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Oral Answers to Questions
(9 years, 2 months ago)
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Mr Henry Bellingham (North West Norfolk) (Con)
1. What change there has been in the level of unemployment in North West Norfolk constituency since 2010.
The Minister for Employment (Esther McVey)
The claimant count in my hon. Friend’s constituency has fallen by nearly 60% since 2010, to just over 900.
Mr Bellingham
That is encouraging and unemployment in my constituency has come down by a staggering 908 in the past year, giving hope to a large number of families. Following the story in The Sunday Times last weekend, will the Minister tell the House what support her Department is giving to people seeking employment?
Esther McVey
I read the article in The Sunday Times about an episode of “Dispatches” that is being filmed in contact centres. Contact centres do not handle emergency hardship payments, as those are dealt with by Jobcentre Plus. Jobcentre Plus staff are fully trained and no one is sanctioned without being told about hardship payments. Awareness about benefit advances is being raised at the moment, and new posters and leaflets will be coming out in March once claimants have passed on their opinions and worked with the Department to get them right.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
2. What support his Department provides to young people seeking employment or education.
Rehman Chishti (Gillingham and Rainham) (Con)
11. What support his Department provides to young people seeking employment or education.
The Minister for Employment (Esther McVey)
Work coaches offer all claimants tailored support from day one of their claim. Claimants in need of experience are guided towards work experience or sector-based work academies, and those who require more focused training are supported through traineeships and apprenticeships.
Stephen Metcalfe
One barrier to young people seeking employment is that they do not necessarily have the correct skills required to take up the opportunities on offer. Will my right hon. Friend work with colleagues in the Department for Education and across the Jobcentre Plus network to ensure that local schools and colleges are aware of the skills that local employers need?
Esther McVey
My hon. Friend is right and we must make sure that young people are properly equipped for the world of work. I know of an ex-business man who ran a family business in printing. He knew who came through his door, which included young people who he wanted to give a job to, but they needed what people call “soft skills” and I like to call “core skills” for employability. We are working with the Department for Education on a new careers and enterprise company, and through the Inspiring The Future initiative young people are meeting business people to get a feel for what business and employment is all about, and we must support them as best we can. As my hon. Friend will know, we have increased work experience considerably and introduced sector-based work academies to that end.
Rehman Chishti
Will the Minister welcome the initiative that has been set up in my constituency with support from DWP and the local Gillingham football club, along with Medway Watersports, to provide young people with skills and positive experiences to assist them in securing employment or further training?
Esther McVey
I welcome the fact that my hon. Friend is working closely with Gillingham football club and its chairman, Paul Scally, who recently launched that help for young people, which is key. Various community and sports groups up and down the country are helping young people through the flexible support fund, and that should be highlighted. As many people as possible coming together to support young people into employment is key.
Mr David Hanson (Delyn) (Lab)
If things are going so well, will the Minister explain why youth unemployment has risen by more than 33,000 in the last two months, including a 10% rise in my constituency, which is not too far from hers?
Esther McVey
I would like to get the record straight for the right hon. Gentleman because youth unemployment has fallen on the year, and has fallen considerably since 2010 by nearly 200,000. That is down to the work of this Government. There was a small rise of 3,000 in the last month, but the trend for unemployment is consistently downwards and the claimant count has fallen every month for the past 38 months—the Opposition would die to be able to deliver youth unemployment like that.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
This week, at an event in my constituency, young people will be talking about how the world can improve for them, especially in terms of access to work. Why does the Minister think that youth unemployment has been rising while overall unemployment has been falling in recent months?
Esther McVey
Again, I need to correct the record. It would be helpful if Opposition Members looked at the true youth unemployment numbers, which are down on the year and down nearly a fifth since 2010. Opposition Members delivered an increase in youth unemployment of 45%. Please stop scaremongering, get the facts right and go and help young people into jobs.
Stephen Timms (East Ham) (Lab)
I hope the Minister will at least take some note of her own UK Commission for Employment and Skills, which points out that the UK now has German levels of adult unemployment, but eurozone levels of youth unemployment. Some 40% of unemployed people in the UK are under 25. Youth Contract wage incentives failed and were scrapped eight months early last summer. Does she have any new plans to tackle the very high level of youth unemployment—nearly three times the level of adult unemployment—which, as my hon. Friends have rightly pointed out and contrary to what she has been telling us, has gone up in the past couple of months, not down?
Esther McVey
What can I say to Opposition Members? They seem blind to the truth. The fact of the matter is that youth unemployment was going through the roof—there was an increase of 45%—and this Government have brought it down by nearly 200,000 since 2010. Working with businesses, we brought in an array of support, from work experience to sector-based work academies and wage incentives. We brought in a whole plethora of support. Some worked better than others—that is correct—but the aim and the outcome remains: youth unemployment is down by nearly 200,000 since Labour left office.
Stephen Timms
There is not much evidence of soft skills in that answer. The part of the UK where we have seen real progress on youth unemployment has been Wales. Youth unemployment used to be higher in Wales. Thanks to Jobs Growth Wales it is not higher any longer. Is it not now clear that for young people to benefit fully from the recovery that is under way, we need the young people’s job guarantee right across the UK?
Esther McVey
I am afraid it is the right hon. Gentleman who has soft skills. I have core skills in telling the truth: youth unemployment is down 200,000 since he left office. We do not need a job guarantee scheme, which does not work and costs an incredible amount of money. The work experience scheme we brought in is delivering better results at a twentieth of the cost. You bring in Labour, you pay a lot more for a lot less results.
Adam Afriyie (Windsor) (Con)
3. What assessment he has made of the effect of the benefit cap on long-term unemployment.
David T. C. Davies (Monmouth) (Con)
8. What assessment he has made of the effect of the benefit cap on rates of employment.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
The benefit cap is having a positive impact on people’s lives. I believe it is encouraging them to find work. The statistics show that. [Interruption.] Yes, they do. Those affected by the cap are 41% more likely to go into work than a similar uncapped group. It is under this Government that we are seeing long-term unemployment fall to its lowest level since 2009. The employment rate, at 73.2%, has never been higher.
Adam Afriyie
I had good cause this weekend to reflect on where I grew up. It breaks my heart to think that so many people spend such a long time on long-term welfare and state handouts. In Windsor, the number of people claiming benefits for more than a year has fallen by almost two-thirds, to just 70 people. That lifts my heart. Does the Secretary of State agree that we have a moral and social imperative to ensure that people are able to make their way from welfare to work and have a meaningful life?
Mr Duncan Smith
I agree with my hon. Friend. There is a fairness element: before we introduced the cap, about £9 million a year was being spent on fewer than 300 families. When asked, 73% of the public support the benefit cap and 77% agree it is fair for no household to get more than the average working household after tax. It seems like the only group that absolutely opposes the cap is the Labour party.
David T. C. Davies
Does my right hon. Friend agree that our changes to benefits regulations have ensured that record numbers of people are now in work, and that this coalition Government are delivering jobs, prosperity and growth and that the only alternative from Labour Members is more debt, deficit and dole queues?
Mr Duncan Smith
As ever, my hon. Friend puts it succinctly—but that does not stop me answering his question. He is right. There are three figures that are really important. The Minister for Employment, my right hon. Friend the Member for Wirral West (Esther McVey), talked about bringing down unemployment. Under this Government, the International Labour Organisation 12-month-plus employment rate for 16 to 24-year-olds—the hardest to help—is down 59,000 on the year and 16,000 on the election; the 24-month-plus rate is down 30,000 on the year and 2,000 on the quarter; and of those in social housing, never, since records began, have we had so many households in work. That is the real reason for the Government’s long-term economic plan.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
Those on both sides of the House agree that it is important to encourage and support people into work, but under the new benefit cap announced by the Prime Minister, there is not a single three or four-bedroom property that somebody could rent when they need that safety net.
Mr Duncan Smith
I think the hon. Lady is talking about the Conservative manifesto proposal—I am not sure what other cap she could be talking about.
Mr Duncan Smith
She is nodding, but that proposal only brings the benefit cap back in line with average earnings, which are £23,000.
Through the cap, the Government have delivered fairness to the system and an incentive to go back to work, and as a direct result, more people are going back to work than ever before. We are asking people to take responsibility for their lives, just as those who are working and are not within the cap take responsibility for their lives.
Emily Thornberry (Islington South and Finsbury) (Lab)
Would the right hon. Gentleman like to meet a constituent of mine whom I met last week? She has polio, she fell down the stairs and broke her leg, and now she has to have a knee replacement. She is on benefits and has two children. The rent on their property is £400, and the benefit cap is £500, which means they are living on £100 a week. Would he like to meet them?
Mr Duncan Smith
I am happy to speak to anybody the hon. Lady wants me to speak to about this matter. I believe that the benefits system in the UK helps those in the greatest difficulty—there is plenty of access to things such as hardship funds if that lady is having difficulty temporarily after breaking her leg—but if it is the hon. Lady’s belief that a Labour Government would increase spending on welfare, perhaps she could encourage those on her Front Bench to be honest about it and say so.
Mr Frank Field (Birkenhead) (Lab)
4. What the average monthly value has been of benefit sanctions imposed since May 2010.
Esther McVey
The Department does not make an estimate of the amount of benefit withheld as a result of sanctions. The sanctions system is in place to ensure claimants comply with reasonable requirements in order to move off benefits and into work.
Mr Field
Although the Department might not make estimates, outside experts do, and they now calculate that the amount of sanctions applied is greater than all the fines that magistrates courts in this country impose, but a fine in a magistrates court is imposed only after someone has been able to put their case. Might not the Government consider something like a yellow card system so that before a fine is exercised, people have the chance to bring in outside advisers to help them put their case more effectively?
Esther McVey
The Government do not make estimates because they would be wildly inaccurate, like the figures that the right hon. Gentleman has given. That is because only a maximum figure could be given that did not take into account hardship payments, which could be 80%, or that people already had a job, and there would be so many inconsistencies. The last Government—he was a Minister in the Department—did not make such estimates either.
Mr Speaker
No, no. I was calling the hon. Member for North West Leicestershire (Andrew Bridgen) to ask about Question 4. Several hon. Members were on their feet in respect of this question.
Andrew Bridgen (North West Leicestershire) (Con)
Does the Minister agree that it is important for us to acknowledge the role that sanctions play as the ultimate backstop in support of our welfare system, particularly as 70% of claimants say that they are more likely to abide by the rules when they know that their benefits are at risk if they do not?
Esther McVey
Sanctions have been around since the benefit came into being, to ensure compliance, to enable the Government to have a backdrop to the social security they provide, and to enable the support to be matched by work to enable people to go into a job. As the secretary-general of the OECD said:
“The United Kingdom is a textbook case of best-practice on how good labour and product markets can support growth and job creation.”
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
Freedom of information requests to the Department for Work and Pensions have revealed that of the reviews of 49 deaths of social security claimants, 33 called for improvements into how the DWP operates nationally and locally. What changes have been introduced, and how have they been associated with sanctions on claimants?
Esther McVey
As the hon. Lady will know, we are always improving what we do and always making things better. We brought in the Matt Oakley review to look at better communications, and we work with claimants always to ensure that sanctions are applied only correctly. We know that the vast majority of people work within the system. For employment and support allowance claimants, over 99.4% work within the rules, and with jobseeker’s allowance claimants, it is over 94%. It has to work, but we always look to see how we can get it better.
Paul Burstow (Sutton and Cheam) (LD)
Given how poorly served people with mental health problems are by the Work programme, and given the fact that the Minister told me in an answer that the Department does not currently have available to it information about the proportion of people with a mental health problem who are sanctioned, is it not time that the Government did that research and made sure that we had back-to-work programmes to help people with mental health problems?
Esther McVey
We know that over 99.4% people on ESA and with a mental health condition are not sanctioned, so only 0.6% are. Again, we look to see how we work with people; and for very vulnerable people there is clear guidance on what counts as good cause, so they would know how and why they would not be sanctioned. We always know we need to do more. We have various pilots going on that seek better to understand people with mental health conditions.
Mr Speaker
I am reminded of the feeling when one thinks the washing machine will stop—but it does not!
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
Over 143,000 benefit sanctions were imposed in Scotland in the two years from October 2012, and one in four food bank users is using them because of delays in the benefit system. Yet today we read in the Financial Times that the Tories are planning to cut 30,000 jobs from the Department for Work and Pensions if they win the next election, most of them in the nations and regions. Is this not a recipe for further chaos and misery? Do not both claimants and DWP staff deserve better?
Esther McVey
For the sake of brevity and clarity, those figures are not true at all.
Richard Harrington (Watford) (Con)
5. What progress has been made on reform of the Child Support Agency.
The Minister for Pensions (Steve Webb)
I am pleased to tell my hon. Friend that the 2012 child maintenance scheme is now open to all applicants and is delivering a more efficient statutory service, including the option of direct payments, for those who cannot make a family-based arrangement. From January 2015, closure of existing CSA cases began.
Richard Harrington
I thank the Minister and want to ask him a further question. For most MPs starting in 2010, this issue provided a lot of constituency casework for us, and the agency in question was often felt not to be fit for purpose, despite the good intentions in setting it up. What progress have the Government made in dealing with the fraud and error that has been so well publicised as existing in the system?
Steve Webb
We recognise that further incremental reform would not deal with the long and deep-seated problems with the Child Support Agency. That is why we are closing all the cases on the existing system and moving towards a much more streamlined system. To provide one example of the improvements, we now get data direct from Her Majesty’s Revenue and Customs rather than having to wait for non-resident parents to provide payslips, so we have prompt and accurate information to avoid arrears building up.
Sir Nicholas Soames (Mid Sussex) (Con)
May I thank my right hon. Friend and the Government for the substantial reforms that they have made to the Child Support Agency, whose service as it was a few years ago is unrecognisable to us now?
Steve Webb
I am grateful to my right hon. Friend for what he has said. We want to encourage people to sort things out for themselves whenever that is possible, but when they do use the new system, we offer a much better service than we did. For example, we now have what is known in the jargon as a web-based portal. People can log on and see how their accounts stand, and the system is so good that some have likened it to online banking.
Paul Flynn (Newport West) (Lab)
6. What assessment he has made of the potential effect on people subject to the under-occupancy penalty of a reduction in funding for discretionary housing payments in 2015-16.
The Minister for Disabled People (Mr Mark Harper)
We have actually increased the funding for discretionary housing payments to help those who are affected by the removal of the spare room subsidy, and, as the Chancellor announced in the autumn statement, it will be protected in 2015-16.
Paul Flynn
Does the Minister agree with the Child Poverty Action Group, which has said that any degradation of discretionary housing payments will threaten to “cut the parachute cord” that keeps so many vulnerable families from the homelessness and destitution created by the foul bedroom tax? Will he give an absolute guarantee that the payments will be not only maintained in real terms, but possibly increased when necessary, and ring-fenced?
Mr Harper
If the hon. Gentleman had listened to my answer, he would have heard me say that the level of discretionary housing payments relating to the removal of the spare room subsidy would be maintained in 2015-16, as the Chancellor said in the autumn statement. I listened carefully to the hon. Gentleman’s point of order about questions and answers last week. I think that my answer did relate to his question, and perhaps he should have listened to it.
Miss Anne McIntosh (Thirsk and Malton) (Con)
What happens when district councils do not use the whole discretionary housing payment fund? Is it carried over? What steps is my hon. Friend taking to ensure that authorities spend the full amount that they are entitled to spend?
Andrew Gwynne (Denton and Reddish) (Lab)
25. What has the Minister got to say to my constituent Mr Cocks, who has not only lived in his two-bedroom house in Denton for more than six decades, but was born there? This is not a house; it is his home. Last year he qualified for a discretionary housing payment, but he has been refused one for next year. Is this not yet another example of how cruel the bedroom tax can be, given that in a few years my constituent will be exempt from it anyway?
Mr Harper
As I have said, the Government have made discretionary housing payments available to local authorities so that they can take specific facts into account, because they are obviously better acquainted with what is happening on the ground. What I would say to the hon. Gentleman’s constituent is that he should talk to his local authority.
Greg Mulholland (Leeds North West) (LD)
Will my hon. Friend and his Conservative ministerial colleagues stop blocking the Affordable Homes Bill tabled by my hon. Friend the Member for St Ives (Andrew George) and allow it to be passed before the end of this Parliament, so that some of these issues can be resolved?
Mr Harper
I am afraid that the estimated cost of the Affordable Homes Bill is about £1,000 million. As well as having to find the money to pay for it, the hon. Member for St Ives would have to identify the other benefits that would need to be cut to enable us to stay within the welfare cap to which both Government parties and the Opposition have signed up.
Helen Goodman (Bishop Auckland) (Lab)
Each year, local authorities are spending nearly £200 million on adapting properties for disabled people. Then the Government come along and try to move them out of those properties by imposing the bedroom tax. Will the Minister now admit that that is a prime example of Tory welfare waste?
Mr Harper
The hon. Lady still has not found anyone apart from herself to take up that slogan. She will know that £25 million of discretionary housing payment was made available specifically to support disabled people who are in adapted accommodation, so that the local authorities do not have to move them. That money is available, and local authorities should use it for the purpose for which it was intended.
Bob Blackman (Harrow East) (Con)
7. What comparative assessment he has made of unemployment rates in the UK and other European countries.
David Rutley (Macclesfield) (Con)
17. What comparative assessment he has made of unemployment rates in the UK and other European countries.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
The UK currently has the 3rd lowest unemployment rate in the European Union, and it has fallen faster than that of any other G7 economy in the past year. Thanks to welfare reform and our long-term economic plan, businesses are creating jobs, and 1.85 million more people are in work than in 2010. For interest, that is more than the total population of Estonia.
Bob Blackman
The Opposition like to ally themselves to France, so I would like my right hon. Friend to inform the House where we stand in comparison with our neighbours in France.
Mr Duncan Smith
I do recall that the Opposition extolled the virtues of the French Government and what they were doing. It is worth bearing in mind therefore what would have happened if they had followed the French example—which I think they still plan to do. If the UK had the same employment rate as France, employment would be 3.5 million lower in this country. If the UK had the same unemployment rate as France, unemployment would be nearly 1.5 million higher. But there you go—the truth is that every time a Labour Government leave office, they leave unemployment higher than when they arrived.
David Rutley
I welcome the steps my right hon. Friend is taking to create jobs and reduce unemployment, which has fallen by 40% in Macclesfield over the last year. I have recently been on a delegation to Spain where we discussed the challenges they are facing of 25% unemployment and 50% youth unemployment, so does my right hon. Friend agree that it is absolutely vital for the UK to stick to its current course for the years ahead?
Mr Duncan Smith
Yes, I do. This Government—under the Conservative party—with our long-term economic plan, will stick to those plans, so we would continue to see unemployment fall. Spain has taken huge strides in trying to make changes, but they still have more to do, as they said to me, to deregulate the ways in which they work, but none the less they are at least making real efforts to do so, and they look to us for some examples. Our unemployment and employment rates are better, but I would like to think they are trying very hard to get there.
Grahame M. Morris (Easington) (Lab)
May I remind the Secretary of State that the UK Commission for Employment and Skills, which was set up by Ministers, has pointed out that 40% of unemployed people in Britain are under 25? There are 550 unemployed young people in my constituency. Is not the Secretary of State missing an opportunity to rebalance the regional economy, to address the skills shortages and to target resources at those areas that need it the most?
Mr Duncan Smith
Absolutely, but the point I would make to the hon. Gentleman is that I would love for somebody on his side to get up and say, “The economy under Labour crashed with a 6% fall in GDP.” Does he honestly think that had no effect on his constituents? [Interruption.] Since then, we have got unemployment down below 2010 levels and got employment levels up, and we are doing our best to reskill people through work experience and so forth—[Interruption.]—and for all the shouting on the Opposition Benches, they blame everybody else for the crash but they do not give us the credit for the changes and improvements.
Kelvin Hopkins (Luton North) (Lab)
Would the Secretary of State like to thank the former Labour Government—[Interruption.]
Mr Speaker
Order. Mr Hopkins is on his feet, seeking to ask a question in his normally robust but courteous manner, and being shouted down by a Member on his own Benches. That is not satisfactory. I want to hear Mr Hopkins; the people of Luton North want to hear Mr Hopkins, the nation wants to hear Mr Hopkins.
