uncertain and assets that deliver a reliable income. I shall clarify the point that was raised about whether the Government could foresee a situation where we did not provide for regulations in a particular area: no, we cannot.
The difference here is between “may” and “must”. We believe that driving this forward in the way that we are, in conjunction with the industry, is appropriate and that this is likely to deliver—indeed, will deliver—the best result. We are also conscious of the fact that on occasion we need to act quickly to make appropriate changes. I assure the Committee that it is our intention to ensure that there are regulations in relation to both the points raised in these amendments.
I should also say that this is related to trust schemes. Further work and conversations are required with the Financial Conduct Authority to establish how it will regulate non-trust-based schemes offering collective benefits. It may be that it is more effective and appropriate for some of the regulation-making powers under Part 2 to be used in relation to occupational schemes only, and for the FCA to make parallel provision in relation to personal pension schemes. That is one reason, because of the two schemes going forward together, why we believe that the Government’s permissive approach is right, but of course we could always revisit that if we felt it necessary to do so. On that basis, I respectfully ask the noble Lord to withdraw the amendment, while acknowledging his continuing charm, which he referred to earlier.
Lord McAvoy
It is probably just a bit run down, but there we are. I am grateful to the Minister for that very full explanation. However, his response struck a chord in me and a note of concern when he indicated that he did not want the word “must” but rather wanted “may” after consultation with the industry. Assuming that they were asked whether the word should be “must” or “may”, they would say “may”, would they not? So there is a bit of concern that the Government have perhaps listened too much.
Lord Bourne of Aberystwyth
I am grateful to the Minister for giving way. As I indicated, the consultation is not just with the industry; it will also be with consumers, pensioner groups and so on. It is not limited to the industry.
Lord McAvoy
I am grateful for that clarification, but I still think that, although obviously I do not know how much weight was given to the industry’s point of view, the fact that the Minister kept some opinions in reserve and indicated that the Government would act at some point in future to change that suggests that there just might be something there. With that clarification, though, especially the clarification that the Government would be prepared to look at this again in the light of experience and circumstances, I beg leave to withdraw the amendment.
Lord Bradley
Lord Bradley
My Lords, I will not labour the points that we have already made regarding affirmative resolutions of regulations, but I shall speak briefly to Clause 21 because it is another key clause in shaping the structure and policies of pension schemes that are to be developed under Part 2. This is another area that, as we know, the Delegated Power Committee picked out when it said that,
“the likely ingredients of regulations will be so significant to the working of Part 2 as a whole that the negative procedure will not afford the House an appropriate opportunity to debate the provision that will determine the shape of the arrangements”.
I am aware that the Minister is going to bring forward an amendment on that so we will have that opportunity, but it is always worth putting on the record the views of the excellent Delegated Powers Committee on these matters, and obviously we welcome the Government’s response to it.
We have another amendment in this group, along with the delegated powers amendment, which again turns—I will not labour this point—on the issue of “may” and “must”. The first part of Clause 21, which is entitled, “Policy for dealing with a deficit or surplus”, says:
“Regulations may require the trustees or managers of a pension scheme … to have a policy for dealing with a deficit or surplus in respect of any collective benefits that may be provided by the scheme, and … to follow that policy if a valuation report shows a deficit or surplus”.
In our view, it is extremely important that they have a policy around deficit or surplus; it is inconceivable, as my noble friend Lady Drake pointed out in the previous comparable amendment, that there would not be such a policy.
I ask again, similarly to the previous set of amendments, whether the Minister sees any circumstances in which there would not be a policy for trustees in applying and dealing with deficits or surpluses. In order to ensure that the members have confidence in the policies, it is crucial that they are consulted on those policies, so there must be a policy that is available for them to have that assurance. For the members of the scheme there must be a policy, so the regulations should be saying that the trustees must produce a policy around deficit and surpluses within the scheme, which are crucial to the members within the scheme. I feel sure that the Minister will be able to give us the necessary assurances on that, which is why I shall be brief and beg to move.
Lord Bourne of Aberystwyth
My Lords, I am grateful to the noble Lord. I apologise that I keep referring to noble Lords opposite as “Ministers”; I am afraid that it is my background in the Welsh Assembly, where I am used to asking questions rather than answering them. They should not jump the gun.
I reassure the Committee about the recommendations of the Delegated Powers and Regulatory Reform Committee. I confirm again that we are content with its recommendation and will therefore bring forward amendments on Report to reflect that. As the noble Lord has said, the power in Clause 21 allows us to ensure that schemes have appropriately transparent policies for how they will handle a situation where the scheme is outside the probability range for paying the target benefits, and that it is a permissive power, not a mandatory obligation.
I shall share some of our thinking around how and why we will use the powers in Clause 21, which deals with what happens in schemes with collective benefits when the required probability range in relation to the target benefits is not being met. In our drafting approach we have used the term “deficit or surplus” to refer to the situation where the scheme is above or below the required probability range. However, I remind the Committee that there is no promise in relation to a collective benefit that an employer would need to stand behind.
The first question to ask is why we require trustees or managers of schemes providing collective benefits to draft a policy on deficit and surplus in the first place. We believe that this is essential because schemes providing collective benefits function in an open and transparent way. It is vital to engender confidence in the way that these schemes are managed and are seen to be managed. Indeed, the lack of a policy set out in advance about how schemes would adjust members’ benefits if required has led to heated public debate in the Netherlands, where some schemes had to reduce benefits when members were not expecting that to happen. I hope that we have learnt lessons from experience elsewhere, as I indicated earlier; this is very much central to the Government’s approach.
Lord Bradley
I am slightly confused. The Minister seems to be saying that there would never be a circumstance where there would not be a policy and therefore it can be permissive because there would be no exception to it. There would always be a policy in place. Can he confirm that that is the case?
Lord Bourne of Aberystwyth
I am happy to confirm that. I believe that I indicated in response to an earlier amendment that there would not be any of these powers where we would not anticipate regulation. We do not see a vacuum in any sense in any of these matters. As I said, I think that the difference is a difference of approach rather than a difference of outcome. We believe that we will reach the goal—achieve it—on a permissive basis. We do not believe that the mandatory approach, which I believe is what the noble Lord is pursuing in relation to at least some of these amendments, is the correct one. The difference is a difference of approach rather than a difference of outcome. I hope that that deals with the point that the noble Lord was making. On that basis, I respectfully ask the noble Lord to withdraw the amendment.
Lord Bradley
Again, I am grateful to the Minister for his response and clarification. From this side of the Committee we could not envisage a situation where something as important as deficit and surplus within funds and providing policies about which the members are clear and on which they have been consulted would not be addressed and in place. The Minister assures the Committee that, through a permissive regime, there will always be such a policy in place. With that assurance, I beg leave to withdraw the amendment.
Lord McAvoy
“( ) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.”
Lord McAvoy
My Lords, Clause 25 gives the Secretary of State the power to require the trustees or managers of a pension scheme to have a policy concerning the cash equivalent of a pension within a collective scheme. It also requires the trustees or managers to consult on the matters and principles they need to follow when calculating and verifying the cash equivalent of a pension in a CDC scheme. This amendment would require the regulations issued under this section to be subject to the affirmative procedure. This clause was also a part of a very large group of amendments which the Government introduced at Report in the other place.
There remains a tension at the heart of this Bill. The Government have been forced—I do not think there is anything wrong in that—into making so many amendments in large part because of the introduction of freedoms and flexibility in the Budget of 2014. We support those freedoms as long as they can be introduced without harming middle and low earners and do not end up leaving people reliant on the state. But really, more should have been done to work out the effect that these policies would have on how the others would operate. As we have already shown, a large part of the benefit from a CDC scheme can lie in the intergenerational risk sharing that it makes possible. This is how the schemes operate elsewhere. However, if a large proportion of people opt out at 55 by choosing to get a product that enables them to access their money straight away, then that risk-sharing element ceases to be there to the same degree.
This raises the possibility of having knock-on effects on the probabilities of achieving certain targets within the scheme. My concern here is that further work needs to be done on the interaction between the changes in the Taxation of Pensions Bill—which being a money Bill has passed through its remaining stages here—and the changes in this Bill to enable collective schemes and risk sharing. A good start would be to require the affirmative procedure to be used for the regulations on cash equivalents. I therefore ask the Minister to respond to that point in as much detail as possible so that we can grasp the thinking behind the Government’s proposals. I beg to move.
Lord Bourne of Aberystwyth
My Lords, I thank the noble Lord for moving this amendment. Clause 25 contains a power to require in regulations that trustees or managers of schemes providing collective benefits must have, and follow, a policy for calculating and verifying the cash equivalents of a member’s collective benefits. Cash equivalents may be needed when a member transfers to another scheme or for the purpose of sharing a pension on divorce, for example. Clause 25 allows for regulations to be made requiring the trustees or managers of a scheme offering collective benefits to set up and follow a policy for the calculation and verification of cash equivalents for collective benefits. The regulations can, among other things, require the trustees or managers to consult about the policy, require that the policy is consistent with regulations about calculating transfer values and other relevant legislation, make provision about the content of the policy, set out matters that have to be taken into account when putting the policy together, and make provision about reviewing and revising the policy.
Delegating to secondary legislation will allow the department to consult on the views of the pension industry, in the wider sense of involving pension groups as well, to ensure that the provisions set out in regulations will capture potential future varieties of collective benefits. The regulations will need to include a fair amount of technical detail, and some of the requirements will be largely procedural in nature. We therefore consider that the negative resolution procedure is the most appropriate form of parliamentary scrutiny here. In the process of parliamentary scrutiny there needs to be a balance between legislative scrutiny and the need to produce secondary legislation in a responsive and speedy way when needed. The requirement for the affirmative procedure in every case as required by this amendment would make it harder to deliver and maintain the regulations that the industry and members need, and would not in our view be an appropriate use of parliamentary time.
It is significant that the 12th report of the Delegated Powers and Regulatory Reform Committee, which considered the Bill, did not make recommendations as regards Clause 25. I am not convinced that the arguments made elsewhere by the Delegated Powers and Regulatory Reform Committee—which we have largely, although admittedly not totally, accepted—apply in the same way here. The committee was rightly concerned about regulations that have shaped collective benefits. Regulations about policies on calculating cash equivalents are not about shaping collective benefits but about how to put a cash equivalent value on a collective benefit when a member asks for a transfer or, as I said, on such an issue as divorce. Those are important matters, but they are largely technical and procedural, and we believe that they are more appropriate for the negative procedure. On that basis, I hope I have dealt with the issues raised by the noble Lord, and I respectfully ask him to withdraw his amendment.
Lord McAvoy
My Lords, once again I thank the Minister for a very full exposition of what was envisaged in the Government’s approach to that. We have at least raised a cautionary note, which the Minister has responded to, and there is not much point in pursuing it further. I beg leave to withdraw the amendment.
Lord Bourne of Aberystwyth
My Lords, the package of amendments in this group falls neatly—I hope—into the category of minor and technical. Inevitably we discover bits of drafting that can be improved or things that need to be clarified, and these amendments do just that. They cover a number of specific issues that relate to clauses in Parts 1 and 2, and with noble Lords’ permission I will explain a little more about what each of them does.
The first group of amendments is about consistent drafting. Clause 27 makes provision for regulations to require a scheme or part of a scheme providing collective benefits to wind up. Separately, Clause 37 makes provision for regulations to impose duties on managers of non-trust-based schemes to act in the best interests of the members when taking certain decisions. Both provisions make reference to different types of requirement that may apply in relation to the scheme, including scheme rules, and any relevant legislation that applies to the scheme. The amendments do nothing more than ensure that the same things are described in the same way in both clauses.