Kelvin Hopkins
I am most grateful to you, Mr Speaker, for that help. Would the Secretary of State like to thank the former Labour Government for keeping Britain out of the euro, which is the principal cause of the devastation of the southern European members of the eurozone?
Mr Duncan Smith
It is a very good thing that we are out of the euro—I am very happy about that. As far as credit is to be given, as the hon. Gentleman knows, I have been opposed to entry into the euro and my party was, under my leadership, absolutely opposed and continues to be so, and I am very pleased about that. May I finish by reminding the House of what even those in Europe say when they look at us? The OECD said of the UK that
“the performance of the labour market has been remarkable!”
That is the point: the rest of Europe says the UK has done better on employment and unemployment than anybody else, and that is down to the Government, thanks to their long-term economic plan. We have got it right; they have got it wrong.
George Hollingbery (Meon Valley) (Con)
9. What progress he has made on the “Not Just For Boys” campaign.
The Minister for Employment (Esther McVey)
With record employment and vacancy levels, the “Not Just For Boys” campaign is intended to encourage young girls and women to consider a career in an industry where they are traditionally under-represented. After just under a month, some of the UK’s and the world’s leading businesses are on board, as are schools, business women, companies such as BT, Microsoft and Diageo and organisations including Opportunity Now, the Construction Industry Training Board and Be Onsite. I could continue, but for the sake of brevity, I will sit down.
George Hollingbery
A recent OECD report made it clear that gender differences among high-performing students remain stubbornly high in science, technology, engineering and maths—the STEM subjects. In 2012, only 12% of women entering university chose to study in science-related fields, compared with 39% of men, with all that that entails for women’s long-term job security and levels of pay. Does my right hon. Friend agree that this simply underlines how incredibly important it is that campaigns such as her “Not Just For Boys” campaign should succeed?
Esther McVey
I do indeed agree with my hon. Friend. The campaign came about after we looked at where the jobs were going to be over the next decade. There will be 12 million jobs in fields such as IT, engineering and manufacturing, yet only 7% of girls were going into those subjects, so we knew that we had to do more—hence the campaign. Businesses came on board, as did women wanting to be role models. The Department for Education should also take some credit here, because there are now 10,000 more girls studying STEM subjects at A-level than there were in 2010.
Nigel Mills (Amber Valley) (Con)
10. What progress his Department has made on the roll-out of universal credit.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
We have begun the national roll-out of universal credit. Those plans are on track, and universal credit is now available in nearly 150 jobcentre areas for single claimants and in nearly 100 areas for couples and families. Universal credit will be available in over 500 jobcentre areas—seven in 10—by the end of the year, and it will be rolled out to all our 714 jobcentres next year.
Nigel Mills
In contrast to some reports today, the staff in the jobcentres in my constituency are looking forward to the roll-out of universal credit because they know the advantages it will bring to local jobseekers. Has my right hon. Friend made a recent assessment of the benefits of universal credit following the roll-out so far?
Mr Duncan Smith
We have indeed. From what I have read of the reports my hon. Friend mentions, every single point made in them is wrong and misleading. We will be making our position clear on that. The analysis that he asks for has shown that the benefits of universal credit are statistically significant. Findings now show that, compared with similar claimants on jobseeker’s allowance, universal credit claimants spend more time looking for work, enter work more quickly and spend more time in work. They also end up earning more.
Dame Anne Begg (Aberdeen South) (Lab)
The roll-out so far has been to specific groups of people with particular characteristics. That is partly because, to put it uncharitably, the original IT system does not work. If I were being charitable, I would say that it worked but with greatly reduced functionality compared with what was originally planned. However, the Department is piloting a digital solution in Sutton, Surrey, and I wonder whether the Secretary of State could tell us how that is going. When are we likely to get the results of that pilot? Can he tell us when the digital solution is going to be rolled out, given that it was meant to be the great white hope for saving universal credit?
Mr Duncan Smith
The IT system is exactly the same system, and it works in all categories. The difference is that we have rightly decided, in accordance with the Public Accounts Committee’s request, to roll this out stage by stage—we have been told that this is the correct way to do it—rather than trying to rush it, as was done with the tax credit system, which crashed. The hon. Lady mentioned the digital solution. Digital development and the online service are merging together, because the live service has many elements that will be used by the digital service anyway. This is a merging of the two services, and we will be reporting on that as we go along. It is successfully rolling out at the moment and expanding at the same time. I would be very happy if the hon. Lady wanted to go and visit it.
Steve Baker (Wycombe) (Con)
22. I congratulate the Government on their agile approach to the roll-out of universal credit. Given that it is expected to come to Wycombe, along with every other constituency, in the course of the next year, will my right hon. Friend remind the House of the advantages that our constituents can expect from it?
Mr Duncan Smith
Apart from the technical changes, the reality is that at the moment when someone falls unemployed then takes a part-time job they have to sign off and go through the whole rigmarole of claiming tax credits with no one talking to them. Under universal credit, they do not sign off. They stay with their adviser, who helps them enormously in negotiating their way through all their job applications. There is therefore a human interface, which is much better and which will help people who are unemployed and who have difficulties. People can look forward to that.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
12. What proportion of people over the age of 50 who have been referred to the Work programme have found work as a result.
The Minister for Employment (Esther McVey)
The objective of the Work programme is to move more people into sustainable employment, and so the available data relate to people’s job outcomes, not starts, which means they have been in work for three or six months. To September 2014, there were 300,410 referrals of people aged 50 and over, resulting in 42,750 job outcomes.
Bridget Phillipson
The Work programme is failing older people, with the figures the Minister has just given meaning that only 13% of people aged 55 to 59 have found a lasting job as a result of the programme. What would she say to the constituents I meet, who are desperate to work and doing all that is asked of them yet feel badly let down by her Government?
Esther McVey
The Work programme is the largest programme of its kind, helping people into work on an unparalleled scale. It is superseding all the expected levels and targets; it is better than anything that has gone before it.
Sir Tony Baldry (Banbury) (Con)
With the Banbury and Bicester job clubs, we seek to help people who are out of work to get back into the world of work, irrespective of age. Am I not right in thinking that 50,000 over-50s who are in work now were not in work last year? So 50,000 over-50s have found work in just the past year, and it is right that we should not write anyone off simply because of their age.
Esther McVey
My right hon. Friend is correct about that. We are seeing what extra support we can give to the over-50s, which is why, with my right hon. Friend the Minister for Pensions, we have brought together the “Fuller Working Lives” document. It is also why we are looking at: how we can do extra IT; how we can do extra CVs and résumés; and how we can have older worker champions going into business to really sell the benefits of older employees, because it is key that they should be there to share their experience.
Fiona Mactaggart (Slough) (Lab)
Can the Minister explain why the Work programme works less well for women over 50 than for any other group in the community? According to her Department’s own figures, just over one in 10 women over 50 actually finds work as a result of the Work programme.
Esther McVey
I am not really sure where the hon. Lady has got her figures from. I have the figures in front of me and the one in 10 would refer to the number of employment and support allowance new claimants who found lasting work—that compares to a figure of one in 25 when they first joined and is well above the expected average, which would have been about one in 14. But we must remember that these people are some of the most difficult and hardest to help into work, which is why we have put this in place to support them. [Laughter.]
Nick de Bois (Enfield North) (Con)
When the Minister joins me on Wednesday in my constituency for her meeting with employers at my jobs fair, she will learn that many of them have started and wish to continue apprenticeships for the over-50s. Does she see a role for the Government in extending the programme to over-50s, with sufficient demand?
Esther McVey
I do indeed, and what my hon. Friend is doing there is incredible, supporting people of all ages through job fairs. As there were peals of laughter from Opposition Members, they obviously do not understand how the Work programme works and who goes on it, because it is there specifically to help those who are the hardest to help into work and to give them extra help and support.
Mrs Mary Glindon (North Tyneside) (Lab)
13. How many disabled people have moved into work as a result of the Work programme.
The Minister for Employment (Esther McVey)
The objective of the Work programme is to move people into sustainable employment, and so the available data relate to people’s job outcomes, not starts, which means they have been in work for three or six months. As of September 2014, there were 596,640 referrals for people with a disability indicator and 78,480 job outcomes paid.
Mrs Glindon
What does the Minister have to say in response to the recent Mind report, which stated:
“Current government back-to-work schemes are failing people with mental health problems because they are not built on a proper understanding of why people have ended up out of work and what support they will need to move closer to work.”?
Esther McVey
Mind also looked at the fact that all previous job schemes did not do enough for those with mental health conditions, who are the hardest to help and support. The Work programme tailors support to the individual, looking at an individual’s barriers into work. We have helped thousands of people with mental health conditions into work, instead of writing them off. There is more to do, so we are working and doing extra pilots to see how we can better engage with people with mental health conditions.
Henry Smith (Crawley) (Con)
I was very grateful to the Secretary of State for visiting Crawley last month to see how successfully the Work programme was operating. Will my right hon. Friend join me in paying tribute to the staff of Royal British Legion Industries who deliver the Work programme in my constituency for paying great attention to getting disabled people and people with mental health conditions back into work?
Esther McVey
Indeed I will join my hon. Friend in celebrating the work of the Royal British Legion and all the other charities and voluntary groups up and down the country as they try to ensure that there is a personalised plan and support for people looking for work. They do an invaluable job, and the people who go into such a field have a passion for getting people into work.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
19. One of the greatest disabilities that stops young people getting a job is autism. Is the Minister aware that autism is predicted to cost this country £32 billion a year? Will she stop for a moment being the “hard-hearted Hannah” of the Front Bench and be a little more compassionate about disabled young people looking for work?
Esther McVey
I understand a lot about autism and the extra support, help and work that we need to do. That is why the Secretary of State and I introduced the campaign, Disability Confident, which reaches out to employers and says, “Listen to the needs of the people and find out what we can do and how we can best work with these people.” I do hope that the hon. Gentleman’s comment was not sexist, as I have had very many such comments from the Opposition Benches.
Stephen Mosley (City of Chester) (Con)
One highlight from my first term in Parliament was meeting a gentleman who had spent 10 years out of work on disability benefits because of depression. Through the Work programme, he got a full-time job. Does my right hon. Friend agree that the Work programme can give disabled people hope and opportunities for the future, whereas, in the past, they were left on benefits for life?
Esther McVey
I totally agree with my hon. Friend. What this is all about is understanding how we can help people, especially those with disabilities, and getting them into work. I am glad to say that, over the past year, employment for people with disabilities has risen by 141,000. Nearly half a million people with disabilities have set up their own business. That is what a Conservative Government and a coalition Government can do.
Kate Green (Stretford and Urmston) (Lab)
A moment ago, in response to my hon. Friend the Member for Houghton and Sunderland South (Bridget Phillipson), I heard the Minister say that the Work programme was exceeding all its targets. Just 7% of those on employment and support allowance in the Work programme have got into jobs, compared with the tender document that said that, by year two, a 15% success rate would be achieved. The programme is not achieving even half that. Meanwhile, hundreds of thousands of people are stuck in a queue waiting for a work capability assessment with no idea when they will be reassessed. The Access to Work programme, which should help people get into work and get on at work, is supporting fewer people today than when Labour left office in 2010. It is no wonder that the bill for disability benefits is set to be as much as £10 billion higher, according to the Office for Budget Responsibility. Is the Minister satisfied with that catalogue of failure and waste?
Esther McVey
Once again, let me give the Opposition the latest and correct figures. One in 10 of ESA new claimants has found lasting work, which is above anything achieved in the past. What we expected was a level of one in 14, which was already there. Disability employment is up by 141,000 in the past year, and it now stands at more than 3.1 million. We are supporting disabled people into work and into education, and we are proud of our record.
Meg Munn (Sheffield, Heeley) (Lab/Co-op)
14. What assessment he has made of the performance of the Health and Safety Executive in reducing road traffic accidents at work.
The Minister for Disabled People (Mr Mark Harper)
The Department for Transport leads on specific legislation relating to road safety, but the Health and Safety Executive does work with the Department for Transport and its agencies to produce joint guidance on driving at work. I understand from statistics produced by the Department for Transport that, in comparison with other countries, the UK remains one of the road safety leaders in the world.
Meg Munn
More than three times as many people die when they drive for a living as they do in any other workplace. It is estimated that 20% of accidents are caused by sleepiness. Is it not time to use the expertise that the HSE has used so well in other workplaces and apply it to people who drive for a living, and reduce the death toll from driving?
Mr Harper
I know that the hon. Lady has been interested in this issue for a number of years following a tragic death in her constituency in 2006 involving a driver with undiagnosed sleep apnoea. The Health and Safety Executive works with the Department for Transport and the Driver and Vehicle Licensing Agency and their medical teams to ensure that people driving, particularly commercially, are safe. They will continue that valuable work and I know that she will continue to raise the issue.
Julie Hilling (Bolton West) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
Today I welcome regulations laid in this House to prevent migrant jobseekers from the EU from accessing universal credit if they have never worked in the UK. This is a clear reversal of the open door policy of the past under the previous Government and we are now delivering a fair system for those who work hard in Britain. It is also in line with the fact that more British people find jobs that ended under the previous Government. A higher proportion of the jobs are taken by British people, which means that more people are in work. With welfare having fallen in real terms and a fairer pension system, this Government, as we come to a close, have a record of which to be proud.
Julie Hilling
An undercover reporter from “Dispatches” has found that staff in the Bolton universal credit call centre, where the system crashed nine times in 20 days, have been told not to inform claimants about same-day advance payment, the flexible support fund or the hardship fund, even though payments are taking at least five weeks to arrive. Does the Secretary of State agree that that is the correct way for staff to be told to behave and, if not, what is he going to do about it?
Mr Duncan Smith
I did read the reports about that and they are wrong. The people the programme talked to are not responsible for talking to claimants about hardship funds. The people who talk about hardship funds are in the jobcentres and I can tell the hon. Lady categorically—she is more than welcome to look at it—that the advice given to them is explicit. They are meant to engage with people immediately if they have any suspicion or if they are asked about this. We are putting up posters in jobcentres to make sure that those people are aware of that and we are also ensuring that all letters on any sanction contain the elements that are relevant. The programme is wrong on this issue.
Mr Philip Hollobone (Kettering) (Con)
T4. Since 2010, unemployment has halved in Kettering. Which Minister is responsible month on month for announcing the big reductions in unemployment we have seen and will she step forward to the Dispatch Box to accept the thanks of a grateful nation?
The Minister for Employment (Esther McVey)
Obviously, I would like to thank my lovely assistants, who are sitting behind me, in a bit of a role reversal. We are led by the Secretary of State, who 10 years ago wrote about “Breakdown Britain” and “Breakthrough Britain”, and about what a compassionate Conservative Government would want to do by providing a ladder to help people who might have been left in despair to come forward, get a job and prosper. So, to him!
Rachel Reeves (Leeds West) (Lab)
Since our last oral questions, the time it will take fully to roll out universal credit on the basis of the latest figures has increased from 1,571 years to 1,605 years, an increase of 34 years in just 42 days. Let me ask about the effect of the policy. In its original impact assessment, the Department for Work and Pensions said that 2.8 million households would be worse off when the policy is fully rolled out. Will the Secretary of States give us his latest assessment of how many households will be entitled to less support under universal credit?
Mr Duncan Smith
The hon. Lady is nothing if not persistent with a useless question, so I will now attempt to answer. Universal credit will benefit the vast majority of households in this country. They will be better off, they will be in work more quickly, they will have longer terms in work and they will earn more. The latest work that has been done, which is independently assessed, shows that universal credit is a net benefit to society. It saves money for the Treasury and helps people. I would have thought that she would say that she backs it, but every time she gets to the Dispatch Box she spends her time trying to attack it. Does she not think that if she wants to be elected to government she needs to stand a little taller and be a little more responsible rather than just playing cheap politics?
Rachel Reeves
Instead of lecturing me, perhaps the Secretary of State would like to answer the question. The truth, revealed in a written answer by the Minister for Disabled People on 3 February, is that another 200,000 households are set to be worse off under universal credit, because to make up for all the waste and delays on universal credit, the Government are reducing the support that they provide to low-paid workers. Is not the truth that universal credit—the one policy that the Secretary of State had to build a better benefits system and make work pay—is being continually scaled down and pushed back because of his inability to deliver anything that remotely looks like being on time and on budget, and are not the hundreds of millions of pounds spent on universal credit so far just another example of his welfare waste?
Mr Duncan Smith
So there we have it: an Opposition who think that they will govern by innuendo and clap-trap. What we have heard from them is a lot of nonsense from start to finish. Listening to the hon. Lady, I wonder whether she is even the slightest bit prepared for government—although she will not be lucky enough to get into government. We heard another little speech from the shadow Chancellor today, in which he did not lay out one single policy on welfare, the economy or anything else at all. What we have from the Opposition—this is why they will not get into government—is constant nonsense, cheap politics and a total waste of time.
Adam Afriyie (Windsor) (Con)
T5. I think we must all welcome the Institute for Fiscal Studies report last week, which said that household median incomes are almost back to pre-recession levels. Does my right hon. Friend the Secretary of State agree that that demonstrates that sensible, competent economic policies in government make the difference to people on the street?
Mr Duncan Smith
That is absolutely true. While the Opposition moan on about bits and pieces, the reality is that this Government have got on with getting more people into work, getting more stable incomes, and increasing incomes. The cost of living, petrol prices and food prices are falling, and people’s incomes are rising. This Government’s long-term economic plan is delivering a change and an improvement to people’s lives.
Emily Thornberry (Islington South and Finsbury) (Lab)
T3. Last week Maximus told me that a disabled constituent of mine, who had been waiting more than a year for her ESA claim to be processed, could not be given a date on which that would happen, because many more people had had to wait longer. That does not exactly fill us with confidence, given that Maximus is taking over the Atos contract for assessing personal independence payment claims, or could the Minister give us some meaningful assurance that things can only get better?
The Minister for Disabled People (Mr Mark Harper)
To be fair to Maximus, it took over the contract only eight days ago. I remind the hon. Lady that the company that it took it over from, which had well-published problems, was appointed by a Government of the party of whom she is a member. We have been sorting out that problem. Maximus has been in place for eight days and will improve the position, but the hon. Lady needs to give it a fair crack of the whip. It will not sort out all the problems in a week.
John Pugh (Southport) (LD)
T6. Will the Minister tell the House how the outlook for women and their pensions has improved since 2010?
The Minister for Pensions (Steve Webb)
I am very happy to brief my hon. Friend. Tackling the poorer pension outcomes for women has been a long-term priority for him and for me. Our reformed state pension will come in during 2016 and will deliver a fairer pension for women. Millions of women have been automatically enrolled and so will have a pension of their own, on top of a decent state pension—the difference, dare I say it, that a Liberal Democrat Pensions Minister makes.
Mr Russell Brown (Dumfries and Galloway) (Lab)
Responding on the issue of youth unemployment, the Minister for Employment painted a rosy picture, but she needs to take additional action in rural areas, especially those such as mine, where youth unemployment continues to rise month on month and the whole economy is based on agriculture and tourism. What additional support does she think she can genuinely give to areas such as mine?
Esther McVey
We have provided a whole array of support. We measured what was working best and asked how we would roll that out. By working with businesses, we found that the answer was work experience, the sector-based work academies, and apprenticeships; we have introduced 2 million of those—and it is national apprenticeship week. Getting young people into a job is about skills, including employability skills, and we are doing as much as we can.
Andrew Griffiths (Burton) (Con)
T8. My constituents in Burton and Uttoxeter welcome people coming to this country who want to work hard, pay their taxes and contribute, but they are concerned about those who come to take advantage of our benefits system. Will the Secretary of State reassure my constituents that this Government take that seriously, and will he outline what we will do about it?
Mr Duncan Smith
My hon. Friend is right. When we came into office there was an open door policy—people could come in, be unemployed and claim benefits immediately. They could claim housing benefit. Since we have been in office, we have stopped people claiming housing benefit. They must be resident for three months before they can claim jobseeker’s allowance, and after three months, if they do not have a job or the prospect of a job, they will not be allowed to stay in this country. These changes introduced by this Government and the new ones on universal credit today mean that we are serious about this. Labour never was.
Mr Jim Cunningham (Coventry South) (Lab)
Has the Secretary of State seen the Citizens Advice report which shows that many ESA claimants are left with no money and are reliant on food banks after being told that they are too fit to claim ESA and not fit enough to claim JSA? Most have had to wait up to 10 weeks for a decision. Will the Minister look into this?
Mr Harper
If the hon. Gentleman is referring to mandatory reconsideration when somebody is found fit for work, he will know that the average length of time taken to decide one of those is 13 days, not 13 weeks. He will also know that if someone is found fit for work, they are able to claim jobseeker’s allowance and they will receive support from the jobcentre to help them get back into work.
Sir Tony Baldry (Banbury) (Con)
T9. In the past five years, how many people have moved from benefits into work? Is there any comparable five-year period since 1945 when so many people have moved off benefits into the world of work?
Mr Duncan Smith
The record now for people moving from benefits into work is remarkable. Some 600,000 have moved back into work. Peak to peak, the figure is over 800,000, and we have many, many more people back in employment. There have never been as many people in work and that number is still growing, with some 700,000 vacancies in the jobcentres every week.
Andy McDonald (Middlesbrough) (Lab)
Some 35% of appellants succeed in overturning erroneously imposed JSA sanctions, yet the Minister denies setting sanction targets or expectations. If that is true, how does she explain such appalling performance statistics—a 35% failure rate that masks untold misery and grinding poverty for thousands of our fellow citizens?
Esther McVey
I have repeatedly made it clear that there are no limits, no levels and no targets for sanctions. That is the case. We ensure that quality is correct so that people get this right. There will be quality assurance targets and measures that are put in place. The figures that the hon. Gentleman quotes are not correct. Somebody might be told that they have a doubt raised against them, and from that doubt, though they have not been sanctioned, 50% will end up never having a sanction, less than 10% will go on to reconsiderations, and much less than that will go to appeal.
Chloe Smith (Norwich North) (Con)
T10. Very good progress has been made both nationally and locally in getting unemployment and youth unemployment down. The answers today show that we should not stop there and put all that at risk. Instead, we should go further. Does the Minister agree that we should be doing even more to help, in particular, young people with disabilities or mental health conditions into work?
Mr Harper
I am pleased to agree with my hon. Friend. I know that she has held her Norwich for jobs initiative, which my right hon. Friend the Employment Minister has had the opportunity to go and see. We are keen to make sure that we improve performance in getting people on ESA back into work, and my hon. Friend will know particularly that we are trying a number of things in the area of mental health to make sure that we are more successful in that area.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
For international women’s day I visited Westgate community college to see the fantastic work that it is doing to improve the skills of women of all ages and backgrounds, but I was told that this Government’s sanctioning policy means that many women cannot feed their children, and also that some women have to come to mandated courses within two weeks of giving birth for fear of losing benefits. Is this how the Government treat women?
Esther McVey
I would like to meet the hon. Lady about these cases because I do not believe they are true. They certainly should not be true because if people had good reason, they would not be sanctioned. People have to take reasonable steps to get a job. We will need to get to the bottom of these cases because that would not be the case. We would not preside over a system where that was the case.
Steve Brine (Winchester) (Con)
The jobless count among 18 to 24-year-olds in my constituency is down 79% since 2010. Does the Employment Minister agree that a degree from a good university is one route into work—and someone who goes to the university of Winchester will be among the 92% who are in employment or further education six months after graduating—but just one route, because one of this Government’s great achievements has been to give young people hope that there are other routes?
Esther McVey
My hon. Friend is quite right. University is one route into work, and if it works for people that is great, but apprenticeships are another route, and this Government have done more than any other to get young people into apprenticeships—there are now more than 2 million apprentices—and into work. I know that my hon. Friend works closely with his university and local businesses to make that happen.
Mr Speaker
We are running late, but this is the last Work and Pensions Question Time of the Parliament and there are two colleagues I wish to accommodate.
Mr Ronnie Campbell (Blyth Valley) (Lab)
Youth unemployment in my constituency is still very high. Unlike some Tory Members, I cannot brag about a 50% reduction in youth unemployment. In fact, I cannot even go to 5%. Will the Minister do something about it?
Mr Duncan Smith
Of course we want to ensure that every young person has a chance to get a job, none less so than we on the Government side and the hon. Gentleman, but he must remember that the reason they are unemployed is that the economy crashed and fell by 6% of GDP, and we have to put that right. What we are seeing now is more young people across the country getting back into work. I believe that this does and will affect his constituents for the better, which is exactly what it is all about.
Duncan Hames (Chippenham) (LD)
Now that the roll-out of universal credit is beginning in Wiltshire, what effect will it have on the identification of children’s eligibility for free school meals, and what conversations has the Secretary of State had with Ministers in the Department for Education on how that will affect the allocation of the incredibly popular pupil premium?
Mr Duncan Smith
In the first instance, we have already agreed with the Department for Education on how that will work. It is set on a series of moments when it will apply the free school meals eligibility. I think that it will actually be better than the present system. With regard to the pupil premium, which is in the coalition agreement and, as the hon. Gentleman rightly says, works successfully, this should have no direct effect on that, other than to improve it.
Speaker’s Statement
Mr Speaker
As Members will be aware, there was a serious breach of security over the weekend. An intruder gained access to the roofs of the Palace on Saturday evening and was arrested in the early hours of Sunday morning. The intruder did not gain access to the inside of the building. I am grateful to the emergency services for their careful handling of the incident. The security authorities expect to be able to produce a full written report tomorrow. The House will wish to know that immediate remedial actions have been and are being taken to address failings in our security arrangements revealed by early analysis of the incident.
Points of Order
(9 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
On a point of order, Mr Speaker. I am known to be a long-term champion of equality for women in our society and at work. During Question Time, only a few moments ago, I referred to the Minister for Employment, the right hon. Member for Wirral West (Esther McVey), as “hard-hearted Hannah”, which I think she thinks was a sexist remark. It was not meant as a sexist remark; it is actually the name of a famous song sung by Ella Fitzgerald. The Minister has a reputation for being a very hard champion of the welfare reforms that this Government have introduced, so I believe that it was a fair comment to make and that it was unfair to call me a sexist. [Interruption.]
Mr Speaker
Order. All I need say is twofold. First, the hon. Gentleman has put his point on the record. Secondly, the way I would prefer to characterise it—I am not arguing with the hon. Gentleman—is that the Minister of State is an extremely robust character who can make her own case with force and skill, as she has done on several occasions today, and indeed at all times. If the Minister, who felt aggressed against and to an extent aggrieved, wishes to speak briefly on the matter, I would of course give her that opportunity.
The Minister for Employment (Esther McVey)
Further to that point of order, Mr Speaker. The reason I want this put on the record is that it is not the first time Opposition Members have been like this to me. John McDonnell came to my constituency and asked people—I know this is unparliamentary language—to “lynch the bitch” live in Wirral West. That is what Labour Members ask people to do in other people’s constituencies. The Opposition have form. [Interruption.]
Mr Speaker
Order. My role is to seek to defuse this. There are strongly held views on both sides. I asked the hon. Member for Huddersfield (Mr Sheerman) to raise his point of order and he did, and I thought it right that the Minister of State should have a right of reply and she has had it. I understand there are strong feelings. Let us try to preserve the courtesies as best we can in the days and weeks ahead. In all sincerity, I thank—and I mean that—both Members for having made their contribution. We will leave it there.
Armed Forces (Service Complaints and Financial Assistance) Bill [Lords] (Programme) (No. 2)
Ordered,
That the Order of 2 February 2015 (Armed Forces (Service Complaints and Financial Assistance) Bill [Lords] (Programme)) be varied as follows:
(1) Paragraphs (4) and (5) of the Order shall be omitted.
(2) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion, at today’s sitting, two hours after the commencement of proceedings on the motion for this order.
(3) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion, at today’s sitting, three hours after the commencement of proceedings on the motion for this order.—(Anna Soubry.)
Armed Forces (Service Complaints and Financial Assistance) Bill [Lords]
(9 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Rory Stewart (Penrith and The Border) (Con)
I beg to move amendment 24, page 1, line 9, leave out “is”
Mr Speaker
With this it will be convenient to discuss the following:
Amendment 25, page 1, leave out line 10 and insert—
“(a) has been a member of the regular or reserve forces in the last five years ending with the day on which the appointment is to take effect, or”
Amendment 26, page 1, line 11, after “(b)”, insert “is”
Amendment 27, page 1, line 13, at end add—
“(4A) (a) The period for which a person is appointed shall be not less than five years and not more than seven years.
(b) A person who has been appointed as Ombudsman may not be re-appointed to the office.”
Amendment 28, in clause 2, page 3, line 15, at end insert—
“(5A) Before making regulations under this section the Defence Council must consult the Service Complaints Ombudsman.”
Amendment 23, page 5, line 15, at end insert—
“(2A) Regulations made under section 340E(1)(b) must specify that in relation to any service complaint which includes allegations of discrimination, harassment, or of being victimised as a result of making such allegations—
(a) where a person is appointed by the Defence Council for the purposes of section 340C(1)(a) or 340D(2)(d) that person must have a proven understanding of discrimination and harassment;
(b) where a panel is appointed by the Defence Council for the purposes of section 340C(1)(a) or 340D(2)(d) at least one member of the panel must have a proven understanding of discrimination and harassment.”
This amendment would require that any regulations made by the Secretary of State must specify that the person, or at least one of the panel members, involved in dealing with Service complaints involving allegations of discrimination or harassment should have a proven understanding of discrimination and harassment.
Amendment 29, page 7, line 32, leave out subsection (2).
Amendment 30, page 7, line 34, leave out from “subject to subsection (2),”
Amendment 31, page 7, line 39, leave out subsection (5).
Amendment 32, page 9, line 25, leave out paragraph (c) and insert—
“(c) provision for the imposition on those to whom reports are sent of obligations of confidentiality in the interests of—
(i) national security; or
(ii) the safety of any person.”
Amendment 33, page 9, line 30, at end insert—
“(aa) accept the findings and recommendations of the Service Complaints Ombudsman.”
Amendment 34, page 9, line 32, leave out “(if any)”
Amendment 35, page 9, leave out lines 35 to 37.
Amendment 36, page 12, line 14, at end add—
“( ) The Ombudsman may report to the Secretary of State on any matter relating to service complaints and the procedure for the handling of service complaints as the Ombudsman considers appropriate.”
Rory Stewart
These very important amendments were tabled by the Defence Committee. We shall not press them to a vote, but we want to explain crisply and clearly why we believe them to be very important. They focus above all on four things: the independence, freedom, power and scope of the ombudsman. I shall briefly go through each of the amendments in turn.
The principle on which the Defence Committee has acted is the need to get the balance right with regard to the very particular needs of military law and military discipline, which we accept are completely different from those in the civilian sphere. The kinds of things that soldiers are required to do are quite different from those required by a conventional employer. It is not necessary to lay those differences out in detail, but military discipline and military law have been quite different from civilian law in a series of important respects for 400 years.
It is important that, along with preserving the independence of the military and of military discipline and military law, we ensure that the ombudsman is genuinely trusted and respected. The first ingredient of that is, of course, the ombudsman’s independence and making sure there are no conflicts of interest, which is what the first set of amendments in this group—amendments 24 to 27—seek to ensure. They would make sure that the individual had not been in the military—either in the regular or the reserves—in the previous five years. That conflict of interest is obvious, so it is not worth trying the House’s patience. Put simply, if someone had been a senior general a month before they became the ombudsman, there would be a potential conflict of interest in the relationships they might have developed, so we think that a five year gap is sensible.
The second ingredient, which is in amendment 27, is to push for the term to be non-renewable. That is also about having no conflicts of interest: as the ombudsman do their job, they should not be perpetually thinking about how to get the job again. Our focus is on ensuring that they do the job clearly and crisply, without worrying about whether they will be reappointed—that is independence.
The second set of amendments, Nos. 28 to 32, deals with the freedom of the ombudsman. The Committee is pushing to ensure that the Ministry of Defence and the Defence Council do not put regulations or procedures in the way of the defence ombudsman or the Service Complaints Commissioner for the Armed Forces that prevent them from doing their job. We are trying to ensure that although the Ministry of Defence can set the parameters within which the ombudsman operates, it is not in a position to micromanage individual procedures. We believe that the Ministry of Defence should consult the ombudsman on regulations. Finally, on the question of power, we do not believe that the Ministry of Defence should be able to use confidentiality as a reason for denying access to the ombudsman, except in two particular cases: the personal safety of the individual and national security. Except in those cases, the ombudsman should have the scope to pursue an investigation.
The third conceptual issue for the Committee is about the power of the ombudsman. In amendments 33 to 35, we argue that the ombudsman’s recommendations should be binding on the Defence Council. The final conceptual issue is about scope, and amendment 36 touches on thematic reviews. In other words, should the ombudsman find a systemic issue—say, repeated examples of bullying—it may think it necessary to conduct a thematic review of the broader issues.
The Committee will not press the amendments to a vote because the Government have so far addressed them in a constructive fashion. We very much welcome the fact that they have accepted our major amendment to allow the ombudsman to look not simply at maladministration but at the substance of cases. We note that the Government, in appointing Nicola Williams, have already taken into account in practice many of the recommendations that the Committee wanted. We note that in the contract negotiations with her the Government have already ensured that the ombudsman appointed has not been in the armed forces during the previous five years—in fact, Nicola Williams has never been in the armed forces—which deals with our amendments 24 to 26. We note that the Government have said that the appointment will be non-renewable, which is our amendment 27. In practice, the appointment deals with the conflict of interests problem, and we understand that the Government will set out measures in regulations to deal with our anxieties about freedom, power and scope.
However, the Committee will of course watch the Government’s performance on such issues very carefully. Given that the Government do not want to agree to the amendments, that they assure us we can trust them and say that we should look at the precedent set by the appointment of Nicola Williams, and that they will introduce individual regulations to achieve all the measures that the Committee want, we will watch them very carefully. The Committee reserves the right to reintroduce the amendments, particularly in the Armed Forces Bill to be introduced in the next Parliament, if we believe the Government have reneged on what at the moment appears to be a commitment made in good faith, to ensure that the ombudsman’s principles are upheld.
Sir Bob Russell (Colchester) (LD)
I am grateful to the Chairman of the Select Committee for the way in which he is setting out its views. Will he expand a little more on the concerns expressed in some quarters about the ombudsman not having any military knowledge and experience? How will she address that problem, if it is a problem?
Rory Stewart
My hon. Friend raised that central question during the Defence Committee’s pre-appointment hearing. We were very pleased that the Committee had an opportunity to meet Nicola Williams and to conduct a pre-appointment hearing with her. We focused very heavily on whether, without military experience, she would feel comfortable in the role. We were very impressed by Nicola Williams. Her arguments and explanations were extremely convincing, she displayed real independence in her role in the Cayman Islands, and she seemed to have the right balance of independence and respect for the institution. We were very happy, as a Committee, to approve her appointment.
To conclude, this matter is very important to the Defence Committee. We are not conventionally a Committee that looks at legislation. The nature of our work is not usually to scrutinise individual Bills, because a great deal of the work of the Ministry of Defence is not connected with legislation. However, we feel that it is very important in the setting up of the ombudsman that Parliament, and the Defence Committee in particular, is carefully involved.
We accept that it is a step in the right direction that the post of ombudsman has gone from thee days a week to a full-time job, and from having five employees to having more than 20. We accept that it is a good move that the Defence Committee has the power to hold an appointment hearing on the ombudsman. We also think it is good that the Government have accepted amendments from the Defence Committee. Aside from the inherent merits of those amendments, it is simply good procedure that in setting up an ombudsman, the Executive listen to the legislative branch and give Parliament and the Defence Committee the chance to influence the procedure. The ombudsman will have trust only if they bring not just the Ministry of Defence but Parliament, the public and institutions such as the Defence Committee with them. On those grounds, I move the amendment, but will not press it to a vote.
Mrs Madeleine Moon (Bridgend) (Lab)
I shall speak briefly to the amendments tabled by the Defence Committee and to amendment 23, which I tabled.
The armed forces, as I frequently tell my constituents, are a closed institution with their own language, dress code and standards. Most personnel live a closed life that is mostly unobserved by society, but which represents the highest values of our society. The armed forces also have their own internal disciplinary system and legal system—AGAI 67. Abuses of the system can remain hidden and have done, as seen in the double jeopardy cases I have discussed in the House and in the Public Bill Committee. Those cases were revealed only because of whistleblowers.
One of the most important things we must accept about the armed forces is that innate to them is a huge desire for justice. Armed forces personnel have a huge recognition of the importance of justice and the importance of people being dealt with fairly. However, papers frequently come through my office that demonstrate that the service complaints system to date has not necessarily been working fairly.
I welcome the changes that the Minister of State, Ministry of Defence, the hon. Member for Broxtowe (Anna Soubry), accepted in Committee. I also welcomed her intervention on Second Reading when she revealed that the issue of double jeopardy would be addressed. I hope we shall have regular updates on the efforts to access the 587 ex-employees, 194 of whom had their service terminated and five of whom had their rank reduced.
Armed forces personnel have limited access to employment tribunals. It is therefore critical that the internal system operates well and gives a sense of confidence to armed forces personnel. We know that the delays are growing. As the number of armed forces personnel decreases, the pressure on personnel increases. The number of people who investigate and adjudicate in the matter of service complaints is also decreasing. As I have said, the creation of the service complaints ombudsman and the changes that were introduced in Committee are the last chance for the armed forces to maintain the current closed system.
Jim Shannon (Strangford) (DUP)
In Committee, the delays for serving soldiers and those employed by the Ministry of Defence in getting their complaints heard concerned me greatly. There are also people who have lost their jobs or who have been suspended—one of my constituents has been suspended for four years on full pay. Will the proposed changes restore much-needed confidence in the process?
Mrs Moon
In many respects that is the critical issue, and I hope the Defence Committee will take an active role in monitoring and adjudicating on whether we need to come back to the Bill and decide whether further changes are necessary. Papers that I received this morning tell me that 74% of the Army’s open service complaints exceed the 24-week deadline—six months—and only 51% of new service complaints in the RAF were resolved in 24 weeks during 2014. In January 2015, the Army had 724 service complaints outstanding from 2013 and previous years. The Navy had 144, and the RAF 165. Those figures are deeply worrying—we are about to introduce a new, complex system with opportunities for the ombudsman to be much more proactive in intervening in service complaints, yet we already have a huge backlog of complaints. I would like the Minister to address whether those outstanding complaints will be subject to the new rules introduced by the Bill, and whether they will be assessed under rules of maladministration. That will be one of the critical deciders as to whether there is confidence for those who have been held in the system and experienced horrendous delays.
Parliament sets the standards that it expects our armed forces to operate to, and it must have confidence that the internal military system works. As I said, Parliament has the opportunity in 2015 to review further the operation of the service complaints system, and to remove control of the system from the chain of command unless we see the changes that we want and our armed forces deserve. Internal papers that come our way suggest that, increasingly, reserves will be used to help to deal with complaints. Will the Minister say how often reserves will be used to sit on panels and change the way that complaints are dealt with?
There are positives to using reserves, because they come with a wider perspective of life outside the armed forces and know how some of the bullying and harassment, and some of the horrendous cases that have come to public attention, would be dealt with in a wider employment setting. That could be a constructive move forward, but it is important at least to be clear about what is happening, whether reserves are being used in that way, and what skills they are bringing to the complaints system and its operation.
There are a number of complaints within the current system such as poor quality entry of complaints into the joint personnel administration system, which is where complaints are held. Indeed, in December 2014 the service complaints wing identified more than 70 service complaints that had not been notified through the unit as a service complaint, and had not been entered on to the system. We therefore do not even know whether we are still getting accurate figures for service complaints. On delay, as I have said, the numbers are growing. It is important that people feel confidence in the system, and that the system is seen as robust and working.