Moving on, the amendment to Clause 32 puts beyond doubt that any requirement to publish documents may also apply to policies required by regulations under Part 2 of the Bill. Regulations made under powers in Part 2 can require trustees or managers of schemes that provide collective benefits to have policies regarding a number of matters, including the factors used to calculate members’ benefits, the calculation of transfer values and the steps that may be taken to deal with a deficit or surplus.
Clause 32 makes provision for regulations in Part 2 which require trustees or managers to prepare or obtain any document, to include requirements about publication of those documents and about sending copies to a specified person. It was always the intention that any requirement imposed by regulations under Clause 32 could apply to policies about the operation of collective benefits, and these amendments put that beyond doubt.
The amendment to Clause 45 is about making the drafting clearer. The changes to Section 67A of the Pensions Act 1995 made by Clause 45 make any modification to an occupational pensions scheme that would replace a member’s accrued rights with a right to a collective benefit a protected modification, which can be made only if the member consents. This amendment makes clear that this provision applies only where the existing accrued right is not a right to a collective benefit.
Lord Bradley
I am grateful to the Minister again for his explanation of the government amendments, which I accept are minor and technical. However, they clarify the position on certain aspects of the Bill, which is welcome, and remove any ambiguity that may have transpired from the original drafting. In that light, the Opposition are happy to accept them.
Lord Bourne of Aberystwyth
I am most grateful to the noble Lord, and I commend the amendments to the House.
Lord Bradley
“Collective benefits: annual review
The Secretary of State must each year produce a report on the operation of this Part and the report must include the number of collective benefit schemes that have been set up under its provisions.”
Lord Bradley
My Lords, I draw attention to the wording of this amendment because I am sure that it will be welcomed by the Government and that they will wish to produce and deliver such an annual review to Parliament.
When the press release that accompanied the Bill was issued, it gave me the impression that the Government envisaged that Part 2 would lead to a number of new combined collective defined benefit schemes coming into operation. However, as we have seen the Bill being considered in this House and in the other place, the number of schemes coming into operation has been cooling and the Government have been more reticent to be clear about how many new schemes they anticipate will be set up.
This is why, among other things, the number of schemes should be included in an annual review to see whether provisions in the Bill adequately enable collective defined contribution schemes to be set up. That cannot and should not be the only measure. We do not wish such an annual report to cover only quality, but it would be useful for Parliament and the public more broadly to be kept aware of how the policy is unfolding.
There is also the wider point that a number of issues that have been raised in Committee today have centred on the speed with which the Bill is passing through both Houses of Parliament, the number of changes to the Bill in that process and the ability to scrutinise secondary legislation alongside primary legislation. All this leads to the conclusion that an annual report to Parliament would be a very effective way of giving assurances that all is well with the implementation of the Bill and indicating specifically the consequences around CDCs.
I accept that the first annual review—if, or when, this amendment is accepted—might be rather thin because, as we heard earlier, the regulations for Part 2 will not come into force until later in the year. However, I do not think that undermines the basic point that legislation of this type should be reviewed and presented to Parliament on an annual basis. I believe that the Government will welcome the publication of such a report, principally because these new schemes are part of the overall package of changes which have been hailed by Ministers as a pensions revolution. It will enable the Government to communicate to Parliament, and more importantly to the public, how these packages of reforms are rolling out, how they are working in practice and how they are achieving the policy objectives which the Government have laid out, not only with the Pension Schemes Bill but with the Taxation of Pensions Act and the other pensions provisions that have been put through Parliament. I accept that this amendment only applies to collective schemes, but it establishes a principle about reporting to Parliament on the pensions changes more broadly. It is a peg on which to hang a package of reporting and a way in which we can continue to have the ability to question and scrutinise a very important area of policy for millions of people in this country. I beg to move.
Lord Bourne of Aberystwyth
My Lords, I thank the noble Lord, Lord Bradley, for moving this amendment. I will say a little about our approach. As I think noble Lords are aware, our approach is about enabling choice. While the number of schemes is important, it is not the only measure of success.
The Bill enables schemes providing collective benefits to be set up where employers and providers wish to do so. We believe that this Bill will stimulate greater innovation and choice, allowing employers to adopt the sort of arrangements available in other countries—we have spoken previously of the Netherlands, Denmark and Canada—if it is right for them and for their employees. The number of schemes is an important issue, but it is certainly not the only issue.
We believe that the development of schemes offering collective benefits could be more appropriately monitored in other ways than a bespoke annual review, which may become something of a tick-box approach. We envisage that this could be done through existing access through the Office for National Statistics, which conducts surveys and collects data, for example.
Perhaps more importantly and across the piece, the noble Lord indicated that this review is on only one small aspect of the legislation. There is much else in the legislation. The Cabinet Office Guide to Making Legislation already requires the relevant government department within three to five years after Royal Assent to submit to the relevant Commons departmental Select Committee a memorandum, to be published as a Command Paper, containing a preliminary assessment of how an Act is working in practice. No doubt, our House can pick up on that too.
I recognise that there is a genuine concern about providing information on how this aspect of the legislation is operating in practice and perhaps more widely than the noble Lord indicated in his contribution. There is a wider issue about how the rest of the legislation is operating. I will have a look at this to see what we can do. However, we believe that an annual review is somewhat bespoke and tick-box. We have a provision for a review within three to five years of the Bill passing, but if there is anything that we can do supplementary to that, and should be doing, I will come back on that on Report. I say that without any firm promise that we believe there is anything to do, but I am happy to look at it. On that basis, I hope that the noble Lord will withdraw the amendment.
Lord Bradley
I welcome the Minister’s response to the request for an annual review. It was certainly not my intention—I hope it was clear in my opening remarks—to see this as a tick-box exercise. I see it as a very effective document that would be presented to Parliament and allow us to have proper scrutiny of a very important new proposal that has been brought forward. The Minister is right that it was in the context of looking at the wider pension reforms that are going through.
While I do not believe that we need to wait three or five years to get such an annual report, I accept the Minister’s offer to at least consider how information can be provided to the House, specifically on collective defined contribution schemes, and then more widely in the context of pension reform. I welcome the Minister’s response to that at a later stage in our deliberations. With that assurance, I beg leave to withdraw the amendment.
Counter-Terrorism and Security Bill
NHS: Medical Competence and Skill
(9 years, 4 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Parekh
To ask Her Majesty’s Government what steps they are taking to maintain and, where necessary, improve the level of medical competence and skill in the National Health Service.
Lord Parekh (Lab)
My Lords, it is an honour and a privilege to introduce this debate. I thank in advance all those Peers who will speak in the debate for the significant contributions that they will make from their respective points of view.
The NHS is one of our finest achievements. No pain goes unrelieved for lack of money. Its staff are dedicated, driven by a sense of calling, and their level of competence is second to none in the world. However, no institution is perfect and it can always do with change. Every institution builds up its own structural biases, and every profession has a tendency to build up a certain ethos, corporate mentality and collective spirit, and tends to do things in a certain way that is useful but has limitations. I suggest that this is just as true of the NHS. That is why several changes have been made over the years, particularly during the last 25 years. I do not care for the changes that are largely managerial and which are concerned to centralise the system and transfer power from doctors to managers. But I greatly welcome the changes that are of a medical nature; for example, appraisal and revalidation of GPs, and the collection and publication of surgeons’ death figures. These changes have been or will be of great benefit to the patients and to the medical profession. It is in the spirit of these changes that I wish to frame this debate and ask two questions.
My first question has to do with the general nature of medical competence in the NHS. How can we sustain the current level of medical competence and skill in the NHS? There is a general feeling that it is being threatened by recent structural and managerial changes. We need to address that concern. Secondly, there is a general impression among the public, the professional staff and the managers that errors of judgment occur in the NHS, and that there are pockets of incompetence that need to be carefully identified and addressed. We obviously need to see whether there is any truth in this impression and deal with it. Sometimes it is denied altogether: that there is absolutely nothing wrong with the level of medical competence in the NHS. That is not true. A report by the Parliamentary and Health Service Ombudsman on 26 November 2014 says that,
“poor communication, errors in diagnosis … and poor treatment”,
top the list of hospital complaints investigated by the ombudsman, Julie Mellor. She upheld just under half of those complaints. Statistical surveys in Australia, the United States, Canada and elsewhere have highlighted what is sometimes called substandard surgical performance. These things occur in those countries and I see no reason to believe that, much as we are better than many of those countries, some of these things do not occur here from time to time.
I was recently reading a wonderful article by the Honourable Geoffrey Davies of the Australasian College of Surgeons in the recent issue of the ANZ Journal of Surgery, in which he talks of an unacceptable level of errors resulting from inadequate competence. In our country, more than 12 surgical specialties collect and publish data on surgeons’ death rates. They show variations and some cause for concern. In all these cases, the concentration is unfortunately on the surgeons. Their errors are easy to identify and difficult to forgive. I suggest that we also look at non-surgical consultants, including physicians and GPs—indeed, the entire medical profession—to ensure that they are of the highest level of competence, for which we are justly famous and for which the medical profession has justly deserved a high reputation.
Medical competence is not about negligence—we know how to take care of that—and nor is it about professional conduct or misconduct. It is about medical judgment: that is, correct diagnosis and correct treatment. It depends not just on the kind of medical degree that one has acquired but on one’s experience and training, on keeping abreast of one’s subject, on giving enough time and attention to the patient, on a sense of accountability for the consequences of one’s diagnosis and treatment, on constant feedback from the patient and so on. Given that these are some of the preconditions of medical competence and the wider feeling that I talked about earlier, I suggest that our distinguished medical professional might like to consider five suggestions. I make them in a tentative spirit, not being a doctor myself.
First, as I said, our surgeons have introduced the practice of collecting and publishing death figures. I suggest that, with suitable modification, the same sort of practice needs to be introduced for consultant physicians. They currently have no means of knowing how the patient responded to the treatment that they prescribed. They are in no position to learn from positive and negative experiences. For example, if a patient goes to see a consultant, a particular medicine is prescribed and if it does not work, the consultant will not know this. The GP picks up the pieces. If the GP decides to refer the patient to the consultant, the consultant may not be the same one that the patient saw in the first instance. It is therefore very important that there should be a measure of continuity between the consultant and the patient. This could be ensured either by the GP informing the consultant as to what his prescribed medicine has done to the patient or, as happens in some countries, through the patient being in contact with the consultant on a regular basis or when the medication does not work as he was promised it would.
Secondly, consultants and GPs are subjected to sometimes unreasonable targets; hence, they are unable to spend as much time with patients as they would like, or as is necessary. This leads to errors of judgment, some of which are very serious. Steps need to be taken to avoid such situations. Targets are important, but should not be unrealistic or at the cost of the quality of care.
Thirdly, GPs are at the centre of the NHS. It is not a secret that patients sometimes avoid certain partners in a practice, even when that involves considerable waiting. There are many reasons for this. One has to do with suspicion of a lack of full clinical competence on the part of certain partners in the practice. It is in the interest of the GPs and the patients that the appraisal system that we have introduced should be made robust. Inadequate GPs should not be covered by an otherwise excellent practice.