Mr Kevan Jones (North Durham) (Lab)
I begin by thanking the hon. Member for Penrith and The Border (Rory Stewart) and the Defence Committee for their work on the Bill. The Committee produced an excellent report covering some major concerns about the system of redress for members of our armed forces which, I have to say, have been raised for many years. The amendments tabled in Committee and on Report today show how effective a Select Committee can be when it does its job. We covered many of the amendments in Committee, and as the hon. Gentleman said, he is not going to press his to a vote, but some of these issues will need to be looked at in regulations. I note that my hon. Friend the Member for Bridgend (Mrs Moon) said that she would keep a close eye on the regulations, and I am sure that the Committee will as well.
The issue that amendments 24 to 28 deal with has followed me throughout my time in Parliament—I was on the Committee that discussed similar matters when we set up the Service Complaints Commissioner—so I am pleased today that we are moving to where we should have been back then, with an ombudsman with the powers and effectiveness that our armed forces require. On the commissioner’s length of service, the suggestion, which we supported in Committee, is between five and seven years, to give the person time to establish themselves and avoid the situation that we see with many public appointments where the person spends more time in the last few years trying to ensure their reappointment than doing an effective job. For that reason, we will have to consider the time limits for the ombudsman.
When we set up the commissioner, it was argued vociferously, especially by Conservative Back Benchers, that they had to have military experience, but I think the present commissioner has shown otherwise. She has done a very effective job without a service background and has earned the respect of the members of the armed forces she has worked with, and I look forward to the new armed forces ombudsman carrying on that tradition. It is important that the position be seen to be independent and that it gives complainants confidence that individuals cannot use the old boys’ network, as it was called in Committee, to influence the ombudsman or commissioner. Much strength has been gained from having someone, in Susan Atkins, who has done a forensic job and taken the trouble, time and effort to understand how our armed forces work and the cultural differences between them. As those who have dealt with them know, they are very different, have their individual cultures and in the past have differed in their implementation of various forms of discipline.
Under the amendments, the Defence Council would consult the ombudsman before making regulations, which, again, I do not see as a threat; it could help the council and the MOD ensure that regulations have an independent eye cast over them. Just as the Defence Committee has played a role in developing the Bill, so I see a role for it in scrutinising regulations and how it is put into practice. It might be a good idea for it to look back, perhaps in a year or so, to see how it has worked in practice.
Mr Dai Havard (Merthyr Tydfil and Rhymney) (Lab)
My hon. Friend was a signatory to the 2003 report that followed the Deepcut barracks incidents, when the Committee started work on such a system. I pay tribute to him and other Committee members who have worked consistently to get to this situation, and I am sure that the next Committee will be equally diligent in ensuring we go further. Would he agree?
Mr Jones
What—praise myself? Surely not, so modest as I am! I wish to put on the record, however, my thanks to my hon. Friend, who is retiring at the election, for his service on the Committee. I think he has been a member for most of his time in Parliament. He has not only shown a keen interest in the subject, but cares about the issues.
I will develop the point further on Third Reading, but it is good to see this legislation coming into being. Should it have happened earlier? Yes. Do the inerrant conservatisms within the system work? Yes, I think they do. When the idea of having an armed forces Service Complaints Commissioner was brought forward, to hear some people talking about it one would have thought that the earth would stop spinning on its axis if such a person were created—but it has not: it has helped the chain of command and provided greater transparency over the tough decisions that we recognise have to be made. When this Bill comes into force, the same question will arise again—why did we not do this many years before?
Amendments 32 to 36 deal with the issue of whether the ombudsman will have teeth and whether the decisions she takes should be accepted and then enforced on the Defence Council. I said in Committee that we would support the amendments. Time will tell, but I think it would be a brave Defence Councillor or Minister who turned round and rejected a recommendation from the armed services ombudsman. What the Defence Committee wanted to achieve through these amendments will in practice become simply a part of the normal system and the Defence Council will accept the ombudsman’s recommendations.
My hon. Friend the Member for Bridgend makes a good point in her amendment 23, and I pay tribute to her tenacity in pursuing this Bill and to her broader support for ensuring that when things go wrong in our armed forces, individuals get the justice they deserve. Her amendment refers to discrimination and harassment. She makes a good point that it is important for at least one of the individuals on the board to have full knowledge and training in relevant areas. The new ombudsman can look at the issues raised today and assist the armed forces by ensuring that the personnel on the panels have the necessary training and expertise.
We shall not press for a vote on the amendments, but many of the issues that have arisen from them today will be dealt with through regulations. It is important that, in drawing them up, the Ministry of Defence takes into account the clear concerns raised by the hon. Member for Penrith and The Border, my hon. Friend the Member for Bridgend and the Defence Committee. I would not want regulations somehow to limit or put a straitjacket on the operations of the new armed services ombudsman.
I said the same thing when the Service Complaints Commissioner was appointed, and I shall say it again. Our armed forces and the military generally have nothing to fear from this new appointment. It will enhance the transparency we expect and, if it is done properly, it will improve the problem identified by my hon. Friend the Member for Bridgend—that complaints are taking far too long to resolve. In any other walk of life, it would be unacceptable to allow such long delays. As I say, this will help the armed forces. Anyone who has ever dealt with a complaints system or disciplinary procedures knows that the quicker they are resolved the better. This helps to ensure that the system is fair and that, even if individuals do not like the outcome of the disciplinary procedures, they will at least know that their cases will be dealt with quickly and effectively.
I think that the Defence Committee has done a great job, and that the Bill has been vastly improved. I hope that some of the issues that have been raised here can be dealt with in regulations.
The Minister of State, Ministry of Defence (Anna Soubry)
I pay tribute to the Defence Committee for its work, and to my hon. Friend the Member for Penrith and The Border (Rory Stewart) for his sensible comments. I also pay tribute to the hon. Member for Bridgend (Mrs Moon) for her long-standing work, and thank her for her contribution today. I am afraid I cannot thank her for everything, because she came to see me last week and gave me part of her very filthy cold; but, as ever, she spoke with great force, and rightly made it clear—as did my hon. Friend the Member for Penrith and The Border—that Members would be watching the ombudsman’s progress very carefully.
While I am confident that the hon. Lady and my hon. Friend will be back here on 10 May, I do not necessarily have the same confidence in my own return. However, I can tell them that, should I be in such a fortunate position thanks to the support of the people of Broxtowe, I too will be keeping an eye on the progress of the ombudsman, regardless of the Bench on which I find myself sitting. Of course, in an ideal world the ombudsman would not have to do any work at all. Would it not be marvellous if she had no work to do? Unfortunately, however, she will have a great deal of work to do, because we have a system that, as we know, is not performing as it should be.
When I had the great pleasure of visiting Northern Ireland and meeting my hon. Friend—as I now consider him to be—the Member for Strangford (Jim Shannon), we spoke about the Bill and about the complaints system. He reminded me earlier today of the genuine concern that he feels about delay. Under the existing system, we hear all too often from members of all three services that there is too much delay, and that there is no excuse for it.
There are sometimes good reasons for delay. It is in the nature of service life that it may not be possible to find a witness—or even a complainant—for some time, because members of the armed forces may be on operations for at least six months. Someone who is serving on a submarine will be literally out of contact for those six months, or longer. Delay may also be caused by the complexity of a case, especially if it relates to allowances or pensions. However, all too often it is clearly due to the attitude that is taken. Complainants may be told, “I am very busy. I have a lot of other things on my plate. We are putting together a group of people to build a hospital in Sierra Leone. It is a crisis. It is an emergency and it is not going to wait, but your complaint can wait.”
We must change that attitude. A good, expeditious system will deliver justice. I know many people fear that false complaints will be lodged, but an effective system will ensure that only right and just complaints are dealt with, and people will then begin to have confidence in the system.
Jim Shannon
I thank the Minister for accepting what we said in Committee, and for responding to it so positively. We felt that the delays were untenable and unfair, and were creating problems. Does the Minister think that the new system will enable people to have confidence in it, and to believe that, at long last, the delays will be reduced and they will be helped to secure the satisfaction that they seek?
Anna Soubry
I believe that if the Bill passes through all its remaining stages, of which there are not too many, and if we extend the remit of Nicola Williams, in whom we all have confidence, to create the role of the ombudsman—following the passing of amendments in Committee that the Government did not oppose—the system will be hugely improved, and people will have more confidence in it. It also sends out a very clear message to our armed forces that they have got to sharpen up now and absolutely make sure that when somebody makes a complaint, whether it is a more serious and more appalling bullying and harassment complaint—which mercifully are rare; we know there is nothing peculiar about our armed forces that means we have more such complaints than other professions or fields of work—or complaints about allowances or pay or whatever, it is taken seriously and is acted upon not only fairly and justly, but with all due diligence and expeditiously, so we do not have these delays.
Sir Bob Russell
Does the hon. Lady agree that what we are talking about this evening is a continuation of the good work done by the last two Governments through their respective Armed Forces Bills—the hon. Member for North Durham (Mr Jones) and I are, I think, the only two Members who served on both occasions?
Anna Soubry
Yes, I do. Both the hon. Member for North Durham and my hon. Friend the Member for Penrith and The Border have said that we have seen a progression to where we are today, and we must understand and recognise that some think this is a step too far. They think we have gone too far and perceive some threat to the chain of command. I absolutely do not believe that, but things often take time to develop in the ways we want. I am absolutely confident that we have struck the right balance.
Rory Stewart
The question of whether this is a fundamental threat to the chain of command is a central point. Although people are very polite and do not put this about, I know a lot of colleagues and people in the armed forces are concerned that this is going too far. Will the Minister lay out more clearly why this is not a threat to the chain of command?
Anna Soubry
This Bill—it has now been amended and we have accepted the amendments—changes the ombudsman’s remit but not her powers. Somebody who brings a complaint to Nicola Williams can be absolutely confident that it will be thoroughly and properly dealt with, and that she will be in a position to make her recommendations. She has access to Ministers and to others in the chain of command, and can go to them at any time. That chain of command is not under threat because of her. Indeed, I am confident that the creation of the ombudsman will give the chain of command the understanding—the hon. Member for Bridgend or the hon. Member for North Durham made this point—that it has nothing to fear from the ombudsman, nor from a better system, because if complaints are dealt with properly and expeditiously, and fairly and justly, we will have a better team and group of people. This will only strengthen the chain of command’s ability to conduct its business.
Bob Stewart (Beckenham) (Con)
Although we have heard a lot about complaints, may I put it on the record that the chain of command deals very properly with most of the problems in the units for which it has responsibility and that we are talking about only a relatively small percentage of people? I just wanted to make that point, because all we have heard is complaints, complaints, complaints. There are not many complaints from the vast number of people who are dealt with properly by the officers in charge of them.
Anna Soubry
I am very grateful to my hon. Friend for making that point. I thought I had made it, but there is no harm in his repeating and endorsing it. Of course the majority serve without any complaint, but sometimes, as my hon. Friend knows, in any organisation there are bad apples, and even in a modern world there are times when people are undoubtedly bullied, and are undoubtedly the subject of discrimination and harassment; there are times when we get it wrong. The hon. Member for Bridgend knows of a very good example of not bullying or harassment but what she called double jeopardy, where something has been done wrong. That may well be to the detriment of certain people, in which case they are right to raise that complaint and we need good, strong systems. No organisation gets things 100% right, and when they go wrong people must have confidence that their complaint will be dealt with fairly and justly, and that if it is not they can go somewhere else—to the ombudsman, in this instance. Now that we have agreed to the amendments tabled in Committee, it will not only be maladministration that can be taken into account. The merits of the case and the matter of delay will also be considered.
I know that we are not going to vote on the amendments, but I should like to tell the House why the Government resist them. Amendment 23 would require anyone appointed to decide on a complaint or on an appeal that related to harassment, discrimination or victimisation to have a proven understanding of such matters. We all acknowledge that these can be among the more complex complaints, as they involve relationships that have gone wrong in one way or another. However, no record is or could reasonably be kept of those who may have an understanding of such matters so that they could be called upon when required, as the amendment proposes. I understand the principle behind the amendment, and there is no doubt that it is entirely well intentioned, but I cannot agree to it—certainly at this stage—for the reasons I have just stated.
Amendments 24 to 26 would require there to be a gap of five years between a person ending their service in the regular or reserve forces and becoming eligible to be appointed to the post of service complaints ombudsman. The provision in the Bill simply requires that the individual to be appointed to the post should not currently be a member of the regular or reserve forces or of the civil service. Our people will rightly expect the ombudsman to carry out the role with impartiality and professionalism. That person should also of course be demonstrably independent of those whom they seek to hold to account for the way in which complaints have been handled. For that reason, the ombudsman will be outside the chain of command and will have access to Ministers and to all levels of the chain of command whenever he or she deems it necessary. I make no apology for repeating that the ombudsman will be able to approach the chain of command and Ministers at any time, at any level and on any issue, should they need to do so.
Being in offices that are outside the defence estate and recruiting their own staff in line with civil service recruitment guidelines will further reinforce the ombudsman’s independence from the services and from the Ministry of Defence. A further mark of the role’s independence and the security of the post holder’s tenure is the fact that the Bill provides that the post holder’s appointment will be subject to approval by Her Majesty the Queen. Yet another measure of their independence is that the House of Commons Defence Committee will conduct a pre-appointment hearing with the MOD’s preferred candidate.
Our aim is to attract high quality candidates and to get the best person for this important job. These amendments would restrict the field of possible candidates and exclude those who might have recent, relevant experience. We want therefore to retain the flexibility provided under the Bill’s current provisions, and I must stress that any previous armed forces experience can and will be scrutinised and fully assessed for any impact it might have on perceptions of the candidate’s independence. For those reasons, these proposals are resisted.
Amendment 27 would require the length of the ombudsman’s term in office, and a statement that it was non-renewable, to be set out in the legislation. It would require that the ombudsman not be appointed for fewer than five years or longer than seven, and that the term could not be renewed. The amendment’s aim is to ensure that the person appointed to be the ombudsman would not be influenced in their assessment of how the complaints system was operating or, in their investigation of maladministration claims, by concerns about whether they would be reappointed. It also aims to give the ombudsman, and those whom they serve, some certainty about the length of time they would be in post and to make that term of office a reasonable enough length for the post holder to get to grips with the role and to see through changes.
I fully acknowledge all those aims, but I do not accept that those provisions need to be set out on the face of the Bill in order for those matters to be enforced or to give certainty and confidence. The matters have been set out in the letter of appointment for the current commissioner, and we believe that to be the right approach. We want to retain the flexibility to amend those terms of appointment if experience suggests that that might be necessary. The amendment is therefore resisted.
Rory Stewart
I reiterate what the Defence Committee said, which is that the amendments are extremely important conceptual points relating to the independence of the ombudsman and conflict of interest; the power of the ombudsman; the freedom of the ombudsman to operate; and the scope of the ombudsman. We will not press the amendment to a vote at this time. That is a good will gesture to the Government, who have made a concession on an important amendment.
I also wish to take this opportunity to pay tribute to the hon. Member for Bridgend (Mrs Moon), who has been the guiding spirit and soul of this process from the beginning to the end. She has kept the Defence Committee focused and she has kept it honest. I hope that she feels a real sense of achievement at having got through this extremely important amendment.
Mr Speaker
For the avoidance of doubt, if the hon. Gentleman could just say the words that he seeks leave to withdraw the amendment.
Rory Stewart
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 2
Reform of System for Redress of individual Grievances
Anna Soubry
I beg to move amendment 1, page 6, line 28, after “may”, insert “, on an application to the Ombudsman by a person within subsection (1A),”
This amendment clarifies the provision made in new section 340H(1) of the Armed Forces Act 2006 (inserted by clause 2 of the Bill) about the making of applications to the Service Complaints Ombudsman. See also amendment 5.
Mr Speaker
With this it will be convenient to discuss the following:
Government amendments 2 to 6
Amendment 22, page 6, line 37 at end insert—
“() for the purposes of subsection (1)(c)—
“Undue delay” should be considered any length of time longer than one calendar year, or a length of time that the Ombudsman determines constitutes an undue delay in relation to a given complaint.”
This amendment defines “undue delay” for the purposes of paragraph (c) of new section 340H(1) of the Armed Forces Act 2006 (see Government amendment 4).
Government amendments 7 to 21
Anna Soubry
The amendments make the changes to the Bill agreed in Committee and ensure that they work correctly from a drafting point of view. I do not mean to insult or to criticise anyone, but we had to ensure that these amendments had the effect that the majority of the Committee wanted. I also want to make it clear that the Government accept the changes made in Committee and that nothing in these amendments seeks to row back on what the Committee agreed. I hope that hon. Members will accept that, because I have seen all the key players—I now see that my hon. Friend the Member for Beckenham (Bob Stewart) is sitting at the back. He might take offence at that, but I hope that he does not. We have done that quite deliberately so that everybody knows why the amendments have been proposed. They fill in significant gaps left by the amendments agreed in Committee and, in particular, ensure that the ombudsman can make recommendations following an investigation into a service complaint, giving her decisions the necessary teeth.
The amendments agreed in Committee reflect some of the recommendations made by the Defence Committee in its report on the Bill, which was published last October. I am grateful for the Defence Committee’s work on the Bill and it is clear that the changes agreed in Committee now have cross-party support, as they did in the Defence Committee. The Government have listened to the arguments made in Committee and by others on Second Reading and have accepted them. I therefore hope that the amendments will be supported across the House.
The Public Bill Committee agreed that the role of the ombudsman should be extended in three ways. The first was that the ombudsman should be allowed to look at the substance or merits of an individual complaint and not just whether it had been handled correctly by the services. In other words, she should be able to consider not just maladministration. The second was that the ombudsman should look for any maladministration that had occurred, not just that alleged by the complainant. If during the course of examining that complaint she comes across any other maladministration, she should be able to consider that.
Those are changes to the ombudsman’s remit, but it is important to emphasise a point that has sometimes been lost in our debates. The ombudsman will ordinarily become involved in individual complaints only once the consideration of them by the services has finished. It is important to reiterate that if an individual makes a complaint it should go through all the necessary stages and processes and if there is no finding in the complainant’s favour, meaning that he or she feels that the grievance has not been met—that they have not won, if you like—they can go to the ombudsman. If complaints are successfully dealt with by the services, there is no need for those complaints to go to the ombudsman. Most complaints are satisfactorily resolved, as one might imagine they would be in any complaints system.
It is important to make a point because the third change agreed in Committee is to allow the ombudsman to investigate allegations of undue delay, as I said to the hon. Member for Strangford (Jim Shannon) earlier, in three different respects: as part of a maladministration investigation, in relation to an ongoing “live” complaint, and pre-complaint. As I am sure you have worked out, Mr Speaker, I mean that when somebody has made a complaint that has got stuck and has not been got on with, even though it has not been completed, that person can go to the ombudsman. Even before a complaint has got into the system, if it is thought that there has been some prevarication or undue delay, the complainant can go to the ombudsman to unstick whatever is gluing things up.
It is in everyone’s interests to have a complaints process in which roles and powers are clear so that there is no confusion. It is also important that the wishes of the individual remain at the heart of the process, given that this is an individual’s grievance procedure. It is about that individual and his or her grievance. It remains the case that the services will in every case still be left to decide how to respond to any findings or recommendations made by the ombudsman, even in relation to the extended remit that the ombudsman will now have.
We have dealt with the amendments made in Committee with those points firmly in mind and the Government’s amendments today make the necessary additional changes to the rest of the Bill’s provisions, which were left untouched by the amendments in Committee, so that there can be no doubt about the precise scope of the ombudsman’s powers. That is why proposed new section 340H(1), as amended by our amendments, will set out in good strong terms that the ombudsman can investigate the following: a service complaint when that complaint has completed the internal system, making it clear that the ombudsman can look into the merits of a complaint; an allegation of a mishandling of service complaints, including undue delay, when that complaint has completed the internal system, which deals with maladministration; and allegations that a service complaint has been unduly delayed before the complaint has completed the internal system or, as I have explained, that there was undue delay before a service complaint was made.
Bob Stewart
Do I assume that if the Service Complaints Commissioner looks at a matter and says that there is no case to answer, it can finish there, rather than there being a long process? Can the commissioner say, “There is no case to answer; this matter is finished”?