The criteria of patient satisfaction should be more carefully defined and include not just “how much time did the doctor give you” or whatever but such questions as how many visits she had to undertake before her complaint was diagnosed or how often her medicine was changed before she felt better. Cases of whistleblowing among GPs and consultants should be viewed more charitably than at present. Whistleblowing is a public service and sometimes a compulsion of one’s conscience. Hence, its occasional excesses or misuse should be condoned or dealt with lightly. If even 1% of our more than 60,000 GPs systematically make a mistake, the extent of harm done to patients is quite considerable. That is also true of consultants. In so far as whistle- blowing diminishes this danger, there is every reason to welcome it.
Fourthly, some cases of incompetence have been identified in relation to doctors who have been engaged by medical companies, on whose resources the hospitals rely. These medical companies need to be monitored and watched more closely.
Fifthly, young doctors sometimes do not have enough clinical experience because of the EU working time directive. The directive is necessary because it protects patients against tired and overstretched doctors. It also allows doctors to learn their craft under ideal conditions. However, training is also important and we therefore need to increase the training period for GPs.
To sum up, I salute the professionalism, idealism and dedication of the medical profession in the NHS. In this debate, I have been concerned to ensure that nothing is done to tarnish the richly deserved reputation of the medical profession, whether it is done by overbearing managers, by target-obsessed civil servants or by a complacent and sometimes defensive profession.
Viscount Bridgeman (Con)
My Lords, I thank the noble Lord, Lord Parekh, for securing this debate. I will venture to speak on a subject which has some relevance to its title and to the noble Lord’s speech—that is, the problem of English language testing for health professionals from the EEA working in the United Kingdom. I speak with particular reference to nurses, with whom I have some familiarity, but my remarks should apply also to dentists and pharmacists. I know that other branches of healthcare are in the pipeline for similar consideration.
I am sure your Lordships’ experience of nurses in the NHS from the EEA is overwhelmingly one of courtesy, competence and compassion. Nevertheless, I am sure they will also have had instances of language difficulties over health workers’ command of English. The background to this problem is the mutual recognition of professional qualifications directive of 2005, which covers the mutual recognition of professional qualifications within the EEA. As originally promulgated, this contained the requirement that registration in the respective countries should be done before any testing for English language capability, the argument being that imposing language tests before regulation inhibited one of the EU’s basic concepts, the free movement of professionals within the Community.
This gives no problems with professions such as surveyors, architects or engineers. However, healthcare is in a category of its own because there is the additional consideration of patient safety, and this has caused considerable problems for the regulating bodies. For instance, the Nursing and Midwifery Council has been obliged first to register candidates without being able to assess their English language proficiency. Control over its members tends to be lost, or at best diminished. A fully registered nurse, probably in employment, is not going to take lightly to being told to go back to school to improve his or her English. Indeed, the onus for language competency currently rests with employers, a far from satisfactory position. This has been the potential scenario for disasters waiting to happen. We are fortunate that there have been no serious ones. However, as a journalist has pointed out, the difference between a milligram and a microgram can be a coffin.
Over the past few years the Department of Health and its associates in the three devolved Administrations have been involved with the Commission in addressing this problem. Fortunately, a lead was given by the GMC, which last year achieved a very satisfactory outcome in respect of doctors. If we turn to the other branches of healthcare, in November 2014 the department and its counterparts in the devolved Administrations issued a four-country-wide paper for consultation, the outcome of which has been a draft Order in Council which, I understand, will be due for debate in both Houses in the course of this Parliament. The effect of this should be that the regulating bodies will have the powers to delay registration of a candidate from the EEA if they are not satisfied with his or her language competence. This development should rectify a serious defect in the freedom of movement legislation, and I congratulate my honourable friend Dr Dan Poulter and his colleagues in his department and the other devolved Administrations on their diligence in achieving this potentially favourable outcome.
This may appear to outsiders to be a minor procedural adjustment. I suggest, however, that it is in fact of great significance. Not only should it be a step towards reducing accidents caused by poor language communication but, of no less importance, it will enhance the standing and credibility of the respective regulators—the Nursing and Midwifery Council, the General Dental Council, the General Pharmaceutical Council and the Pharmaceutical Society of Northern Ireland—in giving them greater control over their members in ensuring that those from the EEA go into the employment market with the necessary competence in English.
The Countess of Mar (CB)
My Lords, I, too, am grateful to the noble Lord, Lord Parekh, for introducing this Question for Short Debate this evening.
I encounter almost daily cases where people with ME/CFS and others with medically unexplained physical symptoms, known as MUPS, are treated abominably by members of supposedly caring professions. For example—and it is by no means an isolated example—a young man of 17 had problems with tolerating foods since he was a small baby. Standard tests could provide no clear reason. By the time he was 16 he was diagnosed by consultant paediatricians at both St Thomas’ and Great Ormond Street hospitals as being extremely reactive to almost all foods and was restricted to a prescribed liquid diet, as none of the consultants had any other resolution. Eventually he was admitted to an environmental medicine polyclinic, where I am also treated, where he has been treated with low-dose immunotherapy and nutritional supplementation. Over a period of a few months, from being able to tolerate no foods he is now eating 33 different foods with few problems.
On his 17th birthday, he went out with some friends for a meal and during that night he developed very severe abdominal pain and, after his GP had refused to visit, his mother managed to get him to the polyclinic. There acute appendicitis was diagnosed and immediate admission to his local hospital in Oxford was recommended. The paediatric consultant’s first response was to ask, “What has the mother of this boy done now?”. On arrival at the hospital the consultant informed the mother that he knew that nothing was wrong with the boy but he would keep him for observation. He scheduled a scan and then went home for the weekend. The boy was left screaming and in acute pain for a further 24 hours, without pain relief or other medication. By the time he was operated on, his appendix had perforated, making treatment much more complex than necessary.
To this day, despite all the evidence of the extremity of his reactions to foods and the failure of our two flagship hospitals to treat this young man’s condition, his Oxford consultant insists that there is nothing wrong with him, that he should stop the polyclinic treatment and that he should eat a normal diet, apparently because standard allergy tests do not provide confirmation. This results in great stress and distress to the boy and his mother.
In fact, substantive evidence in numerous publications proves that the safety and efficacy of immunological changes after treatment with oral immunotherapy for cow’s milk allergy, nut allergy, allergic rhinitis, wheat desensitisation and other specific foods and chemicals is well recognised. The treatments are validated and are neither experimental nor complementary medicine.
I have long wondered why there should be such particularly unreasonable treatment for people with MUPS and I have come to several conclusions. Medicine is supposed to be a very rewarding profession, whether the practitioner is a doctor, nurse or ancillary worker. The patient consults, the doctor diagnoses and prescribes and the patient gets better or at least no worse. On the occasions when the patient’s condition deteriorates and he or she dies, it is usually because the illness is well understood and this is part of a normal process. This is clearly not the case with MUPS. Modern doctors are highly reliant on technology. Test reports taken at face value can dominate the diagnostic process without taking into account factors such as clinical presentation and history and the possibility of false positive or negative results. Additionally, medical practice has become a cost-benefit calculation, with treatments either enforced or rejected on this basis rather than on patient need. I have the distinct impression that, because some doctors and other medical practitioners fail to understand some disease processes, they grow impatient, even intolerant, when their patient fails to respond and then they blame the patient.
The skills that medical practitioners acquire during training are essential to good practice for the rest of their working lives. Unfortunately, the natural scientific curiosity of the profession seems to be stifled in the course of their training. There are still far too many medical professionals who hold that MUPS are “all in the mind” and that patients simply need to pull themselves together, perhaps with the help of a little cognitive behavioural therapy. Somehow, current research findings are not filtering down to doctors who deal with patients.
Are the time constraints on appointments and the dependence on technology reducing a doctor’s ability to listen and to communicate effectively? Is it because GPs and consultants work such long hours that they have neither the time nor the energy to do their own research on problems concerning chronically ill patients? Is it because complex investigations cost money and initial investigations come back as being within normal ranges that the current view is that further tests would not be cost effective? Or is it because doctors have become so demoralised that they can see no reason to go the extra mile on behalf of their patients?
The NHS is excellent for acute management of illness because clear guidelines are usually followed assiduously by all staff. Chronic complex conditions are problematic because clinicians seem to deal with only one symptom at a time. Specialisation means that patients with ME/CFS are rarely looked at holistically. I have heard of one doctor’s surgery with a notice on the door which reads, “One complaint at a time”. The trouble is that frequently it is the combination of symptoms which will point to a clear diagnosis.
I have confined my speech to one aspect of competence and skill, one which falls far short of the excellence that should be the norm. I am interested to hear how the Minister proposes to improve the position for some 250,000 patients with ME/CFS and the many more who have other medically unexplained symptoms.
Lord Selsdon (Con)
My Lords, I am most grateful to the noble Lord, Lord Parekh, for giving me an opportunity to say things that I never thought I would say. In my family, we have had many doctors but we did not do being ill. We were brought up to believe that you suffered and you lived. However, one day, we had an incident at home when I learnt about NHS 111. I dialled 111 and, in no time at all, a member of the family was advised. I went off to my first experience of A&E, which lasted for only four and half hours, and I learnt quite a lot.
Another day, to my horror, I was standing here speaking when I suddenly felt rather faint. When I went out, I nearly passed out, and when I got to my office in Millbank, the word was out and a paramedic was there. He found that he was not competent to look after me properly and, before I knew it, an ambulance arrived and then another. I was tested and overwhelmed with the overcompetence of the issue.
After that I thought that perhaps I had better register with the NHS, which was rather a pleasant exercise. The local operation was rather busy, but it thought that it might be able to fit me in because my wife was there. Since then, I have been extraordinarily impressed. You ring up and ask for an appointment. Usually you can get one within a day or, if it is urgent, more quickly. You walk there and wait for 10 minutes. You are seen for 10 minutes, and a diagnosis takes place. The e-mails go off and you are told which clinic or wherever you should go for the next stage. Then you walk down the road to the pharmacy to get your prescription, with the dog in tow.
I had not realised the significance of pharmacists, who are, in a way, linked to the NHS. I interviewed a few and found to my surprise that there are 12,000 pharmacies in the United Kingdom and that a trained pharmacist spends more time in training than a doctor. Then you realise that there is a link: almost every time you consult a doctor, you end up with a prescription that you take to a pharmacist. I have spoken to several pharmacists and to their association and have realised that there could be a much closer link between them and the medical profession.
My interest in this sector is that when I was in the financial world, I dealt with some of the newer technologies, which I have mentioned on other occasions, not least the developments in the stem cell field. I did some research into the burdens of disease in Europe. To my surprise, cardio came top at 21%, followed by mental at 20%. Down the line was cancer at only 11%. Looking at the afflictions, as one would call them, you found that heart and cancer were almost equal. One of the biggest afflictions was Alzheimer’s, which I would not know how to treat.
I thought about what can be done in the high-tech or the technological field to use the latest technology. At that time, I got involved with the Germans in working with adult stem cells. We looked at the areas of operation. I did not realise that bits out people’s hips were taken out and were injected here and there. There were problems of morality. In Germany, I spoke to Professor Strauer, who had developed some of these technologies and found that there were some religious factors against it. A meeting was held, surprisingly, with the Pope, who approved that this sort of invasive surgery was reasonable.