Anna Soubry
If somebody says that there has been undue delay, but the commissioner finds that there has not, she can certainly say so, though at that stage, of course, she would not be looking at the merits of the case. If somebody makes a complaint and goes through the system, and there is no finding in their favour, and then says, “I will now go to the ombudsman on the question of the merits of the case”, it is absolutely the ombudsman’s role to look at whether there is any merit to the case. If she thinks that there is no merit to it, she will not flinch from saying so. I hope that satisfies my hon. Friend.
It is now possible to apply to the ombudsman alleging undue delay when a complaint in the internal system has not been concluded, or indeed when a complaint has not even been made, so it is important that the Bill sets out for the avoidance of doubt what is meant by the internal process having been completed. That is effected by putting the phrase “finally determined” in proposed new section 340H(1); an explanation of the term is provided in proposed new subsection (5). Several hon. Members raised that issue with me before the debate in private—I mean nothing untoward by that. I want to make it clear for the Hansard record that the phrase “finally determined” does not in any way preclude the ombudsman’s looking into the merits or maladministration of a complaint. It is simply there to make it clear that she can do that only once consideration of the complaint by the services through the internal system has been completed, and only when the applicant has asked the ombudsman to investigate in accordance with the requirements of the Bill. The phrase brings clarity.
It remains important for the ombudsman to have a reasonably clear idea of what the applicant wants them to look into, and for investigations to remain focused and proportionate. One of the amendments would insert a new subsection (4)(b) in section 340H, requiring the applicant to specify which type or types of investigation the complainant wants the ombudsman to carry out. This is not an onerous obligation, and it will help to focus the efforts of the ombudsman on what is most important to the applicant. That is connected with the amendment that would insert new subsection (1)(b) in new section 340I, giving the ombudsman the discretion to decide whether to investigate the whole service complaint or allegation, or just part of it.
New section 340H also reflects the change to the ombudsman’s ability to report on any maladministration identified during an investigation of a complainant’s allegation of maladministration. We want the ombudsman to be free to report on any other aspect of mishandling that she may come across, and have amended the Bill accordingly to make this clear throughout the relevant provisions. Our changes provide an essential clarification to the amendments agreed in Committee; those amendments would have required the ombudsman to look for any maladministration in every investigation, whether or not it had been alleged by the complainant. The amendment that we propose to new section 340H(6) clarifies the scope of this new aspect of the ombudsman’s investigative power.
It is equally important for everyone that it is clear what the ombudsman can do on completing an investigation. Her ability to produce a report with findings and recommendations is fundamental to the view that many will rightly have about whether this new role really does have teeth. The Government amendments will also fill a gap that was left when amendments were made in Committee. We would amend new section 340L to make it clear that the ombudsman must, after carrying out an investigation, prepare a report setting out her findings and recommendations. After an investigation of a service complaint, the ombudsman will need to issue findings stating whether the complaint was well founded, and will need to make any recommendations to ensure appropriate redress. The Defence Council retains responsibility for responding to those findings and recommendations, in accordance with new section 340M. The Government amendments also clarify that the ombudsman must set out any recommendations as a result of a finding of maladministration or undue delay.
This group of amendments is a relatively large one, but it is necessary to ensure that the provisions of the Bill are clear. The amendments also ensure that the drafting is coherent and complete, while giving full effect to the amendments agreed to in Committee, which had cross-party support. In a couple of important respects, which I have outlined, they also improve the amendments which were agreed to in Committee.
We could have been, shall I say, a little bit naughty. When we saw what had been voted for, we could have left it there, knowing that it did not do the job that we knew the Committee wanted it to do. We accordingly went to our draftsmen and draftswomen and we have made sure that the spirit of the Committee is now being put into law.
Rory Stewart
Without being too pedantic or too pompous at this point, there is an important procedural point here when we discuss being naughty or otherwise. There is an important conceptual element in setting up an ombudsman, which is showing respect to Parliament, respect to the Committee system—respect to both the Bill Committee and the Select Committee. Rather than getting into the ins and outs of politics, I encourage the Minister to see this as a great success and a great model for the way such things can go forward in the future.
Anna Soubry
I think the hon. Gentleman misunderstands me. We could have played politics, but I absolutely was not going to do that. My officials would not dream of such a thing, of course, but we could have done that because the amendments were not clear. I took the firm view that it was clear what the Committee wanted and that we should do everything we could to put it into effect. There was a good argument for waiting until the next armed forces Bill, but I took the view that that would not be right. It was clear what the Defence Committee wanted and what the Public Bill Committee wanted. That is why the Government have tabled the amendments. We know that that is, in effect, the will of the legislature. I am pleased to see my hon. Friend the Member for Penrith and The Border (Rory Stewart) nodding.
The amendments will give us a Bill and a process that will help our people understand when they can approach the ombudsman, on what matters and at what stage of the process, and they will give the ombudsman the teeth needed to hold the services and the MOD to account. I therefore commend amendments 1 to 21 to the House.
Mrs Moon
Amendment 22, which is in my name, seeks to define “undue delay”. I pay respect to the Minister, who has taken time to meet everyone involved with the Bill. We had considerable discussion on the issue of undue delay and how it could be defined, and we agreed that, although I would not press the amendment today, it was important that there was a dialogue about delay.
There are two things that one can say for certain about the current complaints system: delay is an endemic problem within the system, and everyone is aware of it. It came to the attention of the Committee many times that only 25% of cases are resolved within a 24-week target, and only 26% of complaints made in 2013 were closed during that year. The internal risk register looking at the implementation of the service ombudsman Bill within the MOD stated that there was a high risk that the system would lose further internal credibility if there was continuing media exposure of how powerless the ombudsman is. Rather than media exposure taking place, it is important that the system operates well so that there can be internal confidence.
There is a high risk that the system will continue to fail and that current delays will continue. There is a high risk that service personnel will be let down, damaging their mental health and leading to suicide attempts. None of us wants to see any of that, which is why the Defence Committee has worked as closely as possibly with the Minister to ensure that we move forward in a constructive and productive manner.
In January 2013, 325 complaints had a red flag. By December 2013 that figure had swelled by over 50% to 500. We have seen repeatedly how delay has been used to wear down complainants so that they go away. It is also used as a punishment for complaints being made in the first place.
Members have raised concerns about this being an attack on the chain of command. Let me say that, since the Bill Committee, I have taken time—I have spoken to the Minister about this—to talk to people in the chain of command and to ask them how they feel about the changes introduced by the Defence Committee. Every person I have spoken to has welcomed the changes and not felt threatened by them. They all felt that the changes were right and that they would focus people’s minds and attentions on complaints so that they are not put in a cupboard and regarded as an annoyance, but are seen as one of the parts of the job to be dealt with first, so that the unit operates efficiently and effectively. The bad pennies that exist would be dealt with quickly and a clear message would be sent that bullying and harassment, in particular, would not be tolerated anywhere in the chain of command.
Delay is caused in part by the labyrinthine system that was initially set up by the Ministry to process complaints. In his evidence to the Defence Committee, retired Lieutenant Colonel Jeremy Field railed against the masses of paperwork involved. The abuse of process by those in the chain of command either to propel a dubious complaint or to hold up a legitimate but inconvenient one is also a worrisome cause of delay. Such abuses can have a devastating impact on individual complainants and on their mental health and well-being. When such cases come into the public domain, the system and confidence in it are undermined.
I raised the case of Tom Neathway on Second Reading and in Committee. Another concerning case that I would like to mention briefly is that of Sergeant Major Michael Booley, who was Prince Harry’s flying instructor. He accused the Army of gross mistreatment after a four-year dispute that ended his distinguished career. When reading about the case, it is very worrying to see that the service complaints panel found that Major Graham, who Sergeant Major Booley claimed had been acting deliberately and maliciously against him, was an unreliable witness and that his conduct not only wronged the complainant, but acted against the interests of his employers in the Army. I think that that is the big issue. Where there is bullying and harassment, it is against the interests of the Army, the RAF or the Navy. We must always keep that central to our thinking and our focus when looking at complaints. That is why the changes set out today are so important.
I think that it is important to have some sort of definition of undue delay, but I accept that it might not necessarily need to be in the Bill, or even in regulations. It can be something that the ombudsman sets out herself when setting out the definitions that will guide her judgments. I therefore hope that the Minister will consider and discuss with the ombudsman how we can move that forward.
Mr Kevan Jones
I give the Minister 10 out of 10 for her brass neck, because these amendments were tabled subsequent to her losing the vote in Committee, and the Government do not want to press them to a vote tonight for fear that she might lose again. The amendments are consequential to the major change that took place in Committee, namely that to the nature of the ombudsman. What the Minister originally proposed was a dry institution that would have dealt only with maladministration, but the ombudsman’s role has now been opened up to cover a wider range of complaints. I have been arguing for that for a long time, and the Defence Committee also argued effectively for it in its report.
Anna Soubry
I must say that I thought I had been rather gracious in defeat, so it was a little churlish of the hon. Member for North Durham (Mr Jones)—[Interruption.] He shouts louder than I do from a sedentary position. I have to say that it is to the coalition’s credit that all we are doing in the Bill, with the creation of the ombudsman, has been done in just over four years, while the Labour party did not do it in 13 years.
I want to address amendment 22. I know it is an awful expression, but the hon. Member for Bridgend (Mrs Moon) and I are absolutely on the same page. We know that undue delays are the absolute devil of any system. It is not a widespread problem, as my hon. Friend the Member for Beckenham (Bob Stewart), who has moved to a different place, has quite clearly and properly said, but when it happens, it is a real problem. The attitude is, “Oh, let’s prevaricate. Let’s put up some device. They’ll just go away, or they’ll give up in the end.” We must stop such an attitude, so I completely and totally understand what the hon. Lady is seeking to do. In that respect we are absolutely at one, but not on how we achieve it. I obviously accept the good intentions behind amendment 22, but I shall it because it is not the device to achieve what we both want.
The time taken in progressing a complaint can be affected by any number of events, such as illness, deployment, which I have mentioned, and training. Sometimes the complainant shows a lack of interest, even though the complaint is valued and should be pursued. A complainant might decide not to pursue it for a period but then come back to it, or they might not be going to pursue it and then realise that they should do so for reasons that we can imagine, but often because others have given them support. Of course, the need to find relevant information can also delay things.
It is important for all concerned that no strict definition is applied. If one were, it might deter worthy cases from being raised or constrain the ombudsman’s discretion as to what is in scope. I am one who looks for discretion as opposed to fixed, determined dates or targets. It should be for the ombudsman to set out guidance on what individuals might need to consider if they believe that they have suffered undue delay in progressing their complaint.
This is not a matter for legislation. Putting the advice in the ombudsman’s guidance will ensure that there is the necessary flexibility to adapt it to reflect real experiences. With some complaints, undue delay might be six or nine months. We need that flexibility. That is why it is right to leave it to the ombudsman to set out her—or, in time, his—guidance.
Mrs Moon
To use the horrible expression that the hon. Lady used, we are on the same page. As of 26 January 2015, 1,033 complaints that had been open since 2013 were still unresolved. We are on the same page in that neither of us wants to see that continue. Let us hope that the ombudsman finds a way to deal with such undue delays.
Anna Soubry
Absolutely. I hope that the hon. Lady is comforted by the fact that we are looking at whether the complaints that are already in the system can be brought into the new system. I imagine that long delay is a matter that we will want to bring to the ombudsman’s attention. Again, it all depends on the nature of the complaint and what the circumstances are. The Second Sea Lord, Sir David Steel, made the point to me that he had seen some cases in the Navy that were huge because they were about complicated allowances and so on and so forth.
However, it struck me that the cases that the hon. Lady referred to were not particularly complicated. Those delays were absolutely unacceptable. It is often the person-to-person complaints or grievances that must be dealt with expeditiously. That is in everybody’s interests, not just the complainant’s. The person against whom the complaint is made also wants determination and justice. Not every complaint is well founded; there are cases in which false allegations are made. It is therefore in the interests of the person against whom the complaint is made that it is dealt with fairly, justly and with all due diligence and expedition.
For all the reasons that I have given, I resist amendment 22 and urge everyone to accept the other amendments.
Amendment 1 agreed to.
Amendments made: 2, page 6, line 29, after “complaint”, insert
“, where the Ombudsman is satisfied that the complaint has been finally determined”.
This amendment makes a drafting change in consequence of amendment 9. It clarifies that the Service Complaints Ombudsman may not investigate a service complaint unless satisfied that the complaint has been finally determined.
Amendment 3, page 6, line 31, leave out from “complaint” to end of line 32 and insert
“(including an allegation of undue delay), where the Ombudsman is satisfied that the complaint has been finally determined;”.
This amendment makes minor drafting changes, including a change in consequence of amendment 9. It clarifies that the Service Complaints Ombudsman may not investigate an allegation of maladministration unless satisfied that the service complaint to which the allegation relates has been finally determined.
Amendment 4, page 6, leave out lines 33 to 37 and insert—
“(c) an allegation of undue delay in the handling of a service complaint which has not been finally determined;
(d) an allegation of undue delay in the handling of a relevant service matter.”
This amendment clarifies when the Service Complaints Ombudsman may investigate an allegation of undue delay in the handling of a service complaint or a relevant service matter (as to which, see amendment 6).
Amendment 5, page 6, line 37, at end insert—
“(1A) The following persons are within this subsection—
(a) in a case relating to a service complaint, the complainant;
(b) in a case relating to a matter in respect of which a service complaint has not been made, the person who raised the matter,
and, in relation to a case mentioned in paragraph (b), references in the remainder of this Part to the complainant and to a service complaint are to be read respectively as references to the person and the matter mentioned in that paragraph.”
This amendment makes provision about who may make an application to the Service Complaints Ombudsman for an investigation under new section 340H(1) of the Armed Forces Act 2006.
Amendment 6, page 6, line 37, at end insert—
“( ) For the purposes of subsection (1)(d)—
(a) “relevant service matter” means a matter of a kind about which a service complaint—
(i) may be made, whether or not at the time of the application to the Ombudsman such a complaint has been made, or
(ii) could have been made (but for provision made by virtue of section 340B(2)(c));
(b) the reference to the handling of a matter is to its handling before the making of a service complaint (if any) about the matter.”
This amendment defines “relevant service matter” for the purposes of paragraph (d) of new section 340H(1) of the Armed Forces Act 2006 (see amendment 4) and makes provision about the reference to the handling of such a matter.
Amendment 7, page 6, line 39, after “writing,”, insert—
“() must specify the kind (or kinds) of investigation which the complainant wishes the Ombudsman to carry out (an investigation under a particular paragraph of subsection (1) being a “kind” of investigation for this purpose),”.
This amendment provides that an application to the Service Complaints Ombudsman must specify which type or types of investigation the applicant wants the Ombudsman to carry out.
Amendment 8, page 6, line 40, leave out “the” and insert “any other”.
This amendment is consequential on amendment 7.
Amendment 9, page 6, line 42, leave out from beginning to “a” in line 44 and insert—
“( ) For the purposes of this section, a service complaint has been finally determined where—
(a) ”.
This amendment converts new section 340H(3) for the Armed Forces Act 2006 into a general proposition about when a service complaint is to be treated for the purposes of new section 340H as having been finally determined.
Amendment 10, page 7, line 5, leave out “that”.
This amendment is consequential on amendment 9.
Amendment 11, page 7, leave out lines 7 to 11 and insert—
“( ) The purpose of an investigation is—
(a) in the case of an investigation under subsection (1)(a), to decide whether the complaint is well-founded and, if so, to consider what redress (if any) would be appropriate;
(b) in the case of an investigation under subsection (1)(b), (c) or (d), to decide—
(i) whether the allegation is well-founded, and
(ii) if so, whether the maladministration or undue delay to which the allegation relates has or could have resulted in injustice being sustained by the complainant.”
This amendment clarifies the purpose of an investigation under each paragraph of new section 340H(1) for the Armed Forces Act 2006.
Amendment 12, page 7, line 11, at end insert—
“(4A) The power to carry out an investigation under subsection (1)(a) or (b) includes power to investigate any maladministration in the handling of the service complaint where it becomes apparent to the Ombudsman during the course of an investigation that any such maladministration may have occurred.”
This amendment provides for the circumstances in which the Service Complaints Ombudsman has power to investigate maladministration in the handling of a service complaint (other than any maladministration that the complainant has specifically alleged).
Amendment 13, page 7, line 12, after “application”, insert
“in respect of a service complaint that has been finally determined”.
This amendment is consequential on the amendments to new section 340H(1) for the Armed Forces Act 2006 (in particular amendments 2 to 4).
Amendment 14, page 7, line 25, leave out “investigated an application relating to” and insert
“carried out an investigation under subsection (1)(a) or (b) in relation to”.
This amendment confines new section 340H(8), which prevents the Service Complaints Ombudsman from investigating subsequent applications relating to a service complaint that the Ombudsman has already investigated, to cases where the Ombudsman has carried out an investigation under new section 340H(1)(a) or (b) in relation to the complaint.
Amendment 15, page 7, line 31, at end insert “;
(b) whether to investigate a service complaint, or an allegation, as a whole or only in particular respects.”
This amendment provides that the Service Complaints Ombudsman may investigate a service complaint, or an allegation, in whole or in part.
Amendment 16, page 7, line 44, after “investigation”, insert “under section 340H(1)(b)”.
This amendment is consequential on amendments to new section 340H(1) of the Armed Forces Act 2006.
Amendment 17, page 8, line 43, at end insert
“, and
(b) any recommendations referred to in subsection (2A).”
This amendment requires the Service Complaints Ombudsman to include, in a report under new section 340L, any recommendations required by subsection (2A) (see amendment 18).
Amendment 18, page 9, leave out lines 1 to 4 and insert—
“(2A) Those recommendations are—
(a) on an investigation under section 340H(1)(a) where the Ombudsman finds that the =-service complaint to which the investigation relates is well-founded, the Ombudsman’s recommendations (if any) on what redress would be appropriate;
(b) on an investigation under section 340H(1)(b), (c) or (d) where the Ombudsman finds that the allegation to which the investigation relates is well-founded, the Ombudsman’s recommendations (if any) as a result of that finding;
(c) where, by virtue of section 340H(4A), the Ombudsman finds maladministration in the handling of a service complaint, the Ombudsman’s recommendations (if any) as a result of that finding.”
This amendment provides for the recommendations which the Service Complaints Ombudsman can make as a result of findings on an investigation under any paragraph of new section 340H(1) or by virtue of new section 340H(6).
Amendment 19, page 9, line 5, leave out “(2)” and insert “(2A)(b) or (c)”.
This amendment is consequential on amendment 18.
Amendment 20, page 9, line 8, after “maladministration”, insert
“or undue delay to which the finding relates”.
This amendment is consequential on amendment 18.
Amendment 21, page 9, line 10, after “maladministration”, insert “or undue delay”. —(Anna Soubry.)
This amendment is consequential on amendment 18.
Third Reading
Anna Soubry
I beg to move, That the Bill be now read the Third time.
I thank the members of the Public Bill Committee, who did an excellent job of ensuring that the issues covered by the Bill were thoroughly looked at. The service complaints system is not one of which many Members of this House have first-hand experience. It is therefore to the credit of the members of the Committee that they quickly grasped the key issues behind the Bill. I am very grateful for the contributions that were made from both sides.
In particular, I thank the hon. Member for Bridgend (Mrs Moon) for her involvement in these issues over a number of years. She played a key role in Committee and our debates this afternoon, and I know she feels strongly about the issues she raises. I commend her for her tenacity and for the passion with which she makes her case. I am delighted that she will continue to pursue all those matters and to scrutinise the Bill should it have the good fortune of reaching the statute book. She will not give up on her campaign to ensure that things are done properly by all those who serve in our armed forces, and the Bill is undoubtedly better because of her involvement.
I also thank the hon. Member for North Durham (Mr Jones). There is some rivalry between us, because we went to opposing schools—although not at the same time; he is much younger than I am. I like to think that that is the reason for some of our rivalry in our discourse in the House and Committee. He has approached these matters in a constructive and knowledgeable way. I wish to emphasise that, because he speaks on the basis of knowledge having served as a Defence Minister, and he therefore knows what he is talking about even if we do not always agree. He has done much to ensure that the Bill has been properly scrutinised, which is important in these proceedings.