I am talking about myself, a complete amateur. Amateur means someone who loves his subject but probably knows nothing about it. When I introduced people for stem cell treatment, I found that it was very simple: you take something out of one part of the body and inject it into another. Before you know it, you may have cured the problem of diabetic foot. I had a great friend whose wife was suffering very badly and I asked him why he did not look at the application of adult stem cell treatment, which he did. I did not see him for a while, but when I did he said that his wife was much better. Then you get one of those moving moments in life: his wife lived for another four years. I was invited to the funeral at a church in France, at which my friend thanked me for giving them a further few years together.
When you look at some of the new technologies in health, you have to say that some are to help to cure people and some are to help to keep people alive. Health is part of the social scene. It is the interrelationship between the professions, the nurses and others. The Minister has spoken today about A&E centres. I am a leading expert on them as I have spent many hours in them waiting to collect people, looking at the nationalities of people and wondering why you need four ambulances stationed outside. The A&E situation has come to dominate the British health situation overall. Can the Minister give us an idea of how many A&E patients are now being served? What are their nationalities and what are the costs? I accept that my experience with a local health operation has been very thorough. I have a code name that I can ring. I am told that I must receive an e-mail every five minutes. I am very impressed indeed, and I thank the Minister for what he has done.
Lord Turnberg (Lab)
My Lords, I, too, thank the noble Lord, Lord Parekh, for introducing this debate in his usual erudite manner. Many years ago I had the privilege of being president of the Medical Protection Society, a mutual assurance society that provides indemnity for doctors accused of negligence and misbehaviour. It provides recompense for patients who were harmed by their negligent practice. It was there that I was brought face to face with the poor behaviour of too many doctors. I was surprised and discomforted by that because until then I had done my level best to instil high standards of practice in my students, when I was dean of a medical school, and in my trainees, when I was a consultant and president of the Royal College of Physicians. To say the least, I was somewhat disappointed when I came to the Medical Protection Society.
However, I soon realised that in a busy day-to-day practice, doctors are only human. They can make occasional honest mistakes or errors of judgment. I do not for a moment excuse any of that but I thanked my lucky stars that there but for the grace of God went I. Among the millions of patients seen every day, there are bound to be occasional mistakes. Those are much more likely where doctors are rushed and under the sometimes intolerable pressure that is too common now. Much more worrying were the fortunately less common doctors whose behaviour and practice were poor, who were unfeeling and lacking in empathy or who were just substandard. They clearly have to be weeded out by one means or another. They have to be retrained or prevented from practice, which is where the General Medical Council comes in.
Something I noticed when I was training young doctors was that it was hard to distinguish between those who had qualified from different medical schools around the country. Their skills and practice seemed very similar, no matter where they had graduated. That made me realise that most of their skills and attitudes were being gained after they had qualified and that it was their postgraduate training that really mattered. Here, too, there are problems that might be relevant. Training has certainly suffered as a result of the EU working time directive and the imposition of rotas of care. Both have had an impact on continuity of care and have fragmented the learning experience of many. Some training programmes have been so structured and rigid that they have seen trainees rotate at bewildering speed from one experience to another, again interfering in that continuity of the relationship between trainee and trainer that is so important. These are not easy problems. We must, however, try to correct them. I would be interested to know whether the Minister has any ideas about how we might do this.
Finally, I shall follow the noble Viscount, Lord Bridgeman, and say a few words about the EU directive under which doctors trained in other member states can come to practice in the UK without any assessment here of their competence and skills. It is only in the past couple of years that the GMC has been allowed under EU law to test the language skills of EU doctors. I fear that we are still not in a position to assess the training of a cardiologist, for example, from Greece, Spain, Holland or France or that of a neurosurgeon from Germay, Luxemburg or Belgium. They may be perfectly competent and capable, but the problem is that in the UK we have no information about what their training comprised and we are not allowed to make any assessment of it. That would interfere with EU manpower laws that encourage free movement of workers around the Community.
I tried to fill this gap several years ago when I was chairman of the Specialist Training Authority of the Medical Royal Colleges. Even though it would have been possible to do this then by a simple change in the directives that were available to us, as with many others of my efforts, I am afraid that I failed miserably. I would be very interested to hear from the Minister whether there is any hope that we may now be able to correct this anomaly.
Lord Bhatia (Non-Afl)
My Lords, I am grateful to the noble Lord, Lord Parekh, for raising this issue and giving us an opportunity to discuss it. The NHS is a burning and most important issue in the minds of citizens. It is one that will be foremost in the minds of everyone when voting in May this year. People will vote for the political party that assures them that the NHS is safe in its hands. I declare my interest in this issue as my daughter is a GP in London and her daughter is also training in the medical field.
We all come with our different experiences—mine are positive—when we meet the NHS in the front line either with our GPs or when we end up in an NHS hospital and see the devoted, skilful and competent work of the professionals who provide humane and concerned care to cure you as soon as possible. Over the past few years, I have been a patient at a hospital. I have seen how I was diagnosed, treated and brought back to good health. The same applies to the GPs who take enormous care to treat you for your minor and major health issues. There is always enough time for you at the GP, who ultimately becomes a good friend, with care and concern for your well-being. To me, at the age of 60, the annual flu jab is a great blessing.
Very recently, I was admitted to hospital for a serious heart condition. Having been treated and discharged from the hospital, after a few days I received a letter from yet another NHS facility asking me to come to its rehab centre, which would help me build up my muscles and teach me to walk, breathe and do exercises once a week. The professionalism of the staff at this rehab facility is, for want of a better word, exceptional.
I therefore fully support the question asked by the noble Lord, Lord Parekh. The Government should not only maintain but improve the level of our NHS manpower. New scientific discoveries are coming on stream all the time. Medical professionals must be given the opportunity, time and resources constantly to update and improve their skills.
In conclusion, I shall quote from the briefing pack from the House of Lords Library dated 7 January 2015. These are positive policy statements that should be followed. First:
“No system can be 100% failsafe and where a failure does occur there needs to be a system-wide response with three key objectives: safeguarding patients; ensuring the continued provision of services to the population; and securing rapid improvements to the quality of care at the failing provider”.
Secondly,
“Healthcare professionals and clinical teams, their ethos, values and behaviours, will remain the first line of defence in safeguarding quality; the leadership within organisations who provide care remains ultimately responsible for the quality of care being delivered by their organisation, across all service lines”.
Thirdly,
“Getting the right staff with the right skills to care for our patients all the time is not something that can be mandated or secured nationally. Providers and commissioners, working together in partnership, listening to their staff and patients, are responsible and will make these expectations a reality. As national organisations we pledge to play our part in securing the staffing capacity and capability you need to care for your patients”.
Finally,
“Our National Health Service and public health services’ first priority must be the public that we serve. It is the commitment, professionalism and dedication of the NHS and public health staff that can make the greatest difference in providing high quality services and care for patients and their families”.
Lord Hunt of Kings Heath (Lab)
My Lords, it is a great pleasure to speak in my noble friend’s debate, and I warmly welcome it.
We would all pay tribute to the medical profession in the UK. We clearly have much of which to be proud. Equally, I agree with my noble friend that we should guard against the risk of complacency and always aim to sustain the current level of competence and try to enhance it.
I shall put to the Minister five points about training, continuing professional development, the use of simulation techniques, the adoption of new practices and medicines and the issue concerning medical negligence raised by noble friend Lord Turnberg.
I have been reading the Shape of Training report, led by Professor David Greenaway that looks at the future training requirements of doctors. It makes very sensible reading. I wonder whether the Minister can say something about the Government’s intentions on this and especially about the role of Health Education England. I draw his attention particularly to the fact that we need more doctors who are capable of providing general care in broad specialties across a range of different settings. The report states that this is being driven by a growing number of people with multiple co-morbidities, an ageing population, health inequalities and increasing patient expectations.
The Minister will recollect the work of the Royal College of Physicians on the new hospital, where it made the point that alongside specialists we need generalists who can co-ordinate care. Does the Minister think that that ought to be incorporated in the future training of our doctors? By definition, or certainly by implication, that means that greater prestige needs to be given to generalist doctors alongside the highly specialised ones.
I have also had the benefit of discussions with Dr Kieran Walsh of the BMJ in relation to medical education. The key point that he has put to me is that we need to look at inter-professional education. Healthcare professionals no longer work in silos, but in teams, but healthcare professional education still occurs mainly in silos. Again, are the Government working through Health Education England to do something about that?
I have had further discussions with Professor Stuart Carney, the dean of medical education at King’s College, concerning continuing professional development. As the Minister knows, this was introduced into the National Health Service some years ago but subsequently, of course, the revalidation of doctors was also introduced. Is he able to say something about the initial outcome of revalidation? There is a worry that both continuing professional development and revalidation can become a tick-box exercise rather than a focused approach to improving and enhancing the quality of medical practice. Perhaps he could say something about that. Again, that relates back to the Shape of Training report.
The fourth point I would like to raise is about the use of e-technology and simulation and how we can harness new technologies in the development of medical competence and skills. The Minister will know that around the country there are a number of simulation centres where doctors and other clinicians can take part in sessions that are designed to simulate clinical practice. That enables trainers to put doctors and other clinicians under pressure to see how they react when faced with multiple pressures at the same time. The problem is that it is all very voluntary at the moment. Can we look forward to a time when we can expect simulation training and regular updates to be a mandatory part of the life of doctors?
My fifth point is an issue that I have raised and discussed with the Minister on many occasions. In this country we have first-rate life sciences. We have a fantastic medical health technology and devices industry, but we know that the NHS is very slow to adopt new medicines and new techniques even though they have been proven to work. Will the Minister say a little bit about how we can encourage the NHS to move to adoption much more quickly? Can we use the new PPRS agreement on drug costs, for instance, as a way of incentivising the adoption of new medicines?
Finally, my noble friend Lord Turnberg asked about medical negligence. The Minister will know that there is an alarming rise in the payout of claims, which is probably unsustainable going forward. I cannot believe that the quality of medical practice is getting worse. It is something to do with the number of claimants and the action of the courts. I know that the medical defence organisations are very concerned, as well as the NHS Litigation Authority. In the short time that is available, is he able to say that this is something that the Government are at least keeping under review?
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)
My Lords, in thanking the noble Lord, Lord Parekh, for bringing this topic to the House and for his very constructive and thoughtful speech, I would like to begin on the subject of medical education.
I am sure all noble Lords will agree that medical education in this country is of the highest quality. Indeed, our medical schools rank in the top 10 in the world. But it is not just formal education at university that contributes to maintaining and improving the skill of clinicians in the NHS, as the noble Lord, Lord Turnberg, reminded us. High-quality postgraduate education, continuing professional development, appropriate regulation, the development and dissemination of best practice, the uptake of innovation, and, as the noble Lord, Lord Parekh, emphasised, transparency in the performance of clinicians all contribute to delivering high-quality patient care.
With regard to regulation, the General Medical Council—GMC—is required to evaluate the fitness to practise of all doctors holding a licence to practise medicine in the UK. Medical revalidation, which was raised by the noble Lord, Lord Hunt, commenced on 3 December 2012 and is the process by which the GMC will make an evaluation to renew a doctor’s licence. Doctors are required to revalidate every five years by participation in local schemes of appraisals which are based on the GMC’s core guidance for the medical profession, Good Medical Practice. Areas of concern will be discussed at appraisal and plans agreed to undertake further development to tackle those concerns. These remedial activities are overseen by a senior doctor to ensure an effective outcome.