I thank the Defence Committee and its Chair, my hon. Friend the Member for Penrith and The Border (Rory Stewart). He is no longer in his place, but I am sure he is about somewhere and hopefully he will read this debate. The Committee produced an excellent and detailed report on the Bill last year, which has done much to focus our debates on the most significant issues. I am delighted that my hon. Friend has made it clear that his Committee will continue to do the job that it has been doing over a number of years, to ensure that we have a good, fair, robust complaints system in the way we have identified. In that respect we are absolutely in agreement.
The Bill does two important things: it improves the system for handling service complaints, and—we seem to have forgotten this because it is not contentious, although it is incredibly important—it ensures that we can provide funding anywhere in the world to organisations, notably our great military charities, that support our armed forces community. It is clear from debates on the Bill that there is general agreement about the need to reform the services complaints system, and we all agree on the importance of having a system that is fair, effective, swift when it has to be, and efficient.
Having a robust complaints system is a key part of maintaining morale and therefore ensuring operational effectiveness—a happy crew, ship, team or whatever will work better. That is pretty obvious; unfortunately, it is not always obvious to some, although I hope it will be from now on. It is not a “nice to have” but an essential part of the covenant between our society and those who are willing to lay down their lives to defend it.
As I said, clause 4 has attracted less interest because it is not contentious, although it is important. It will allow us to support organisations that help our armed forces community anywhere in the world, which we all agree is a good thing. The amendments will mean that the proposed service complaints ombudsman will have a wider role than first envisaged. He or she will be able to look at the substance of complaints and at any maladministration in the way it has been handled, not just that alleged by the complainant. The ombudsman will also be able to investigate allegations of undue delay at earlier stages in the process, whether or not a complaint has been made, and that is a good thing.
I will not pretend that this is what the Government initially wanted, but we have listened to arguments from all sides and we have accepted them. I emphasise that on balance I believe that the changes have left us with a stronger and more robust system of oversight with more protections for the individual. The Bill now delivers the right complaints system for our servicemen and women, and on that basis I commend it to the House.
Mr Speaker
I call Mr Kevan Jones: Portland school, as opposed to Hartland school, but both rejoicing in their being in or close to Worksop.
Mr Jones
We at Portland were always better at snowball fighting than Hartland, Mr Speaker.
This is a very important day. The Bill brings into being an armed forces ombudsman, something that is long overdue. I have been involved in this issue since I came to Parliament, both as a member of the Defence Committee and as a Defence Minister in the previous Government. This day will be pleasing to those who have campaigned over many years for a system of oversight and redress for our armed forces. I am thinking of the families of those involved in Deepcut and the recommendations of Mr Justice Blake’s report. People have campaigned over many years to get to this point today.
The Minister asked why the previous Government did not introduce this measure during our 13 years in office. We did: we set up the Armed Forces Service Complaints Commissioner. Did some of us at the time want to go further? Yes, we did. I argued for that very strongly, along with other members of the Defence Committee, including my hon. Friend the Member for Midlothian (Mr Hamilton) who was on the Opposition Whip’s Bench a moment ago. He made very strong representations to try to get to this point in 2006. I have to say that the people who argued against it were the conservative elements of the chain of command and the Conservative Front-Bench team of the time, who said that it would be the end of the world if we even had a Service Complaints Commissioner.
Those same voices thought that this next step would be a step too far, which is possibly why the Government were initially resistant in Committee to the changes. I said in Committee and I say it again now: I do not think there is anything in the Bill that senior members of the chain of command in our armed forces should be fearful of. If we look back to when we introduced the Service Complaints Commissioner, there was an argument that people would be interfering with the chain of command. Nothing could be further from the truth. In fact, what has happened is that senior military personnel now see that the way in which Susan Atkins has carried out the function of Service Complaints Commissioner has added not only to the process of accountability and transparency, but with the recommendations that she has brought forward. I put on record my thanks to her for how she has carried out the job. She saw the limitations that she was acting under right from the start, but like any good regulator she pushed where she could and brought about change within the system.
Bob Stewart
Just to back up what the hon. Gentleman is saying, it is the way Dr Atkins has carried out her duties that has encouraged everyone—even dinosaurs like me—to think that this is a seriously good thing and a step forward. I am delighted to say that the people who, like myself, were against the idea to start with, have been totally converted by the work of Susan Atkins.
Mr Jones
That is the change. I am glad to see dinosaurs still alive and kicking on the Conservative Back Benches, and long may they live.
I wish Nicola Williams all the best in the job she has before her. The Bill sets out a new era, but I think it will be very rewarding for her to ensure that the issues we have raised during the passage of the Bill are addressed.
One of the issues to be addressed, and which the armed forces have to wake up to, was raised by my hon. Friend the Member for Bridgend (Mrs Moon): the delay in dealing with complaints. Most organisations, whether companies, local councils or even central Government these days, would not put up with the delay in dealing with complaints. The armed forces need a performance mechanism to enable complaints to be dealt with simply, quickly and effectively, and the nearer to the source of the complaint the better. Even if they do not like the outcome, at least early resolution avoids the added injustice of people thinking they are being messed around by the system. I just hope that the armed forces, particularly the Army, will take that on board and that we can ensure the speedy resolution of some complaints.
Of course, the perfect position would be if the ombudsman did not have anything to do, but that is not going to happen—there is already a backlog. Over time, however, not only will she be able to suggest improvements to the system, but I hope that slowly we can educate people in the chain of command that a more effective way of dealing with complaints and disciplinary action in general would be a better way forward.
I thank the Defence Committee for its work on the Bill. As I said, it is a good example of a Select Committee—the current Committee and its predecessors over several years—taking a keen interest in a subject, ensuring parliamentary scrutiny and not letting go of an issue. It has kept on pressing for this type of redress system. I also think that the changes made in the Bill Committee have improved the Bill—the Government were wise to accept the amendments, because had we not done that now, we would have had to return to the issue in four or five years’ time—and I wish the Bill Godspeed through its remaining stages. We must support our armed forces not only with our words in the House, but with an effective system that supports armed forces personnel on the rare occasions—as the Minister said, they are rare—when things go wrong and which gives them the justice and support they deserve.
Question put and agreed to.
Bill accordingly read a Third time and passed, with amendments.
Consumer Rights Bill
(9 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
18:25 - The House divided: - Ayes: 353 / Noes: 5 - Question accordingly agreed to.
Mr Speaker
I must draw the House’s attention to the fact that financial privilege is engaged by Lords amendments 12M and 12S. If the House agrees to those amendments, I shall cause the appropriate entry to be made in the Journal.
I have selected amendment (a) to Lords amendment 12Q, which stands in the name of Philip Davies.
After clause 32
Secondary ticketing platforms
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
I beg to move, That this House agrees with Lords amendment 12J.
Mr Speaker
With this it will be convenient to debate the following:
Lords amendments 12K to 12P.
Lords amendment 12Q and amendment (a) thereto.
Lords amendments 12R and 12S.
Jo Swinson
It is a veritable alphabet soup of amendments, Mr Speaker.
On 24 February in the other place, the Government agreed with amendments tabled by Lord Moynihan to introduce light-touch regulation of the online secondary ticketing market, alongside a statutory review of the market. The Bill has therefore returned to us for further consideration. It sets out a simple, modern framework of consumer rights that will promote growth through confident consumers driving innovation and more competitive markets. Consumers, knowing their rights are protected if things go wrong, will have greater confidence to take up new products and switch suppliers, which will help to create a competitive and thriving economy.
The Bill contains important new protections for consumers alongside measures to lower regulatory burdens for business. All this together will make markets work better, which is good for consumers, good for business and therefore good for growth. It will have an impact across all sectors of the economy and address many of the concerns we hear daily in our own constituencies.
Chapter 1 gives consumers a new right to a refund on faulty goods within 30 days. Chapter 2 protects consumers in law for the first time when they buy digital content, while schedule 5 means business will get more notice of routine inspections by trading standards. These represent an important package of reforms that businesses and consumer groups have been waiting for and preparing for. Once the Bill receives Royal Assent, we will alert business to the forthcoming changes well ahead of the Act coming into force.
Since December, there has been one outstanding issue to resolve before the Bill can be sent for Royal Assent—how to address issues in the online secondary ticketing market. This is the market where fans sell tickets they can no longer use to fans who missed out on tickets the first time round. It is a much safer and more convenient environment for fans to buy and sell tickets than dealing with shady individuals in the backstreets around venues.
There are some concerns, however, about how this relatively young market is working, as I explained when we last considered this issue in January. I know that many hon. Members have been following this area very closely, and I appreciate the keen interest in this issue. I know that several members of the all-party parliamentary group and of the Select Committee on Culture, Media and Sport are in their places today, and I pay tribute to their extensive work on this issue over a number of years.
The Competition and Markets Authority has also been active in this area. I warmly welcome its announcement last week that it has secured further protection for consumers. This work makes an important contribution to our parliamentary debates. To deal with them, there has been general agreement across the House on two central points: we agree on the importance of a safe and secure environment for fans to buy and sell tickets; and we agree on the need for event organisers, the marketplaces themselves and enforcers to play their part in combating fraudulent practices in the resale market.
We were not, however, able to support an amendment made by the House of Lords in November. While that amendment aimed to increase transparency in the market, we were concerned about privacy and unintended consequences for the secondary market. We did not think that that amendment would allow the secondary market to continue to thrive or to be a proportionate and appropriate response to concerns that had been raised. Since December, we have been working intensively with all the relevant stakeholders to see if a compromise could be reached—a compromise that allows fans to resell tickets they cannot use, but one that also tackles some of the known issues in the market.
Philip Davies (Shipley) (Con)
The Minister in the House of Lords said that the Government were accepting these amendments on the basis that people would still be able to sell on their tickets at any price they could command, and that the sports bodies concerned could not blacklist anybody who decided to do that. Will the Minister confirm that that is the Government’s position and the basis on which they are accepting the amendments?
Jo Swinson
I am certainly happy to confirm that position. There is already protection in the unfair trading regulations, and any unfair terms can be challenged in law, so they should not be included. There would be many circumstances in which the terms surrounding the cancellation of ticket reselling would be deemed to be unfair. My only caveat would be that, in some circumstances, such terms might be appropriate. If, for example, a particular category of ticket aimed at a particular sector such as a youth audience were sold at a discount and it was important to increase access to such events for a particular group, some restrictions on resale could be justified and the terms deemed to be fair. I hope that my hon. Friend the Member for Shipley (Philip Davies) will reassured by what I have said.
On 24 February, the other place agreed to add provisions to the Bill to protect consumers in the secondary ticket market. Those addressed the concerns I raised during our last debate and, importantly, they achieved cross-party welcome and support. The provisions cover four main issues. First, they put on a statutory basis the review that I announced here on 12 January. They also give more details on what the review will cover and how it will be conducted. It will be a full review of consumer protection measures in the secondary ticketing market.
As I explained during our last debate, this will be an independent review and it will be presented to Parliament. The review will start this summer and be presented to Parliament within a year of the duty coming into force. The review will look at the current law, including any new provisions, and assess how best to protect consumers. It will be an invaluable opportunity to gather evidence on how the market works and how consumers can best be protected when operating within it.
Secondly, there is a requirement that online ticketing marketplaces report criminal activity on their sites. Where they are aware of such activity—for example, fraud—they must report it to the police and the event organiser. This new requirement addresses an issue many hon. Members raised during the Bill’s passage. There is criminal activity and fraud in this market, as there can be in any market, and we should be concerned about that.
Philip Davies
The Minister is being typically kind in giving way. What measures exist to prevent people from setting up online sites offshore, and how would the law apply to an offshore internet site that was selling on tickets in a secondary market?
Jo Swinson
The hon. Gentleman has identified challenges that exist in regulation of all kinds that applies to the internet and to foreign sites and companies. I do not think that those challenges can be the basis for an argument against trying to make the market fairer. We have built a consensus with the key players in the industry, and have arrived at proposals that they believe to be workable. We have a secondary ticketing market that works very successfully for many consumers in this country, and because there are existing, established providers, it is unlikely that there will be a sudden exodus of tickets to sites abroad. Consumers will also be aware of the protections from which they benefit when using sites in the United Kingdom. The legislation will cover sites with which they are already familiar.
There is no benefit in making crimes “doubly” illegal, but it is important for us to improve reporting and enforcement, and the new requirement to report fraud will help in that regard.
The final two changes that we are making address the issues of transparency and consumer protection directly. To improve transparency, those who sell tickets online must give buyers some basic information. That information, when applicable, consists of the face value of the ticket, the seat number, and any restrictions relating to the person who can use the ticket. When those in the secondary market, event organisers or certain other connected persons are selling the tickets themselves, they must make that clear. The provision is complementary to, and supplements, existing law. It ensures that buyers will be given some of the most important information that they will need in order to make an informed choice.
Crucially, the list of information that must be provided does not include the name of the individual seller, so individual consumers will not have to give their names when they sell online. As was pointed out when we considered the earlier amendments in January, that is an important way of protecting sellers from identity theft. We are providing a finite list of the most important pieces of information that a consumer will need to make an informed purchasing decision, thus ensuring that there is compliance with relevant EU law.
I know that some Members—including the hon. Member for Shipley (Philip Davies)—fear that the new information will allow event organisers to cancel tickets or blacklist sellers. That might, of course, be unfair on fans, and give those event organisers unfair control of the market. We share those Members’ concern, which is why our provisions build in consumer safeguards. An event organiser will not be able to cancel a ticket or blacklist a seller merely because the ticket is resold or offered for resale, unless there is a term in the original sales contract that allows for that, and, perhaps more important, the term itself is fair. Terms that prohibit resale are not always fair, and those that are not fair do not bind the consumer. Similarly, terms that seek to prohibit resale at or above a particular price are not always fair, and not always binding on the consumer.
The combination of transparency and consumer safeguards will allow the secondary market to flourish. It will ensure that no one, including event organisers, has a monopoly on resales, or an unfettered ability to set prices in the secondary market. The new system of light-touch regulation will make buyers and sellers confident about using the market. It will make the market more dynamic, and will benefit consumers further by creating competition in relation to price and quality of service. The review that I mentioned earlier will ensure that that outcome materialises in practice. If other issues arise, or if the new legislation has any unintended consequences, the review will pick that up.
The hon. Member for Shipley has shown great interest in the Bill, and has brought a great deal of energy to our debates.
Jo Swinson
It is indeed a compliment, and I hope that the hon. Gentleman takes it as one.
If the hon. Gentleman’s amendment were passed, chapter 3B would cease to apply two years after coming into force. The Government share his fear that regulation of the resale market could threaten the current online ticket marketplaces. That is why chapter 3B makes it clear that tickets cannot be cancelled or their sellers blacklisted merely because the tickets are offered for resale, unless certain strict conditions are met. The consumer protection that amendment 12Q seeks to introduce is already part of these provisions. Striking this down after two years would neither help nor protect consumers.
Philip Davies
The Government have set great store by the review they are going to carry out after the election and after the legislation has been introduced. Surely a sunset clause of two years will give that review much more power, because it will mean that by the end of the review the Government will have to make specific proposals to implement its recommendations, rather than just a review taking place and dying?
Jo Swinson
My hon. Friend clearly takes that view. However, I think that two years after the legislation has come into force is not very long at all. It would be very shortly after the review had concluded and the Government had issued their response. Indeed this would already have pre-empted the outcome of the review by saying it should be sunsetted, because if the review finds that the new provisions are working well, it will be required to take action to make that continue. The review might recommend removal of the provisions, but in that scenario we would also want the benefit of the advice on the best timing in which to do so, rather than some arbitrary date being imposed. However, what I would say to reassure my hon. Friend is that if such action was required as a result of the review, the Government could use primary legislation to repeal chapter 3B without needing a sunset clause.
Finally on amendment 12Q, we should take a step back and look at how it could impact on the market. I am sure I do not need to remind this House of the disruption caused by changing the law too often. Changes and reforms are necessary and important, but there are costs to business in implementing a new regime, and to have it repealed wholesale after two years would incur significant costs.
We must also consider the major events we host in this country. Amendment 12Q would mean that fans of some such events benefit from the new regime, but others do not. For example, fans buying and selling tickets for events such as the world athletics championship in 2017, possibly the biggest athletics event we will have hosted since the Olympics, would lose out. That would not be fair on those fans.
In conclusion, we believe the provisions agreed in the other place create a proportionate, light-touch regime to protect consumers and the secondary market. I encourage Members to support them and allow this important Bill to move to Royal Assent.
Ian Murray (Edinburgh South) (Lab)
I am delighted that this issue has now come back to this place, as we have always believed that the Consumer Rights Bill gives an opportunity to provide real protection against rip-off practices, particularly in the secondary ticketing market.
We all know that healthy, fair and competitive markets are vital to building an economy that works for both consumers and businesses. We also know that well-informed consumers make for better customers and better-informed citizens get better outcomes in dealing with both the public and private sector. Ticket touting is a classic example of a market where a group of traders are colluding to restrict supply and so push up prices, ripping off consumers by overcharging them and as a result shattering the dreams of many fans. We have argued this throughout the passage of the Bill and, while we are pleased that Ministers are now in agreement, they have been dragged here kicking and screaming to make these changes.
I was delighted that in the last sentence of her speech the Minister agreed with the Lords amendments, but it has taken her three years to do so. That sums up this Administration. They rail against good ideas from Opposition Members, charities, non-governmental organisations, trade bodies, trade unions, the public and others, and then they are eventually embarrassed into having to bring forward the very provisions they have railed against. We have witnessed that with regularity, first on allowing the Groceries Code Adjudicator to fine people, and also on giving tied landlords a better deal with pubcos and better enforcement of the national minimum wage to name just a few, and they even had to be dragged kicking and screaming to do something about zero-hours contracts.
Now we have the secondary ticketing issue, where the Minister and the Government are arguing against their views of just a few weeks ago. On 21 January 2011 the Culture Secretary told Parliament:
“Ticket resellers act like classic entrepreneurs”
and that concerns about touting represented
“the chattering middle classes and champagne socialists”.—[Official Report, 21 January 2011; Vol. 521, c. 1186, 1187.]
That is obviously not the case now.
On Friday 6 February 2015 the Daily Mirror quoted the Culture Secretary as saying unscrupulous websites have every right to hoover up sought-after tickets for football matches and pop concerts and flog them at five or 10 times the asking price. He said:
“There’s nothing wrong with a healthy second market”
and went on to say
“I don't have any problem with it.”
He obviously does now.
Philip Davies
It is difficult to know where to start, but I shall begin by saying that there was one thing on which I very much agreed with the hon. Member for Edinburgh South (Ian Murray), which was when he said at the start that the Government had in effect done a massive U-turn—they clearly have. My colleagues ought to be aware that in a few minutes’ time, or whenever it may be, they will be encouraged by the Minister to vote for something that they have twice been invited to vote against. I should say to the hon. Gentleman that if his party is lucky enough to be in a position to put a coalition together after the election and he is thus thrashing around for coalition partners, he will have seen at first hand what happens in coalition with the Lib Dems: they find it easy to change their view on something within a few weeks, and usually it does not take them that long.
Clive Efford (Eltham) (Lab)
On changing minds, perhaps the hon. Gentleman should look closer to home, as the Prime Minister seems to have changed his mind about TV debates.
Philip Davies
You would rule me out of order if we got into a slanging match about TV debates, Mr Speaker. The hon. Gentleman is an affable chap and I am happy to have a cup of tea with him afterwards so we can discuss the merits of the TV debates. I do not think this is the right venue for such a discussion, as I would rightly be ruled out of order if I were to go down that route. I knew it was a mistake to give way to him.
Once upon a time, as you will recall, Mr Speaker, the Conservative party used to believe in the free market. It appears to be an increasingly alien concept these days, but I am wedded to the idea and I always thought it was what the Conservative party believed in. I am talking about the idea that if someone owned some property, they were free to sell it on to somebody at a price they were happy to sell it for and others were happy to pay. That is the whole essence of the free market, and it happens with every possible thing we can ever buy, including houses—they are in short supply at the moment too, with much more demand than supply. But I worry that Government Members seem to have given up completely on the free market.
Philip Davies
I am happy to give way to someone who never believed in the free market.
Kelvin Hopkins
Indeed; the hon. Gentleman has a point. The free market operates where supply can actually be increased. Where there is a limited supply, the price simply increases and people are exploited.
Philip Davies
I am interested in what the hon. Gentleman says. I do not want to rehearse all the arguments we have had in the past, but what we are talking about does not just happen with tickets. For example, limited edition products are sold all the time—there is a limited number of them. When a painting is sold, there is just one and the demand for it may well outstrip the supply. Is the hon. Gentleman saying that wherever demand outstrips supply and the supply cannot be increased, nobody should ever be able to make a profit? That may well be the policy the Labour party is arriving at: nobody is ever allowed to make a profit. That is a perfectly respectable position for the hon. Gentleman to hold, and he holds his positions consistently, and with great vigour, honour and determination. I do not blame those in the Labour party for being in favour of these kind of restrictions: because they are socialists, they do not want people to make a profit and they want to regulate every aspect of people’s lives. That is fair enough; I respect them for that, although I do not like it. What I object to is the fact that Conservative Members are being asked to give up on the free market.
Mr Jim Cunningham (Coventry South) (Lab)
I always have great respect for anything the hon. Gentleman has to say. I have to tell him that the UK Independence party has adopted the free market mantle now, as his party has gradually eschewed it.
Philip Davies
The hon. Gentleman kindly said that he had a great deal of respect for what I had to say, which is certainly more than can be said for most people on the Government Benches, so I am very grateful to him for that kind comment. It probably will not do much for his reputation within his party, but I am grateful for it, because I have a great deal of respect for him, too.
I believe in the free market and am not ashamed of doing so. I believe it acts in the best interests of the consumer. The hon. Member for Edinburgh South (Ian Murray) said he was surprised that I was not standing up for my constituents as consumers, but I am. I believe in the free market; I believe that people should have the right to sell on their ticket if they buy one and then find that they cannot go to the event or that somebody else is prepared to pay a higher price for it. I will happily take my chances with my electorate at the general election, to see whether they are happy that I look after their interests, just as he will put his record before his electorate at the general election—we shall see how we both get on.
The Minister glossed over the fact that the Government have done a complete U-turn on this issue. I do not know whether she is embarrassed about that or not, but I would be if I were in her shoes.
Mr Christopher Chope (Christchurch) (Con)
I am surprised to hear about the extent of the U-turn. Can my hon. Friend explain why there has been such a U-turn? Surely the Government are normally consistent—or try to be consistent—from one week to the next.
Philip Davies
I congratulate my hon. Friend on keeping a straight face when he said that, but it is not for me to explain it. I have certainly kept my position consistent, and I have to congratulate the Secretary of State for Culture, Media and Sport on maintaining a consistent position on these issues. I can only presume that the interference of our Liberal Democrat coalition friends in the Department for Business, Innovation and Skills has led to this about-turn.
We have an issue here, because the Minister seems to be arguing that nobody in the secondary market has anything to worry about and that their industry is going to thrive, prosper and flourish, yet all the sporting bodies and events organisers, and some of our hon. Friends, are cock-a-hoop about this. They are not cock-a-hoop because they think the secondary ticketing market is going to thrive and prosper as a result of this Lords amendment being accepted; they are cock-a-hoop because they think the exact opposite will happen. I have to congratulate the hon. Member for Washington and Sunderland West (Mrs Hodgson), who has been very persistent on this issue, and my hon. Friend the Member for Hove (Mike Weatherley). They obviously knew what they were dealing with in Liberal Democrat Ministers; they knew that they were always in the game for a U-turn whenever the Lib Dems were involved, and I congratulate them on their industry and initiative in that regard.
The question nobody has asked is why are the sporting bodies and events organisers so keen for the full details of the ticket—the row number, the section number, the ticket number, the seat number and the whole lot—to be published online? Let me give hon. Members the answer. They are so desperate to have that information so that they can see who bought the ticket, cancel the ticket if it gets sold on to somebody else, blacklist the person involved and prevent them from ever buying a ticket in the future. The only reason they want this information is so that they can use that information to stop this market.
The Government have said that these bodies will not be able to do that—the law will say they cannot do that—but I would like to know from the Minister who is going to police that? When somebody turns up to an event with a ticket bought from a secondary ticketing site and the event organiser says, “Sorry, I’m not going to let you in. We don’t like the look of that ticket. We saw it in the secondary ticketing industry”, who is going to be there from the Government to say, “No, this chap should be allowed into this event”? Nobody will be there. That person will be sent away and never get to see the event they wanted to see—the Government will have let them down. Even if the person went to court and won the case, they would still have not got to the event they particularly wanted to see. It is an absolute con if consumers think this will protect their interests when they buy a ticket from the secondary market. The sporting bodies know it and the hon. Members here who have been agitating for this measure know it, and that is why the sporting bodies and the events organisers are so keen to have this information. The Minister says that people cannot be blacklisted, but who is going to police that? Who is going to stop it? What resources are the Government putting in to make sure that does not happen? The answer is none. Basically, there are just warm words. The Government are repeating what they did on immigration, which is making a promise that they know they are in no position to keep. It is that kind of thing that brings politics into disrepute.
The Minister said that consumers could now have confidence in the market, but where is the evidence that consumers do not have confidence in the secondary ticketing market? Consumers have confidence in the secondary ticketing market, but the sporting bodies and the big event organisers do not. If people did not have confidence in it, they would not be buying tickets there in the first place. The problem for these big bodies and these multi-millionaire music organisers is that too many people do have confidence in the secondary ticketing market, which is why they want to damage it. That is why we should reject these Lords amendments this evening.
Mr John Redwood (Wokingham) (Con)
Will my hon. Friend give me some idea of how much damage might be done to the industry during a two-year phase?
Philip Davies
My right hon. Friend makes a good point. The Minister argued that two years was very short. In two years’ time, the whole industry could have upped sticks and gone abroad. It may well be that my two-year sunset clause is too long. I will happily be chastised for that, but I thought it was important that we put a line in the sand. I thought that two years would give us a reasonable time to see how the legislation worked with different tournaments and different music events. It is ample time for people to consider the effects. If those people who are in favour of the Lords amendments are so confident in their arguments, they have nothing to fear from a sunset clause. If everything is fine and dandy and none of my fears comes to fruition, the Government will happily reintroduce the legislation and it will sail through because it has been shown to have worked. They do not like the sunset clause because they know that the point I am making is the real agenda behind this Bill, and they do not want to be rumbled.
Once the Bill is on the statute book, the Government think that that will be it and nobody will bother or have the courage to revisit it, and I suspect that they are right. That is why I have tabled my amendment. I understand that there may be some difficulty in having a vote on it, even though it is sensible, and I am sorry that the Government have refused to accept it. This is an unfair and unnecessary intrusion into the free market. Who knows what consequences will flow from this legislation? I shall urge my colleagues to do what they have done twice in recent times already, and vote down the Lords amendment. I shall be interested to see how many of my colleagues vote for something that they have happily voted against in recent weeks and how, as a general election is coming, they will justify their action to their constituents. I shall happily be able to tell my constituents that I stuck to my guns, that I did not change my mind and that that is why I do not want to be in coalition with these wishy-washy Liberal Democrats any more.
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
As many in the House are aware, I have been interested in the secondary ticketing market for many years now, and, alongside the hon. Member for Hove (Mike Weatherley), I have co-chaired the all-party parliamentary group on ticket abuse, the report of which spearheaded the former amendments to those we are debating today.
It is my long-standing belief that for a long time things have needed to change in the sector, as more and more fans are being ripped off and exploited by unscrupulous touts, and ordinary people are being priced out of seeing the artists, shows, or teams that they love. The full extent of the problem was clear last week when the Competition and Markets Authority, after consulting the major ticket re-sellers, published a new code of conduct—an agreement for which the CMA was happy to take all the credit, somewhat ignoring all the hard work and campaigning over many years of Members, peers and other industry bodies, and on which we are now legislating.
However, that small gripe aside, on the very same day that the new code of conduct was announced, a person could go on some of those companies’ websites and find tickets, guaranteed, for the upcoming boxing match between Floyd Mayweather and Manny Pacquiao in Las Vegas. On one site, the cheapest came in at just under £4,000, and the most expensive floor seats at more than £32,000. That was despite the fact that last week there were no official tickets yet on sale and original ticket prices had not even been agreed. That is a ludicrous situation which leaves the public totally misinformed about the marketplace and serves only further to inflate prices when the tickets become available.
Mike Weatherley (Hove) (Con)
Does the hon. Lady agree that it was bizarre that the CMA came out with guidance only days before Parliament was debating the issue and passing laws in this House? It seemed almost to usurp what we are doing.
Mrs Hodgson
I totally agree. As I have mentioned, I was surprised that in the press coverage the CMA was taking all the credit for the new measures given that Parliament has been pushing for this in both Houses. As the new authority, which is replacing the OFT, has now agreed with Parliament, the CMA should perhaps have mentioned that fact in some of its press coverage.
Sadly, the example I have given is one of many hundreds of thousands that routinely happen every day. It is only through measures such as the Lords amendment that we can hope to tackle the worst excesses of the industry and put the genuine fans first.
Let me be clear that the argument and the fight have never been about stopping the resale of tickets. The legitimate resale of tickets is not the problem and those who have claimed that clamping down on ticket touts and increasing transparency will harm true fans know very little about the problems and even less about what needs to be done to address them. Greater transparency is never a problem for a market operating properly and it is only in the interests of illegal ticket touts to sit back and do nothing to change the law. Others say that this is a licence for event organisers to cancel tickets, but the amendment clearly sets out that event organisers cannot cancel tickets simply because they have been resold, and can do so only in very specific circumstances. I am glad that that safeguard is in the Bill.
The hon. Member for Shipley (Philip Davies) has tabled a characteristically unhelpful amendment that would insert a sunset clause for the provision—an act that is as misguided as it is obstructive. I know that the Opposition will vote against it and I am sure that the Government will too, as it is our intention to work on behalf of the fans and not the touts. Any further debate on that point gives it merit that it simply does not deserve.
Before I consider the specifics of the amendments proposed in the other place, let me praise Lord Moynihan for his diligent cross-party work and for succeeding in achieving such an important step towards strengthening the regulations in the sector. As a former Sports Minister, he knew first hand how pernicious the practice is. It has been an extremely productive experience working with him, as it has been with many other colleagues in both Houses who care just as passionately about the rights of fans as he, the hon. Member for Hove as my co-chair on the all-party group, the members of the all-party group and I do. I know that Lord Moynihan worked tirelessly over the last recess to secure a compromise with Ministers across two Departments—a feat few could accomplish—and event goers and fans across the country owe him a debt of gratitude for the amendment.
As has been said, the amendment will do three key things to help stop the exploitation of fans. First, it will boost transparency, as from the time the Bill is enacted, ticket resellers will have to provide a seat number, any restrictions or limits on the ticket and the original face value of the ticket to all those they hope to sell it to. That will give fans far more knowledge about what they are buying and will give event managers more information about the tickets that are being resold.
Secondly, the amendment will place a duty on ticket resellers to report criminal activity if they suspect it, making the enforcement of the law much more proactive and effective and discouraging the secondary market platforms from turning a blind eye and letting the worst excesses of these practices continue.
Finally and crucially, the amendment compels the Secretary of State to review measures relating to the industry in a report to Parliament after 12 months, and that is what I would like to use the remaining time to speak about. The improvements in the amendment are a crucial first step, but they do not solve all the problems we can see in the sector. The review process will be absolutely vital in taking representations from the industry and making proposals that can build on the legislation and get to the heart of what is wrong with how things operate.
There is much that needs to be considered in the review, but I shall limit myself to a couple of key points that must be investigated if we are ever properly to understand why the problem is so persistent and deep-rooted. The first is the speed at which secondary ticketing sites get access to tickets in the first place. Secondary ticketing platforms can have hundreds if not thousands of tickets on their sites and ready to be sold within minutes of their first going on general release and in some cases even before they have gone on sale. How can that happen without sophisticated software, such as bots, harvesting them, without certain so-called power sellers working alongside the platforms to get tickets on their behalf or without inside trading, such as behind-the-scenes deals in which premium tickets are not sold on the primary market but given straight to the secondary market to be sold at huge mark-ups?
Mark Tami (Alyn and Deeside) (Lab)
Does my hon. Friend agree that in some circumstances those people never have tickets in the first place but are chancing their arm to see whether they could get inflated prices?
Mrs Hodgson
I agree. Sometimes they are following through on a fraudulent transaction and sometimes the listing is speculative, as they might try to get a ticket later and want to see how much they can sell it for.
Given that there is no lawful way to harvest large numbers of tickets and that behind-the-scenes deals are at best duplicitous and immoral, we must ask just how the situation can take place and continue. Further to that point, if the tickets showing on the system have not been acquired, how can the sellers guarantee their sale on their sites? An investigation of those guarantees must be central to the review, because if that approach is found to be misleading, it would directly go against consumer rights, which are of course the entire purpose of the Bill. One way the all-party group on ticket abuse thought of to solve that would be to publish the seller’s identity when reselling tickets. I am sure that that will also be considered in the review.
The duty under the new amendment to report criminal activity is welcome, but we must also ask why past instances of criminality have been so largely unreported in the sector, even when the secondary platforms have been the victims and have had to pay out large sums in compensation. Has that been seen simply as collateral damage? It cannot be a continued coincidence and questions must be asked in the review.
In conclusion, the review is crucial and much needed and will have to be handled carefully and expertly so that we understand how best further to protect the public. That is why the choice of chair is so important. The marketplace is so complicated that it will need somebody who understands it but who is fair minded enough to listen and engage with all parties while keeping the rights of the fans at the heart of the entire process. If I may be so bold as to venture a suggestion, I think that my all-party group co-chair, the hon. Member for Hove, would be an ideal candidate to take up the challenge after he leaves Parliament. I do not know what his plans are—he might be hoping to travel the world and have a normal life for a while—but I can think of no one better. Whoever is chosen, however, I am confident that they will ensure that the right questions are asked, the right leads are pursued and the right outcome is achieved so that at last we can be sure that the market will put fans first.
Mike Weatherley
It is an honour to follow my co-chair on the all-party group, the hon. Member for Washington and Sunderland West (Mrs Hodgson). The amendment is the culmination of four years of hard campaigning and it is a little ironic that we have only about two minutes to squeeze in all our comments. I will not go through all the points that have been made so admirably by my hon. Friend the Member for Shipley (Philip Davies) and the hon. Member for Washington and Sunderland West, as there is no point in doing so, other than to say that the bots have made the free market untenable and something needs to change.
I want to make two particular points. The first is about the review, which is crucial. I thought at first that that would be like kicking the issue into the long grass, as my hon. Friend the Member for Shipley said, but it is an essential part of the reforms. The critics of the reforms are screaming about the potential problems, as we have heard, whereas those who want more action are screaming that more should be done. That is a lot of shouting, but time will tell and the review, which will report in a relatively short period of time in parliamentary terms, will closely consider both claims and at last come up with a proper analysis and recommendations.
The legislation specifically states that terms and conditions need to be fair, and making sure that they are fair must be part of the review. The terms and conditions that event organisers attach to tickets are there to protect fans—not to take advantage of them, as my hon. Friend the Member for Shipley indicated they might be. Where fans have bought tickets for genuine use, and have a genuine reason for resale—that is, where they have bought tickets not just to make a profit—I am fully behind their ability to resell. I will make sure that that is a fundamental principle in the review. Equally, I will make sure that the insertion of “fair terms” in the amendment is not the secondary ticketing industry’s way of undermining all these changes to the law. I am pleased that groups such as the Sport and Recreation Alliance, the England and Wales Cricket Board and the Rugby Football Union are fully behind the amendments.
As with all compromises, neither side is fully happy with the solution, but on balance, this is a good step in the right direction. The review will be key. With this review, the UK, with its rich cultural heritage and world-leading position, will once again be the focus of world attention. I suspect that the review will act as a blueprint for many countries around the world—both those that have enacted secondary ticketing legislation, and those considering doing so.
Ian Murray
The hon. Gentleman has put so much effort into ensuring that we got to this point today. Will he, with his experience of the industry, say what he would like the conclusions of the review to look like? What questions should be asked to make sure that the secondary ticketing market works best for both consumers and businesses?
Mike Weatherley
I thank the shadow Minister for his intervention. The review must be balanced. Obviously, I am pushing for more regulation, because I feel that the free market has fallen down, but we should consider experiences around the world. There are states in America that have repealed secondary ticketing laws, and we need to look at why. Was it because the legislation was badly drafted? Norway and Denmark have laws under which tickets cannot be sold above face value, but they have never been enacted. Is that because, as someone mentioned, trading standards teams do not have enough teeth to implement such measures? All of that needs to be in the review; that is absolutely essential. There are so many aspects to the review that it will be quite an exciting one.
To summarise, and to misquote E.M. Forster on democracy, two cheers for the amendment, but not quite three. However, I am really pleased that we will enact this law before the end of this Parliament, and before I step down. This is very much a good step forward.
Jo Swinson
I congratulate the hon. Member for Washington and Sunderland West (Mrs Hodgson) and my hon. Friend the Member for Hove (Mike Weatherley) on their tireless work on this issue. They should be pleased with the outcome that they have managed to achieve. I want to address two points that came up in the debate. The first was the question, “Why now?”, and the second was about the CMA.
On the question of why now, my hon. Friend the Member for Shipley (Philip Davies) seemed to suggest that we had voted for something and will now be voting against it, or some such thing. The amendments that we are considering differ in two respects from the ones that we considered in January. First, on privacy, the amendments in January stipulated that the name of those selling tickets would have to be a piece of information that was made transparent. We thought that there were privacy concerns about that. Secondly, there were concerns about compliance with EU law—the technical standards directive—and that could unfortunately have rendered all the provisions unenforceable. That was because of the de facto price cap in the amendment put forward by the hon. Member for Washington and Sunderland West. For those reasons, although we understood the concerns brought forward, we could not accept the amendments in January. Of course, those concerns have now been addressed; that is why we are able to accept the Lords amendments today.
Last week’s announcement by the CMA has been mentioned. The CMA in no way sought to usurp the work done in this House. It had done a long-running piece of enforcement work against four sites. The announcement covered the transparency elements of amendment 12J, but the amendment puts things on a statutory footing and should be very welcome.
The CMA does, of course, have significant power. To address the concern raised by my hon. Friend the Member for Shipley, it would be able to stop an organiser cancelling tickets. The CMA has shown that it is willing to act in this market should there be any concern that tickets were being cancelled, and I am sure that it would be happy to do so in future. On the international point, as the provisions apply to marketplaces and sellers targeting the UK, enforcement action can take place elsewhere. Indeed, the CMA recently pursued successful enforcement action against several websites, including viagogo, which is of course based in Switzerland. That shows that we have the enforcement to back up these consumer protections, which are proportionate, and which do not give rise to the privacy concerns that we had before. They will help to make sure that the secondary market can genuinely thrive and work better for consumers.
Question put, That this House agrees with Lords amendment 12J.
Commission Work Programme 2015
(9 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Madam Deputy Speaker (Mrs Eleanor Laing)
I inform the House that Mr Speaker has selected the amendment in the name of Sir William Cash.
The Minister for Europe (Mr David Lidington)
I beg to move,
That this House takes note of European Union Document No. 5080/15 and Addenda 1 to 4, a Commission Communication: Commission Work Programme 2015–A New Start; and supports the Government’s view that the most significant initiatives are those that focus on the strategic priorities set out by the European Council in June 2014 to promote jobs, growth and investment in the EU.
This is the fourth such debate in which I have taken part as Minister for Europe, but I think it is the first time I can say that the European Commission has sent a strong message that it intends to do things in a different fashion from how its work has been carried out in the past. The clear message from President Juncker and his team is that they want to focus on a smaller number of key priorities and that they wish to set limits on the degree to which the Commission, and the EU collectively, can interfere in matters that are often better handled at national or local level.