Revalidation provides the reassurance that all doctors, including locums and doctors in private practice, are engaged in a process of structured appraisal and professional development that will provide the framework for continuously improving the quality of their practice. Medical revalidation will help doctors keep up to the standard expected of them by ensuring that they stay up to date with the latest techniques, technologies and research. The regular feedback from patients and colleagues will highlight areas for improvement and help a doctor to tackle any concerns about important skills such as bedside manner and maintaining trust with patients. Where concerns about doctors are more serious or attempts to tackle them are not successful, as the noble Lord, Lord Turnberg, alluded to, a doctor may be referred to the GMC fitness-to-practise process, where a full investigation will be made that may result in sanctions or removal from the medical register.
I was very struck by the phrase used by the noble Countess, Lady Mar, about the notice that she saw: “One complaint at a time”. In this context, the noble Lord, Lord Hunt, mentioned the Shape of Training report. One of the key themes of Professor Sir David Greenaway’s report was the balance between specialists and generalists in the medical workforce. I can say at this point that the four UK Health Ministers will consider the draft policy proposals early this year.
The noble Lord, Lord Turnberg, mentioned doctors from the EEA. We welcome the agreement to modernise the professional qualifications directive. The revised directive will now make it easier for professionals to work anywhere in the EU but we have pushed hard for more transparency in regulated professions across member states to ease the requirements on skilled professionals finding jobs in the EU. We also have a duty to play our part as a department in the furthering of the UK’s wider aims in Europe, such as freedom of movement. To that end, we are also keen to ensure that highly skilled professionals do not face unnecessary or disproportionate barriers when moving to the UK.
My noble friend Lord Bridgeman focused on language skills, which, as he said, are also a key part of ensuring that doctors in the NHS are able to care properly for and communicate with patients. That is why we made changes to the Medical Act in 2014 which allow the GMC to refuse a licence to practise in circumstances where a medical practitioner from within the EU is unable to demonstrate the necessary knowledge of English. Furthermore, an additional fitness-to-practise category of impairment was created relating to language competence. These powers help to ensure patient safety and strengthen the GMC’s ability to take fitness-to-practise action where concerns are identified. Doctors from outside the EU are already subject to systematic language checks prior to registration with the GMC. These powers ensure that only doctors with the necessary language competence are given a licence to practise in the UK.
My noble friend referred to other healthcare professionals. As he mentioned, the department has consulted on proposals to give powers to the Nursing and Midwifery Council, the General Pharmaceutical Council, the Pharmaceutical Society of Northern Ireland and the General Dental Council to carry out proportionate language controls for EEA applicants similar to those given to the GMC. The consultation ended on 15 December 2014 and a government response will be published shortly.
The content and standard of formal medical education and training are the responsibility of the GMC, which has the general function of promoting high standards of education and ensuring that medical students and newly qualified doctors are equipped with the knowledge, skills and attitudes essential for professional practice. Medical schools also play a key role in medical education and training. They design curricula for undergraduate medical education, including the type of placements students may undertake during the course. The royal colleges also play a vital role in postgraduate specialty training. They develop postgraduate curricula, provide advice to postgraduate deaneries on the quality management of training as part of the GMC’s quality framework, and provide continuing professional development opportunities for their members.
The department set up Health Education England to deliver a better health and healthcare workforce for England. HEE does this in a number of ways: by commissioning training places to ensure delivery of the right number of medical staff for the future; working to influence the royal colleges and other professional bodies responsible for developing and approving formal training curricula to ensure they are appropriate; and ensuring professional and personal development does not end when formal training stops.
The creation of HEE and its local education and training boards has given employers a stronger voice in workforce planning so that the education and training HEE commissions better reflect their needs and, therefore, the care they deliver to patients. The noble Countess, Lady Mar, will be interested to know that in 2014 we asked HEE, through its mandate, to work with the professional bodies and regulators to seek to include specific training in curricula where needed. Examples of this training include perinatal mental health training to support the health and well-being of women and their children during pregnancy and following the birth; compulsory work-based training modules in child health in GP training; care of young people with long-term conditions; and dementia education across a number of specialty areas.
We also asked HEE to provide leadership and to work with the local education and training boards and healthcare providers to ensure that professional and personal development continues beyond the end of formal training. For example, HEE will work with other organisations to develop a bespoke training programme to allow GPs to develop a special interest in the care of young people with long-term conditions by September 2015.
Clear outcomes and guidance also provide a focus for action and improvement for clinicians. Since 2010, the Department of Health has published outcomes frameworks for public health, adult social care and the NHS, which include the main outcomes that represent the issues across health and care that matter most. Combined with this, quality standards produced by the National Institute for Health and Care Excellence provide a clear description of what high-quality health and social care services look like, so that organisations can improve quality and achieve excellence.
As my noble friend Lord Selsdon rightly said, and as the noble Lord, Lord Hunt, also pointed out, innovation within the NHS is also an important driver of improving the skills and knowledge of staff. We are working with key stakeholders to remove barriers and put in place incentives to accelerate the adoption of innovation at all levels in this complex system. In 2013, England became the first country in the world to implement a universal system of academic health science networks which act as system integrators to link all parts of the healthcare landscape with industry and academia. Through this network, innovations and best practice can be spread and disseminated.
The noble Lord, Lord Hunt, referred to the use of technology in particular. The development of supportive tools for clinicians is an example of how innovation can be used to deliver improved patient care. The noble Lord mentioned others and I will get back to him on the specific examples that he gave if I can get further information on them. Macmillan Cancer Support, which is part-funded by the Department of Health, has developed an electronic cancer decision tool which is currently installed in over 1,000 GP practices across the UK, with plans to make it available to all GPs as part of their standard software. In answer to the noble Lord, Lord Parekh, we recognise the hard work and the vital job that GPs do, and we are doing our best to free them from excessive box-ticking so they have more time to devote to patient care.
Finally, to address one particular point made by the noble Lord, Lord Parekh, the Government’s commitment to transparency has seen, among other things, consultant-level outcomes data published for 11 specialties on the My NHS website. It has also seen the Care Quality Commission publish the findings from its first comprehensive inspection of NHS GP out-of-hours services. More generally, transparency in public services and access to open data are key government policies, and I would be happy to expand on that in writing to the noble Lord.
The Government’s response to Robert Francis’s public inquiry into Mid Staffordshire NHS Foundation Trust also set out our commitment to creating a culture of openness, candour, learning and accountability in an NHS which puts compassion at its heart. As noble Lords can see, the Government are undertaking a great many things to ensure that the medical competence of staff in the NHS is not only maintained, but is improved where needed.
Pension Schemes Bill
Lord German
“Disclosure of information about schemes: duties on trustees and managers
(1) The Pension Schemes Act 1993 is amended as follows.
(2) In section 113 (disclosure of information about schemes to members etc), after subsection (10) insert—
“(11) The trustees or managers of an occupational pension scheme and the managers of a personal pension scheme shall be under a general requirement to account to their beneficiaries for all actions taken in the performance of their investment functions, including (without limitation) actions relating to any of the matters mentioned in subsection (15), and shall also be under a general requirement to act transparently in that regard.
(12) The trustees or managers of an occupational pension scheme and the managers of a personal pension scheme shall comply with any reasonable request for information relating to any of the matters mentioned in subsection (15) where such request is made by or on behalf of one or more of the beneficiaries, or any other persons of a prescribed description which the Secretary of State may specify in regulations under this section, or by a relevant independent governance committee.
(13) The trustees or managers of an occupational pension scheme and the managers of a personal pension scheme shall comply with any reasonable request by or on behalf of any of the persons specified in subsection (12) for information relating to the reasons for the manner in which they have exercised or are proposing to exercise a discretion in relation to any of the matters mentioned in subsection (15).
(14) The trustees or managers of an occupational pension scheme and the managers of a personal pension scheme shall take all reasonable steps to ensure that all persons to whom they have delegated any investment functions mentioned in subsection (15) comply with any reasonable requests by or on behalf of any of the persons specified in subsection (12) for information relating to the performance of such delegated functions.
(15) The matters mentioned in this subsection that are referred to in subsections (11) to (14) are—
(a) the selection, retention and realisation of investments,(b) the stewardship of investments, including (without limitation)—(i) the exercise of rights, including voting rights, and(ii) the engagement with the managers of investee companies and other investee entities in relation to (among other matters) corporate governance (including management remuneration) and corporate actions,(c) the selection, appointment and monitoring of investment managers and other agents to whom the trustees or managers delegate any of the matters mentioned in paragraphs (a) and (b) above, and(d) the selection and monitoring of investment funds which are operated by insurance companies or other institutions and in which the trustees or managers have invested or are considering investing.(16) For the purposes of subsections (11) to (15), a request for information shall be presumed to be reasonable unless—
(a) the requested information has already been supplied to the person making the request within twelve months before the date of the request,(b) the requested information is otherwise readily and freely available in easily comprehensible form to the person making the request and that person has been advised accordingly,(c) the trustees or managers (or, where subsection (14) applies, the relevant delegate) reasonably consider that the costs of providing the information would be disproportionate, having regard to (among other matters)—and have stated that to be their view, have explained their reasons, and have given their best estimate of such costs to the person making the request.(i) in the case of an occupational pension scheme, the best interests of the beneficiaries as a whole,(ii) in the case of a personal pension scheme, the best interests of the beneficiaries of all personal pension schemes of the same provider as a whole, and(iii) whether the requested information is relevant to those best interests,and have stated that to be their view, have explained their reasons, and have given their best estimate of such costs to the person making the request.(17) Subsection (16)(c) above shall not apply unless where a relevant independent governance committee, having considered such view and reasons—
(a) notifies the trustees or managers that it does not agree that their estimated costs would be disproportionate, or(b) there are commercial considerations, including (without limitation) confidentiality constraints, that, for so long as such considerations subsist, would make it either unlawful or not in the best interests of the relevant beneficiaries for the requested information to be provided,and the trustees or managers (or, where subsection (14) applies, the relevant delegate) have stated that to be their view and, so far as practicable, have indicated the nature of the relevant considerations to the person making the request.(18) Subsection (17) shall not apply to the extent (if any) that it is reasonably practicable for any part of the requested information to be provided, whether in full or in a redacted or summary form, without prejudice to such commercial consideration.
(19) The provision of information under subsections (11) to (15) shall be made without any—
(a) cost or charge to the beneficiary or any other prescribed person making the request, or(b) restrictions on the use or dissemination of the information by the recipient. (20) The Secretary of State may make regulations with a view to ensuring that the information disclosed under subsections (11) to (15) is provided in a timely and comprehensible manner.
(21) For the purposes of subsections (11) to (20)—
“beneficiaries” means the persons for whose benefit investments are being, will be or may be applied for the purposes of a pension scheme, whatever the particular form of ownership under which such investments are held for the time being,
“commercial considerations” does not include any contractual provision purporting to exclude or restrict the right of the trustees or managers of a pension scheme to disclose to their beneficiaries the terms of appointment of any person to whom they have delegated any investment functions,
“investments” means investments in relation to which any investment functions are performed,
“relevant independent governance committee” means, in relation to a personal pension scheme that is included in a workplace pensions arrangement, a committee established by the provider of the personal pension scheme to oversee the affairs of the arrangement in the interests of the beneficiaries.””
Lord German (LD)
My Lords, I am pleased to move Amendment 22, standing in my name and those of the noble Lords, Lord Stoneham and Lord Paddick, and the noble Baroness, Lady Bakewell. The amendment follows the theme of this Government’s action in pensions by empowering savers and giving them choice.
I make no apology for tabling a comprehensive and detailed amendment. It is intended to demonstrate the breadth of action required in legislation to achieve a high level of transparency in the operation of pension schemes. I am indebted to ShareAction, a charity dedicated to this aim, for its help and its research.
The amendment provides a general requirement for pension schemes to account to savers for their investment and stewardship decisions; and a right for savers to access meaningful information about how their money is being invested and managed. It is an attempt to set a standard—a floor—guaranteeing savers rights to certain information about how their money is used. In doing so, it aims to rebuild the trust currently lacking between savers and those managing their money.
The pensions sector is not a perfect market: most savers do not actively choose their pension provider; it is chosen by their employer. Historically, there has been very little switching between products, and by the time poor performance is apparent, usually at the end of the saver’s working life, it is too late for the saver to act in a way to send a signal to the market. Savers feel disconnected from their money and this exacerbates these market imperfections. A disconnected saver is less likely to scrutinise the way in which his or her money is used. The buyer side of the market will continue to be weak, providing no real scrutiny of the industry. We have seen the impact that this has had on the fees and charges that people’s pensions have been subjected to.
The report of the now noble Lord, Lord Myners, in 2001 observed that good governance and accountability are mutually reinforcing. I agree. The pensions sector may never be dominated by a majority of active and engaged savers but, the more savers are active and informed, the better the market will work.
Under the current system, savers have relatively few rights to information about their money. This is partly a result of outdated legal concepts. Much of pension law is based on laws that governed a world of private family trusts. More rules were designed for a world dominated by final salary pension schemes, a world that is fast diminishing.
In today’s system, millions of people are automatically enrolled into defined contribution schemes, and now, potentially, into defined ambition schemes. Under these schemes, the saver takes the investment risk. It is therefore appropriate that such savers have rights to know how their money is being used—which answers the second of the two key questions which savers ask. The first is: “How much money will I get back?”. The second is: “Where does my money go?”.
Currently UK pension schemes are subject to a number of disclosure requirements. However, these do not translate in practice into disclosure of information useful to the average saver. In summary, the current rules, depending on the nature of the scheme, require disclosure of a scheme’s investment policy and annual reports on investments, including high-level information on investment performance. In practice, savers are often sent information that is technical, inaccessible and does not show how high-level policies are enacted.
The UK stewardship code is one mechanism that was designed for increasing transparency in the financial sector. The code covers issues such as how investors are engaging with companies and how they vote in investee companies. While the Financial Conduct Authority requires asset managers to disclose their commitment to the stewardship code, no equivalent requirement is placed on asset owners such as pension funds and insurance companies. Very few pension funds sign up to the code. This means that there is no real impetus for pension schemes to pass on to savers any information that may be disclosed to them by their asset managers. There is a missing link in the chain of accountability back to the ultimate saver.
The rights created by this amendment would apply to all pension schemes. It encompasses the trustees or managers of occupational pension schemes and the managers of personal pension schemes. In summary, the amendment would place the trustees or managers under a general requirement to account to their beneficiaries for all actions taken in the performance of their investment functions and to act transparently in that regard. It would require trustees or managers to comply with any reasonable request for information —by “reasonable”, I mean not just that it should not involve disproportionate cost but where information is not more readily available—made by or on behalf of a beneficiary, including by an independent governance committee, about decisions being made in key four areas: first, the selection, retention and realisation of investments; secondly, the stewardship of investments; thirdly, the selection, appointment and monitoring of investment managers and other agents to whom powers are delegated; and, fourthly, the selection and monitoring of investment funds in which the trustees or managers have invested or are considering investing.
Savers should have information to make informed decisions, and information to enable them to fully understand their own position. For example, we all know that when people have concerns about certain corporate practices, they may choose to alter the way in which they interact with those corporations. For example, after the Rana Plaza factory disaster in Bangladesh, many people chose to boycott companies that used the factory, and similar ones, to produce goods. Having taken this stance, many people would have been horrified to learn that the money they saved in their pension each month was actually invested in those companies. Another example is the fact that although many people are concerned about the health risks of smoking, those same people might well be surprised to find that a portion of their savings each month is being invested in tobacco companies.
This amendment would plug that information gap. It would allow a saver to request information about whether their pension was invested in a particular company or industry sector. What can the saver do with this information? Under the terms of the amendment, they can ask their pension scheme what, if anything, it is doing to influence a company on a particular issue. If a saver is worried about excessive executive pay in companies, he or she can ask the pension fund how it voted in respect of pay packages in companies. If the scheme has done nothing in respect of the issue, perhaps by abstaining from voting or not engaging with a company about it, a dialogue has been started. The pension scheme trustees or managers may not agree that action is needed, but on the other hand they may agree. If other savers have approached them on the same issue, this may prompt them to review the stance, or lack of stance, they have so far taken, and to ask questions of the company or even to consider their exposure to the company—of course, being mindful of their fiduciary duties to their members. Thus, through empowering the saver, we have developed a mechanism for companies to be held to account that works with the market.
This increased transparency would build on the work the Government have done to improve oversight of companies. The UK stewardship code has been adopted by the majority of asset managers, and it requires reporting on stewardship activities. It recognises that transparency is key to corporate accountability. But as I said earlier, the code has not been widely adopted by pension funds, and very few pension funds relay the information they receive from their managers to the ultimate saver. The amendment would allow a saver to receive this information on request. The release of such information to the saver would not mean that the saver would now move his or her money, as very few pension savers are realistically able to switch products. The effect is much subtler, but just as powerful. In a system where there is no real exit for the saver, the information has given him a voice.
Parallels can be drawn with the move towards increased transparency on fees and charges in pension schemes. No one is suggesting that savers should not be given greater information on fees and charges applied to their pension savings because they cannot act on it. Instead it is recognised that there is a more subtle, wider benefit in this information being made public: pension providers may be held to account and savers may be better engaged with their savings.
Transparency is a critical part of reconnecting savers with their savings. This amendment seeks to place in statute the actions needed to give effect to this very important principle. I beg to move.
Baroness Drake (Lab)
My Lords, I am pleased to support Amendment 22, moved by the noble Lord, Lord German, and I commend him for tabling it. The thrust of the amendment is designed to achieve two things: to provide a lever for achieving greater engagement of savers with the investment of their savings, and to help correct failings in the pensions market where the demand side is so weak. It would do this by giving pension savers the right to ask for details on how their money is invested and managed; by compelling occupational and personal pension schemes and investment intermediaries to provide information; and by leveraging transparency to increase scrutiny over those who make the investment decisions.
We know that pensions are not a normal market. Auto-enrolment is designed and built upon the principle of inertia, for a population of savers who do not engage. As the noble Lord said, savers do not choose a product; the employer does. The saver is restricted to a binary choice—to stay in, or to opt out and lose the employer contribution. Savers cannot easily move their pension savings.
These features strengthen the importance of holding agents to account, because that very inertia allows conflicts of interest to flourish. It is difficult for savers on their own to secure improvements in transparency and accountability. The Government need to provide a legislative push. Saver disengagement is a concern for two reasons. First, it helps to feed serious market failings. Secondly, it undermines effective shareholder engagement with the governance of companies in which their money is invested.
When auto-enrolment is bringing 10 million-plus new savers into the pensions system, the case for greater engagement and scrutiny becomes even more compelling. People avoid complexity but, as evidence from both the NAPF and ShareAction reveals, that does not mean they are not interested in what is happening to their money. They want their pension providers to invest in companies that behave well. Why should savers not know how their funds are engaging with companies on important issues, and how shareholder votes are cast at AGMs?
Increasingly, shareholder responsibility is exercised through pension funds and investment intermediaries. We know from what happened in 2007 and 2008, and from the findings of the Kay review, that this model of shareholder engagement can be inefficient for the economy as a whole.
Pension savers do not know how, if at all, their schemes are interacting with the companies in which they invest. As John Kay observed in his review of UK equity markets, such markets are no longer a significant source of new capital for businesses. Rather, their function is to allow savers to share in the success of business. The corporate governance function of shareholders is therefore not a sideshow but a core part of the purpose of modern equity markets. Increasing transparency, scrutiny and saver engagement is good for the saver, the pensions market and the efficiency of the economy.
As a consequence of the Kay review, when seeking to clarify the fiduciary duties of trustees, the Law Commission confirmed that trustees can take into account non-financial factors such as improving members’ quality of life. However, they can do so only if they meet two tests, one of which is that trustees should have good reason to think that scheme members would share the concern. Arguably, that assumes that there is some form of dialogue or engagement between funds and savers. That does not exist now and, given savers’ limited rights to information and the complexity of what they receive from schemes, the amendment would help to build up such engagement. Savers could ask how their money was invested and how rights attached to those investments were being exercised. Savers questioning funds will help to hold investment intermediaries to account and give funds a better idea of the view of their members.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I, too, support Amendment 22. Savers’ distrust of the pensions industry threatens the success of automatic enrolment. It would be a great disappointment if people chose to save less or to opt out of pensions saving entirely because they have no confidence in those who are managing their money. One key mechanism for improving engagement and building public trust in pensions is increasing transparency, as has already been said. That means letting people know what is happening to their money and helping them to see how their retirement savings connect with the wider economy—not least through being invested in companies that they know well in their daily lives as consumers, employees and local residents.
As well as supporting automatic enrolment, the rights proposed under this amendment would further the Government’s important work since the financial crash of 2008. The Kay review, commissioned by the Secretary of State for Business, Innovation and Skills, sets out a clear challenge to industry and to government to build a culture of trust and confidence within the investment sphere in order to counter the short-termist behaviour that contributed to the crash. Increasing the information that savers can obtain about their money will help to build this culture of trust. An important outcome of the Kay review was the Law Commission being asked to clarify the law around fiduciary duties in the investment sphere. In so doing, the Law Commission clarified that trustees can take into account non-financial factors if they have a good reason to think that the scheme members share a particular view and their decision does not,
“risk … significant financial detriment to the fund”.
Arguably, this assumes that trustees will have some sense of the views of scheme members and will engage in some sort of dialogue between savers and trustees. This cannot happen easily if savers continue to be cut off from important information about their money.
Finally, enhanced accountability to shareholders has been a key plank of this Government’s work to promote more responsible corporate behaviour. We have seen this in the introduction of shareholder votes on executive pay. However, many of the largest shareholders in UK companies are pension funds and insurance companies holding money on behalf of ordinary savers. While shareholder votes may have increased accountability between companies and these institutional shareholders, there is no equivalent mechanism in place between these institutional shareholders and the savers. The amendment is a step towards bridging the gap between these institutions and the people whose money they hold. The rights created would increase the potential for scrutiny of their decisions. This is a logical continuation of the move towards greater corporate accountability.
As my noble friend Lord German has said, the amendment covers four specific areas where transparency can be improved. First, there is the selection, retention and realisation of investments. In practice, a saver could ask his pension scheme what investments it holds in order to understand where his money is. That is key if the saver is to understand the risks to which his investment is exposed.
Secondly, there is the stewardship of investments. Stewardship by shareholders plays an important role in ensuring the long-term success of a company. It involves responsible management of an investment in a company and taking an interest in how it performs in the long term, both financially and in areas beyond the financial. It can be contrasted with the type of short-termist trading of shares which led to the financial crisis. It is very important for pension savings that there is this type of long-term interest in companies, given the long time horizon over which pensions are saved.
For institutional investors, such as pension funds, stewardship will cover practices such as exercising their rights to vote in companies and engaging with companies over corporate governance issues such as high pay and board diversity, and other corporate actions such as the use of sweatshops in their supply chains or the risks associated with expanding into emerging markets. A saver has an interest in knowing how, if at all, his pension scheme is influencing company practices. These practices have an impact on the value of his or her savings and on the way in which major companies influence the world in which he or she lives, and into which they hope to retire.
Thirdly, there is the selection, appointment and monitoring of investment managers and other agents to whom the powers are delegated. This amendment recognises that trustees and managers often delegate their investment and stewardship power to other agents. This delegation does not absolve trustees or managers of responsibility for their agents’ activities. The ways in which agents are selected and the terms under which they are appointed and monitored are all-important. Where trustees or managers take stewardship and engagement with companies seriously, they will ensure that their agents take these issues seriously too. This will be reflected in the way that they choose and monitor managers and the mandates they give those agents.
Fourthly, there is the selection and monitoring of investment funds which are operated by insurance companies or other institutions, and in which the trustees and managers have invested or are considering investing. The amendment also recognises that for insured schemes, the main investment function of the trustees or managers is the selection and monitoring of investment funds. For savers invested in these schemes, it will be important to know how trustees and managers understand the investments that they are making and whether they seek to exercise any direction over these funds.
Lord Bradley (Lab)
Because of the lateness of the hour and the excellent way in which the amendment was introduced by the noble Lord, Lord German, and supported by my noble friend Lady Drake and the noble Baroness, Lady Bakewell, and as all the arguments have been clearly laid out, it would not be of any great benefit to the Committee if I tried to elaborate on this proposal. Suffice it to say that we would support any proposal such as this which improves transparency for the public.
Lord Bourne of Aberystwyth (Con)
My Lords, I thank noble Lords who participated in the debate on the amendment and my noble friend Lord German for moving the amendment so ably. The Government are committed to improving transparency in pension schemes and have a robust and thorough work programme during 2015 and 2016 to do so.
My noble friend Lord German has raised a very important issue that this House has long recognised: the need for transparency in pension schemes. I assure noble Lords that this is an issue that the Government take very seriously. Indeed, in their publication Better Workplace Pensions: Putting Savers’ Interests First on 17 October 2014, the Government committed to improving the governance of workplace pensions and transparency surrounding the costs and charges which members are faced with, including better information about transaction costs related to buying and selling investments. I know that this amendment goes much beyond that but it indicates the direction of travel.
Noble Lords will also be aware that this Government have recently consulted on draft legislation which, subject to parliamentary approval, will introduce from April this year new requirements on trustees to improve the governance of trust-based schemes. Trustees will be required to demonstrate that they have complied with new standards of governance by completing a statement, signed off by the chair of trustees, annually. Similar rules are to be introduced by the Financial Conduct Authority to require the newly formed independent governance committees to demonstrate that they have complied with such rules for the contract-based side of the workplace pensions market on a similar timescale. The Government intend to build on this first phase of transparency work. We are committed to consulting further, later this year, on how we propose to introduce transparency on additional costs and charges. The Financial Conduct Authority will also be consulting on similar new requirements in relation to workplace pensions.
Regulations and rules made as a result of the Pensions Act 2014 will significantly improve the transparency of costs and charges in pension schemes and lead to members receiving better value for money. However, I recognise that the proposed amendment would go much further than this. It seeks to place requirements on trustees and managers of occupational and all other personal schemes to provide members with detailed additional information relating to their schemes’ investment functions, over and above what is already required, and additional to the improved transparency of costs and charges information that we intend to introduce from April. The amendment, were it to be accepted, would require trustees and managers to provide investment-related information to members on request where that is reasonable—and there is a rebuttable presumption that it is—which would be additional to existing requirements and would do so before we have consulted with the industry, savers and other interested stakeholders, as we announced we would in our Better Workplace Pensions consultation last October.
Lord German
I thank my noble friend the Minister for that detailed response. What I was particularly hoping to hear, as noble Lords may imagine, was where we are going next and what developments we can see being taken forward. If I may try to interpret what my noble friend the Minister has said, it is that we are moving forward on costs and charges and that is the direction of travel; that this is additional, although there may be some overlap with what is being proposed; and that at some stage in 2015 there will be a further consultation which will encompass many of these issues, including the issues raised by this amendment. If my interpretation of what was said is correct, that is fine; it seems to me to be an appropriate next step.
The other area, of course, is about powers. My noble friend suggested that existing primary legislation already has these powers. I should be grateful if he could identify—he may want to do it by a note rather than by trying to give a detailed answer now—where those primary powers lie, under which Acts, so that we can be clear that they cover the range of activities we have been talking about today.
I feel heartened that the Government realise that the costs and charges are a starting point in a much longer journey. I hope that today in your Lordships’ House represents one further step in taking this whole area of transparency further but with a conclusion in mind so that it is not too far away. On the basis that I look forward to the consultation later in the year and to understanding how the powers are derived, I beg leave to withdraw the amendment.
Lord Holmes of Richmond
Lord Holmes of Richmond (Con)
My Lords, it is always a pleasure to speak about pensions. As we have heard today, the Bill provides an opportunity to discuss some really chunky issues in the arena of pensions in terms of guidance, trustee powers, investments and so on. It also gives us an opportunity to look at details and minutiae and perhaps, not to put it too bluntly, to clear some horsemeat out of the statutory food chain. I hope that that is what my amendments might achieve today.
I shall focus on Clause 43 and the whole question of indexation and its inconsistent application to specific types of pension schemes. As you would imagine—it is to do with pensions, after all—it is complicated and detailed and makes your head hurt. I will not go into the minutiae today; if I may, I will write to the Minister with the detailed background to my amendment. Effectively, I would like to achieve consistency across the application of indexation to particular types of pension scheme. To give some history to this, the 1995 Act required certain occupational pension schemes to have indexation applied. Over the years the type of indexation has changed, but for the purpose of this debate we should just consider it to be limited price indexation, or LPI. The 2004 Act removed that obligation for money purchase schemes. The 2011 Act followed on by removing that obligation for cash balance pots. So far, so good.
Unfortunately, there is what I would describe as quite a curious kicker in the 2011 Act: if you have a cash balance pot in a scheme that is contracted out, LPI increases will have to be applied to that, and a member will have to take LPI increases whether or not they want them. If I were a member in such a situation and I were contracted out, I would be forced to take limited price indexation increases, whether or not I wanted them. If I were contracted out for a period and then contracted back in, I would still be forced to take LPI increases, whether or not I wanted them.
Perhaps even more curiously, if I were a member of the scheme, cash balance pot in hand, and I had never been contracted out, but another member, most likely unknown to me and potentially even at a different time from when I was a member of the scheme, was contracted out, I would still be forced to take LPI increases. Even more bizarrely, perhaps, if that member then left the scheme, transferred out or died, I would then get the opportunity to choose whether or not I wanted LPI increases. It seems curious that one’s decisions over one’s pension pot can be so influenced by an unknown other who just happens to have been a member of the scheme and contracted out at a particular time, and difficult to believe that this could ever have been the policy intention. It probably underscores yet again the point that pretty much anything to do with pensions is complicated.
The complication is further added to because it is not possible to remove this horsemeat from the statutory process with regulations. It requires primary legislation. It is why, when Clause 43 was first proposed, there was—I would not go so far as to say excitement—a lot of interest in whether this clause would in fact close this loophole. It gets close but unfortunately again the problem comes whereby, for future cash balance pots, LPI will not have to be applied. Job done? Sadly not. It still leaves a toxic tail that any benefits or rights accrued between 1997 and whatever the commencement date of this Bill is still require LPI increases to be applied, whether the person wants them or not.
On one level I am not suggesting that it is a bad thing of itself for people to have to take inflation-linked increasing annuities. Perhaps it is overly paternalistic to force this; certainly it is inconsistent when you look at the treatment of cash balance pots and money purchase benefits, when in many ways it is really difficult to get a cigarette paper between those benefits, but that is the case as it stands and is set out in Clause 43.
So to my amendments. Amendment 22A would posit a regulatory-making power within the Act which would enable this to be put right. It would also give the space for people to consider whether there was potentially any sirloin within the horsemeat. I do not think there is. Others may, particularly if they focus on rights that have been achieved while that individual member was actually contracted out. I do not think that gets across the line. I think Amendment 22B is far more to the purpose, whereby a new Clause 43 would address this problem, not least through proposed new subsection (9), which would take us absolutely to these sunny uplands which everybody would desire where there is consistency across the treatment of benefits, whichever pot you may have—cash balance or money purchase.
I considered tabling an Amendment 22C—it could best be described as the whole cash balance hog—whereby you would scrub out the end of new Section 51(5B)(c) and replace that with some wording which would in effect state that it was down to the member to choose, irrespective of their contracting out. It would be for the member to decide whether they wanted LPI increases on their pension pot at that point. This seems clear; this seems consistent. Perhaps, and this is the reason why I decided not to table the amendment, it may be too big a leap at this stage but I certainly urge my noble friend the Minister to strongly consider the amendments, not least Amendment 22B. We have had horsemeat; we have had a sliver—perhaps—of sirloin; we have had the whole cash balance hog, at which point I beg to move.
Lord Bourne of Aberystwyth
My Lords, first, I thank my noble friend Lord Holmes for sharing his concerns with us. He is very much the Desert Orchid of the Government Back Benches. He steered us to removing some horsemeat from the food chain in a typically earthy metaphor, although he got mixed up later with “sunny uplands”. However, I will do what I can.
I confirm that the Government are aware of this issue, and we have some sympathy with the points that my noble friend made and the anomalies that he has highlighted. The requirement to index cash balance benefits was removed by the Pensions Act 2011, as he rightly stated, in response to representations from the pensions industry. It was pointed out that the requirement to index money purchase benefits was removed in 2005, and cash balance benefits are very similar in that entitlement is generally based on calculation of a lump sum rather than an income stream. Therefore it was a relatively easy decision to follow suit with cash balance benefits when the opportunity arose. However, the decision was made at that time that we would not disturb contracted-out schemes—they are subject to their own requirements. That was for very good and very technical reasons.
We now accept that in theory that means that there could be members with rights to cash balance benefits that still have to be indexed, and that might be because another totally unconnected member has some contracted-out pension rights somewhere in the same scheme. That does seem odd, but to be honest we have not received any specific representations and we do not know of any particular case of concern. If the noble Lord can bring forward any specific examples of schemes or individuals who have suffered detriment as a result of this issue, it would clearly support the case for change that he has eloquently set out.
We are aware that the Association of Pension Lawyers is also championing this issue but, as I say, until we know the size of the problem, or indeed if there is a problem in the sense of whether there are people suffering detriment, it is difficult to know how to deal with it and what form that action should take, whether it is through this legislation or elsewhere. We need to take account of the changes coming up in April because they will give members more say in how they spend their pension money, so some of the people caught in the situation at the moment could, arguably, decide to take a lump sum then reinvest that in an annuity without the indexation requirement, although admittedly, there will be problems with taxation at the highest level there, according to that particular taxpayer. As I said, if my noble friend Lord Holmes is able to come up with some specific examples of concern, I hope that we will be able to have a continuing dialogue with him and other noble Lords on this subject. However, in the mean time I respectfully ask him to withdraw his amendment.
Lord Holmes of Richmond
I am grateful to my noble friend for that response. I will be happy to provide some examples from my time in practice as a pensions lawyer—a number of examples immediately spring to mind. However, so as not to detain us this evening I will be happy to write to my noble friend with details of those.
This is not the greatest issue on the planet and will not make a huge difference to pensions as we know them, but there are a significant number of situations where it bites and impacts. I cannot envisage a downside to making this change, which is not that tricky to bring about. It needs to be done through primary legislation and this is an ideal, opportune moment to do it.
I accept the point on the changes this April, in that if members take pre-crystallised benefits there is a potential route around that. However, even taking that on board, there is still a significant enough issue that it is very much worth looking at this clause and what we might be able to do. I will be very happy to provide that information and to carry on the dialogue with my noble friend. At this stage, I beg leave to withdraw the amendment.
Lord McAvoy (Lab)
My Lords, we have tabled a clause stand part debate to scrutinise the rationale behind Clause 44 and the likely cost savings estimated by the department. First, can the Minister provide a few examples—or even one example—of how the process for selecting trustees under Section 7 of the 1995 Act operates? It is my understanding that following the removal of the requirement to operate a register, the regulator will appoint trustees for a scheme that has suffered an insolvency through a flexible procurement panel. What is the typical cost of recruiting in this way rather than through a register of trustees and how does this compare to the cost of maintaining that register?
In Committee in the other place the Minister discussed the Government’s Red Tape Challenge, specifically the desire to remove £2 million-worth of regulation on businesses for every £1 million introduced. He also said that the savings that will be made by the Pensions Regulator will be passed on to pension schemes and then on to savers. We are therefore understandably keen to get an estimate of the windfall that awaits pension savers once this clause is passed. What is the saving for pension schemes and can the Minister say whether he can guarantee that this is passed to contributors?
The clause stand part debate is intended to probe these details. I hope the Minister will be able to help in this way.
Lord Bourne of Aberystwyth
My Lords, I thank the noble Lord for his contribution to the debate. Clause 44 fulfils a government commitment which he outlined under the Red Tape Challenge to remove statutory requirements which are felt to be superfluous. This is such an example. He rightly set out that there is already an existing power for the Pensions Regulator to appoint trustees where he can appoint a trustee without reference to the register. Therefore, it would not seem to present a problem that the register goes. I will come back to that issue.
I will clarify a point made by the noble Lord. The Minister who made the commitment about savings was the Pensions Minister in another place. I am sure that if he said it we can underline the commitment. It is not a statement that I or a Minister in the Lords made, but I am aware that any savings from this will be reinvested and we will confirm that in writing to the noble Lord. I understand that to be the position.
I am happy to reassure the House that the regulator is committed to ensuring that any process to replace the register would provide the same level of assurance to members and schemes that an independent trustee appointed to a scheme is fit for the task. That, after all, is the paramount issue. The selection criteria would remain rigorous and transparent. The criteria and processes being published on the regulator’s website, along with the procedures for appointing and removing trustees, would be guaranteed. We will ensure that appointments will continue to deliver the best candidate for the job, given the specific circumstances of the scheme in question.
I think there is little doubt that this register is superfluous and that there is the ability for the Pensions Regulator to draw on an existing pool of trustees without the need for the register. As the noble Lord, Lord McAvoy has highlighted, savings will be reinvested and I will confirm that in writing to him. On that basis, I ask that the clause should stand part of the Bill.
Lord Bradley
“National Employment Savings Trust transfers
In relation to the National Employment Savings Trust, within one month of the passing of this Act the Secretary of State must lift the ban on transfers and the contribution cap.”
Lord Bradley
My Lords, the amendment in my name and that of my noble friend Lord McAvoy would require the Government to lift the restrictions on the National Employment Savings Trust—or NEST, as it is commonly known—within one month of Royal Assent. This includes the ban on transfers and the contribution cap.
The Government’s decision not to lift the contributions limit and bulk transfer restrictions on NEST until April 2017 or to lift the ban on individual transfers in and out until October 2015 is cause for real concern. In his Written Statement of 26 September, the Minister said that,
“the European Commission has considered and approved the modifications to the State aid case for NEST”.—[Official Report, 26/9/14; col. WS 167.]
He can therefore see no barrier to lifting the restrictions that apply to NEST within the timescale set out in our amendment. Crucially, I believe it to be in the public interest for the Government to proceed in such a way.
I cannot understand why the Minister is so reluctant to lift the restrictions. I will highlight all the positive statements made by the noble Lord, Lord Freud, in support of NEST. The noble Lord, Lord Freud, said, in a Written Statement on 26 September, that NEST has proved its value. It now has more than 1.5 million scheme members and works with about 9,000 employers. That number is rising. NEST provides a quality, low-cost pension scheme targeted at low to moderate earners and small employers. Its public service obligation ensures that NEST makes sure all employers are able to engage with their automatic enrolment obligations. On 18 November, the Minister reminded us:
“From June 2015 1.2 million smaller employers—those with fewer than 50 workers—will start to engage with auto enrolment. NEST will be critical in ensuring that these small employers are able to access low-cost pension provision for their workers”.—[Official Report, 18/11/14; col. WS 13.]
I think that all sides of the House agree with the Minister on the crucial role NEST has to play in its target market, and with the evidence that it is performing very well.
It is worth expanding on the NEST success story. As the pensions industry acknowledges, NEST provides best practice standards, which have encouraged the insurance companies to improve their standards. It is low cost for employers and employees. It is simple and cheap to administer. It has high standards of governance. As NEST’s website proudly states, it has an “award-winning investment strategy”. Finally, NEST provides an excellent solution for employers with a high staff turnover, such as the catering and construction industries, because the pots remain and can be paid into by the next employer. Can the Minister confirm that he agrees with this analysis: that NEST has proved its effectiveness and worth? If he does, I fail to understand his reluctance to lift the restrictions.
I agree that there was a good case for having restrictions before it was clear how the market would progress, but these restrictions are no longer justified. The auto-enrolment market is now well under way and NEST has not taken all the business, which had been a concern among some. We should therefore examine the impact of failing to lift the restrictions and caps within one month of Royal Assent, as our amendment suggests. The restrictions to date have meant that NEST has been able to get less of that low and medium-earning pension than it otherwise would have done. If this continues, the effect would be to contribute to the increase in the number of small, dormant pension pots. It may also miss out on the benefits of scale. We debated that earlier.
Banning transfers in and out will be a problem for employers. The Department for Work and Pensions’ research found that more than 80% of employers want one provider. That makes sense: it reduces their administrative burden and means that they can provide their staff with pensions that are easier to understand. The ban means that employers who are thinking about using NEST but currently have a pension scheme of any type will be discouraged from using NEST because they cannot transfer in the pension assets in their current scheme. The Government purport to encourage employers to use NEST but, by refusing to lift the ban on transfers in and out right away, the effect is to discourage employers who currently have a scheme elsewhere.
Baroness Drake
My Lords, I do not want to spend too much time on this. Obviously I am not unfamiliar with the issue of NEST, and the restrictions on NEST. We are now in a position, in 2015, where the continued bans on the transfer into NEST are clearly to the detriment of pension savers. It will be increasingly difficult to mobilise the argument that continuing those bans is in the pension saver’s interest. It denies many people a good home for their legacy savings and is unquestionably increasing the proliferation of small pots, particularly in the SME community. One of the merits of NEST is that it would reduce the proliferation of small pots. It is not benefiting the employers any more, who want the flexibility to use NEST and bulk transfer the accrued pension savings of their existing employees or scheme members, which they are denied. As far as I can see, the main beneficiaries of the continued ban are still predominantly the private pension providers that benefit from restricting NEST’s market proposition.
The Government have dealt with the EU state aid requirements, which no longer pose a barrier. The desire to get NEST to focus on a target market of small and medium-sized employers has been achieved. The auto-enrolment market is well under way. A cursory look at the figures will show that the private providers have secured a very large proportion of the new pension business, which is likely to grow. NEST is hardly tipping the market against them any more.
It is difficult to see why the Government are taking so long to make a change that would benefit pension savers and, particularly, facilitate efficiency among the employers who are bearing the responsibility of having to establish workplace pensions and cannot pick up what may be a preferred position in NEST because they are left having to run an arrangement for the legacy savings of their existing scheme members or employees.
Lord Bourne of Aberystwyth
My Lords, I thank the noble Lord, Lord Bradley, for moving this amendment and the noble Baroness, Lady Drake, for her contribution. As noble Lords will be aware, NEST was established to support automatic enrolment by ensuring that all workers have access to a low-cost workplace pension scheme. Its design, including the annual contribution limit and transfer restrictions, focuses NEST on its target market of low to moderate earners and smaller employers who the market found difficult to serve. Since October 2012, when automatic enrolment began, NEST has fulfilled its role very successfully. I am happy to reinforce the statements made by my noble friend Lord Freud. We think that it has done an exceptional job. It already has more than 1.8 million members and 10,500 participating employers. NEST is doing what it was set up to do—supporting automatic enrolment.
During the winter of 2012 and the spring of 2013, the Department for Work and Pensions undertook a call for evidence. This sought to assess whether there was evidence that the annual contribution limit and the transfer restrictions placed on NEST were preventing it serving the market that it was designed for. The evidence showed that these two constraints were not preventing NEST serving its target market. That said, the call for evidence revealed that the constraints were sometimes perceived as a barrier to using NEST. Smaller employers have limited experience of providing pensions for their workplace. A perception among smaller employers that using NEST is unduly complex could make choosing a scheme unnecessarily complicated. This could damage confidence in automatic enrolment and undermine its aims.
With that in mind and taking account of the evidence, the Government determined that removing the annual contribution limit and the transfer restrictions that we are debating to address the perception of restriction would not be a proportionate response at the time, given the importance of the role that NEST was fulfilling in ensuring automatic enrolment. We conceived that to be its core function and where we thought that it should focus. We therefore concluded that legislation to remove the constraints in 2017 was a balanced approach. I think that it is scheduled to happen on 1 April 2017, which is some two years away.
The noble Lord, Lord Bradley, raised the state aid situation. It is our understanding that we would have to reapply to vary the state aid consent that we have. Bearing in mind that it took us a year to get the original state aid clearance, that is clearly a significant period of time. We will double-check that in light of the comments made by the noble Lord, but I have had that confirmed while we have been debating this matter. We will reassess that, and I will write to the noble Lord and others who have contributed in the debate to confirm that position or otherwise.
Therefore, we consider two issues to be at the forefront of this. The first is that we want NEST to fulfil its core function. We believe it is doing that very well and do not want to disturb that. The second is that 2017 is only two and a bit years away, and we believe it could take a significant amount of time to vary the state aid consent, but we will have another look at that issue. In the mean time, given that I have undertaken to examine that, I ask the noble Lord to withdraw the amendment.
Lord Bradley
Once again, I am grateful to the Minister for his response and that, if there is lack of clarity over the state aid issue, he will look at it and write to me about the actual position, so that we can apply it to the amendment. I hope that he will be able to do that before Report, so that we may consider whether it is appropriate to pursue the matter further. In the light of his assurances on that point, I beg leave to withdraw the amendment.
“( ) in the substituted subsection (2)(a), for “hybrid scheme” substitute “shared risk scheme”;”
“( ) For the definition of “defined benefits scheme” substitute—
““defined benefits scheme” has the meaning given by section 2 of the Pension Schemes Act 2014;”.”
“““collective benefit” has the meaning given by section 8 of the Pension Schemes Act 2014;””