Of course, the test of that message will be what happens in practice; it is actions that will count, not words. However, I am encouraged by the creation of the powerful post of First Vice-President of the Commission, which gives Frans Timmermans, the former Dutch Foreign Minister, an overarching power to veto any proposals that do not meet the requirements of subsidiarity and proportionality. He is already making it clear that a key element of his responsibility is to say a firm no to fellow commissioners, to the European Parliament and to outside lobbyists and to focus only on those matters where the Commission judges that European action would genuinely give Europe added value that could not be achieved by other means.
Sir William Cash (Stone) (Con)
I have spoken with Mr Timmermans a number of times in COSAC meetings with the chairmen of the 28 member states. On the question of national Parliaments, which is the key question in relation to subsidiarity—it is the question of what should be done best at the appropriate level—is not it the case that, for all the words about involving national Parliaments, we will not get much change out of Mr Timmermans, any of the Commissioners or the European institutions if we insist on national Parliaments at the expense of the European Parliament?
Mr Lidington
I do not want to pre-empt tomorrow’s debate on the European Union’s relations with national Parliaments and the principles of subsidiarity and proportionality. My hon. Friend is right to identify this as a challenging agenda and to indicate that the European Parliament, in particular, is likely to be resistant to the idea of a stronger voice for national Parliaments, but I think that he is too pessimistic in his assessment of Frans Timmermans. After all, it was during Mr Timmermans’s tenure as Foreign Minister of the Netherlands that the Dutch came forward with a number of specific proposals for strengthening the role of national Parliaments in holding EU decisions to account. I take heart from the fact that we have in this powerful role within the Commission somebody who has previously gone on the record to say that the guiding principle should be, “Europe where necessary, but national where possible”, and who has been very sympathetic to ideas for strengthening the role of national Parliaments.
The Commission has set out a clear intention to be more strategic and to act in a smaller number of areas where there is real added value for the EU. It has also said that it wants to demonstrate a particularly strong focus on jobs, growth and European competitiveness, which are objectives that the Government strongly support. The Commission has pledged to create a closer partnership with member state Governments and national Parliaments. We can see some evidence of the Commission’s approach by looking at some of the numbers in the work programme. The work programme includes just 23 legislative and non-legislative policy initiatives and—importantly— 80 measures proposed for either withdrawal or modification.
Mr John Redwood (Wokingham) (Con)
Does the Minister not note that most of the measures being withdrawn are either obsolete, having been superseded by a measure that has already gone through, or being withdrawn in favour of a more ambitious proposal? It is complete nonsense to say that the Commission is giving up power and wishes to do less. This is a massive work programme and the 80 measures are just a con trick.
Mr Lidington
I think that my right hon. Friend is being too pessimistic. As I said earlier, the test will be whether at the end of five years we can look back and say that the Commission has delivered in practice what its words indicated at the start of its tenure. I completely accept that there is a real problem with the Commission’s working culture, which, to be fair, like many national Government Departments, tends to judge success by the output of new law and new regulation, rather than the quality of what is actually done on a number of core priorities.
I was pleased to note that the Commission confirmed this weekend that 73 of the measures proposed for withdrawal have now been formally withdrawn. By comparison, the 2014 work programme proposed 29 new initiatives and prioritised a further 26 measures for adoption, and in 2010 there were some 300 new measures proposed. This work programme is focused on fewer measures, and on measures that will encourage growth and jobs, deepen the single market, conclude trade agreements and improve regulation, freeing up business from unnecessary regulatory burdens. The Government welcome that new focus.
Jacob Rees-Mogg (North East Somerset) (Con)
I cannot agree with my right hon. Friend. Of the 73 proposals being withdrawn, 71 are either obsolete or have already been blocked by the Council. Of the 79 actions being withdrawn under REFIT, 58 are evaluations or studies, five are proposals to codify, two are proposals to simplify, one is a proposal for a simplified framework and two are proposals for an update or a review. There is only one that would reduce something, against 452 Commission proposals, less the 73 that are sitting on the table. He tells us that this is a great success for Europe. What would be failure?
Mr Lidington
Failure would be Europe failing to give priority to job creation, economic growth and competitiveness at a time when a horrifying number of people, particularly young people, are out of work in this continent and when European competitiveness is not only slipping behind that of the United States, but is at risk because of the global shift of economic power to Asia and Latin America. The answer to those economic challenges lies in Europe raising its game dramatically as far as competitiveness is concerned.
Keith Vaz (Leicester East) (Lab)
I congratulate the right hon. Gentleman most warmly on lasting the whole Parliament as Minister for Europe, which must be a first. I understand that he and the Government received this Commission work programme some time ago, so why has it take so long to get it to the Floor of the House? I might be wrong about that, so will he clarify when the Government first received it?
Mr Lidington
I can check the precise date and let the right hon. Gentleman know. There has been a delay, which I regret, because it has taken time to get collective agreement on this and on a number of other debates that the European Scrutiny Committee has referred. Originally, we considered having this debate in Committee, but, having discussed the issue with my right hon. Friend the Leader of the House after he had given evidence to the European Scrutiny Committee, the Government decided to have a debate on the Floor of the House. I am just glad that we are having this debate relatively early in 2015.
Sir William Cash
I suspect that that is an invitation to say that the amendment that I and many other members of my Committee have tabled, which I hope the Minister will accept, deals with free movement—a massive issue that affects immigration. The fact that it has been not merely delayed, but stalled for more than a year must have been a coalition decision, but we have not been told who was behind it, so who was it?
Mr Lidington
As I told my hon. Friend when I last gave evidence to his Committee, the Government take decisions collectively and it would not be right for me to go into detail about internal Government communications. I will come to the issues raised by the amendment shortly, but first I want to say more about the importance of the proposed work on economic affairs and competitiveness.
The United Kingdom has long argued for ambitious trade deals. The ongoing Transatlantic Trade and Investment Partnership and EU-Japan negotiations could benefit this country annually by more than £15 billion, so the comprehensive stocktake of trade policy proposed by the Commission is welcome.
The EU’s greatest achievement—the single market—is still very far from complete, so we are pleased that the Commission plans to push liberalisation in sectors that could boost GDP the most, such as construction and professional services. We want EU legislation to enable the dynamic development of the future economy by supporting and not hindering a continent-wide digital single market. If that is done right, in a way that encourages the growth of online trade—both retail and business to business—it could generate €250 billion over the lifetime of this Commission.
We also support the Commission’s vision of a well-regulated and integrated capital markets union of all 28 member states that maximises the benefits of capital markets and non-bank financing for the real economy. Lord Hill’s recent Green Paper on the subject spelled out the approach he plans to take, and the Government will, of course, engage with his team as the policy is developed further.
We welcome the fact that the Commission intends to consider a range of approaches, and not just legislation, to develop Europe’s capital markets, and that much of that will be delivered through member state and industry action, rather than through EU-level law or regulation.
Mr Redwood
Will the Minister comment on the investment programme, which is said to be significant? How much of it is a spending commitment by the European institutions from their levies on member states, and how much will be done by gearing and leverage through guarantees and loans?
Mr Lidington
If I get the chance, I will give my right hon. Friend the exact figures at the end of the debate, but only a relatively small amount of the European fund for strategic investments—the so-called Juncker package—is derived from reallocating parts of the existing EU budget. The majority of the proposed €315 billion for the EFSI relies very much on private sector input on the basis of gearing.
Perhaps my right hon. Friend will be reassured to know that when I visited the European Investment Bank recently to discuss its approach to the programme, it was very firm in saying that it took very seriously its responsibility to its shareholders—the member states—and that it would exercise its responsibilities as a bank, that there would be due diligence, that it was not prepared simply to wave projects through on the basis that any sector or country deserved a particular slice, and that it would look at the real economic benefit that each proposal for capital investment offered to Europe as well as to the member state.
One of the sectors that we think could benefit from the EFSI is energy, where there is a need for work on interconnectors that would not only make more possible a genuine single internal market in European energy, but meet the strategic objective of trying to reduce European energy dependence on Russia. We think that the Commission communication on energy union is an important step towards not only strengthening Europe’s energy security, but decarbonising our economies and deepening the internal energy market.
Mr Christopher Chope (Christchurch) (Con)
On trying to reduce dependency on Russia, how does President Juncker’s recent proposal for a European army to stop President Putin in his tracks fit into the work programme?
Mr Lidington
In fairness to President Juncker, with whom I do not agree on that point, it is not a secret that he has held that view for a long time and I suspect it is held by pretty much every leading politician in Luxembourg. [Interruption.] That is the reality. A small European country would see an obvious benefit to its national interest from that sort of greater European action. The British Government do not share the view that a European army would be helpful or necessary. We believe that NATO is and should remain the centrepiece of our collective defence and security arrangements.
Were there to be any move towards establishing greater European military integration, it would first require consensus among member states, because such matters cannot be determined by a qualified majority vote under the treaty. Moreover, as I am sure my hon. Friend will recall, in passing the European Union Act 2011, this House required that there would have to be both an Act of Parliament and a referendum of the British people before any British Prime Minister could give consent to a proposal for the establishment of an EU army or armed forces in some hypothetical future.
Sir William Cash
Of course, if we were no longer members of the European Union by that time, we would not need to give consent because we would not be in the position to do so.
Mr Lidington
We can argue about all sorts of improbable hypotheticals, but the key point is that, while President Juncker was expressing a view that he has made no secret of holding in the past, this is not a live issue for debate around the table in Brussels at the moment. In fact, both President Juncker and others who have spoken in support of a European army or defence force have said that they see it as being a very long-term objective.
Turning to the amendment tabled by my hon. Friend and a number of other members of the European Scrutiny Committee, the Government recognise public concerns about immigration from other member states and the need for the Commission to do much more to address the abuse of free movement rights and the problems to which it gives rise. That is why this Government have gone further than any previous Administration to try to tackle the problems associated with free movement both domestically and at the European level.
We have acted domestically to tackle abuse and ensure that the rules governing access to our welfare system and public services are as robust as possible. Only today, my right hon. Friend the Secretary of State for Work and Pensions has laid regulations in Parliament to ensure that EU jobseekers have no access whatsoever to universal credit.
At European level, we secured language in last June’s European Council conclusions on the need for the Commission to support member states in combating the misuse of free movement. We continue to work both with member states and the Commission to reform EU social security co-ordination rules so that they better reflect current migration patterns and the divergent, diverse nature of member states’ welfare systems, while ensuring that member states can maintain effective control of their own welfare systems. Welfare provision is of course set down in the treaty as belonging to the competence of member states, rather than that of European institutions.
We welcome the proposal in the work programme on the labour mobility package—it covers several such items—which will assist us in carrying forward our ideas. However, we are very clear that there is much more to do, as my right honourable Friend the Prime Minister made clear in his speech on 28 November. I therefore have no problem in welcoming the amendment tabled by my hon. Friend the Member for Stone (Sir William Cash), which will be agreed to at the end of the debate.
Jacob Rees-Mogg
I commend my right hon. Friend’s wisdom in accepting the well thought through amendment tabled by my hon. Friend the Member for Stone (Sir William Cash). In relation to the debate on free movement, will Her Majesty’s Government reconsider their stance on Switzerland? If we are serious about renegotiation, it seems to me that we must take a sympathetic view of its effort to get out of the principle of free movement. If that is one of the four fundamental principles applied to Switzerland, which is not even a member state, how can we have a thorough renegotiation?
Mr Lidington
The challenge the Swiss Government face is that they have entered into a series of bilateral agreements with the European Union linking a number of different elements together. For example, in the Swiss bilateral treaties with the EU, access to some of the EU’s single market provisions is explicitly linked to accepting the principle of freedom of movement. At the moment, it is written into that package of bilateral treaties that if one is revoked or renounced, all of the agreements will fall by a certain deadline. That is the challenge the Swiss Government face following the referendum early last year. We remain in close touch with Switzerland, a friendly country, and we hope that we can find a satisfactory way forward.
Mr Lidington
If my hon. Friend will allow me, I am conscious that the debate is time limited, and I want to let other Members speak.
Before I conclude, I want to refer to the question of regulation. During his hearing in the European Parliament, Vice-President Timmermans pledged to conduct a review of pending legislation, which was completed in late 2014; to launch a revised inter-institutional agreement on better law-making in spring 2015; and to conduct a review of better regulation by October 2015.
We are continuing to work with other member states to implement the recommendations of the Prime Minister’s business taskforce on EU regulation—the introduction of EU burden reduction targets, even greater use of lighter regimes and exemptions for small and medium-sized enterprises and micro-enterprises, and greater independence and powers for the Commission’s Impact Assessment Board.
Thirteen of the 30 recommendations of the Prime Minister’s taskforce have been fully implemented at European level, and progress is being made on others. The Commission has set out its intention to review, recast, merge or replace some 79 EU Acts as part of its Refit programme. We have long pushed for EU legislation to minimise unnecessary costs to business, particularly SMEs, and it is positive to see that reflected in the work programme and what appears to be a reinvigorated approach by the Commission to better regulation.
Overall, the work programme shows encouraging signs that the Commission wishes to take the EU in what we consider to be the right direction, at least on the economic priorities. It is important to judge the Commission by what it now does in practice. In our view that means implementing the work programme in a way that respects the principle of “Europe where necessary, but national wherever possible”, reduces the burden of European regulation on business and eliminates barriers to growth, and supports increased competitiveness, trade and the completion of the single market. If that is the outcome, it will demonstrate important progress in the Government’s EU reform agenda.
During the past five years, we have already secured the first ever reduction of the EU’s budget; significant reform of the common fisheries policy, including a ban on discards; the launch of talks on an ambitious transatlantic trade deal; and important protections for non-eurozone countries in respect of banking union. Just five years ago, it would have been unthinkable for the first work programme of a new Commission, which would want to demonstrate its ambition, to contain just 23 priority initiatives. That is evidence that this country’s messages are being heard and acted on.
We launched this debate, and today there is growing consensus across Europe in favour of reform. We will continue to work energetically to ensure that the EU becomes more competitive and democratically accountable, deepens the single market to enable free movement of services and capital, and tackles abuse of the principle of free movement. I commend the motion to the House.
Mr Pat McFadden (Wolverhampton South East) (Lab)
This is the first of two debates on the European Union over a couple of days—a double-header, as it were. It is a bit like Davis cup tennis, the only difference being that those involved are playing exciting, edge-of-the-seat tennis, and we are discussing the work programme of the European Commission.
As the Minister was speaking, I was struck, as I have been before, by how often such debates are taking place inside the Conservative party rather than more widely. It seems to me that the debate inside the Conservative party has governed much of our positioning in recent years, but not to our national advantage.
Sir William Cash
Is the right hon. Gentleman effectively saying to UKIP in his constituency that he does not regard the free movement of people and immigration as of any interest to his constituents?
Mr McFadden
I do not believe that that is what I said. I am interested in the hon. Gentleman’s intervention, because I thought that the issue for him was principally parliamentary sovereignty, rather than the free movement of people. Perhaps he has shifted his position, and I should stand corrected.
The Minister outlined the position on the numbers in the measures. I noted the scepticism with which the right hon. Member for Wokingham (Mr Redwood) greeted the numbers. I do not propose to go over that ground as the Minister has done so, but on the face of it the Commission is proposing a narrower, more focused programme—under 10 headings and 23 specific measures —than it has in the past.
At the top of the Commission’s agenda is something we would all welcome—an emphasis on growth and jobs. In a continent still struggling to recover from the financial crisis, it is right to have such an emphasis and focus on the very high level of youth unemployment, on doing what is right on the big issues, and on less interference in and over-regulation of issues that do not need it.
In his speech in London last week, Mr Timmermans, the vice-president of the Commission, said:
“It is incredibly important that we follow through on limiting the initiatives we take to those areas where EU action is urgent and needed. For too long we worked on the premise of doing things because they were nice to do; I want to work on the premise that we do it because we need to do it, because Member States can’t do it by themselves alone. There needs to be added value of acting on a European scale.”
I very much welcome that emphasis from Commissioner Timmermans, and I hope that it is followed through in reality as well as in the written plan.
Mr Redwood
As the right hon. Gentleman is such a fan of all this interference, will he say which of the 23 measures will actually reduce the shocking levels of youth unemployment, which are the curse of Europe thanks to the idiotic policies of this Union?
Mr McFadden
I thank the right hon. Gentleman for painting me as a fan of all the measures before I have even spoken about them. One measure that could help to create jobs would be a properly negotiated free trade agreement between the EU and the United States. That has the potential to help our exporters and create jobs.
Kelvin Hopkins (Luton North) (Lab)
I gently say to my right hon. Friend that there is a range of views in our party, as well as in the Conservative party, but I shall not dwell on that.
I heard Mr Timmermans speaking in Rome fairly recently, and to hear him one would have thought there were no problems at all. He was speaking in Italy, where unemployment is at horrendous levels—not as horrendous as in Spain or Greece, but still horrendous. He said that countries could not act on their own. The reason they cannot act on their own is that they are cemented into the euro and have no control over their exchange rates or interest rates. If they had control over macro-economic policy, they might be able to act on their own, but they cannot do so at the moment.
Mr McFadden
I thank my hon. Friend for his intervention. Certainly in the speech that I heard last Thursday, the commissioner was not saying that there were no problems at all. He acknowledged many of the problems and said that he was determined to take a different approach in responding to them from that taken in the past. It is perfectly fair for Members to say, “We’ll see how that works out. Let’s see if he’s serious about what he says.” However, that certainly is what he says, and that is reflected in the work programme.
There has been legitimate frustration about over-regulation in the past. If the Commission is serious about weeding out proposals that are not going to go anywhere, that have been lying on the table for years without prospect of agreement or that have been bypassed by events, we should welcome that. I welcome the emphasis on growth and jobs and on regulation in the work programme.
The other measure on growth and jobs, to which the Minister referred, is the Juncker package of investment. As the right hon. Member for Wokingham said, it is a combination of real new money and the encouragement of private sector investment and loan guarantees. If the Minister has a chance to respond to the debate, will he say what bids this Government have made for any proportion of that money? What investment projects have been brought forward and where are they in the country?
Specifically, will the Minister say how that proposal is to be organised in England? There has been concern among local authorities and local enterprise partnerships that they are not permitted to put in bids and that they all have to go through Whitehall. In an environment in which we are discussing devolution to various parts of the country, it is important that areas in England get a fair crack of the whip in terms of submitting bids to this fund for their projects. I hope he will say something about that.
The Minister said that the work of the UK’s commissioner, Lord Hill, on the capital markets union was important. It has long been said that SMEs are too reliant on bank finance and that we need to encourage more forms of finance. What input can this country, with its expertise in financial services, have in those proposals and in the development of the capital markets union, not only from a Government point of view but from a private sector industry point of view? Nowhere in Europe is better placed than the UK to contribute to ideas on financial innovation and financial services.
Of course, some of the work programme does not apply to us. There are measures that apply only to the eurozone. It is important that countries outside the eurozone, such as the UK, continue to play a full part in the EU.
If the Minister responds to the debate, will he update the House on progress on the Transatlantic Trade and Investment Partnership? In the question and answer session that followed Commissioner Timmermans’ speech last week, he was asked about TTIP. He said that if it was to be done, it would have to be done by the end of this year. He did not spell this out explicitly, but I think he meant that after that, the timetable of the American presidential election would make it more difficult to negotiate an agreement. Is it the Government’s view that if TTIP is to be done, it has to be done this year? If it is, what input are we having to ensure that that happens, provided that the important concerns about public services and investor-state dispute settlement procedures are worked through and considered properly?
This debate about the work programme reminds us of the way in which we debate these things. My right hon. Friend the Member for Leicester East (Keith Vaz) asked when the Government received the programme. It always strikes me that we debate these things after they have been adopted. Parliament’s method of scrutinising European affairs is not the subject for tonight, but this debate reminds me that these things can be overtaken by events.
There is reference in the work programme to security issues. Like the Minister, I do not agree with Mr Juncker’s suggestion for a European army. However, I do believe that the issue of security is becoming more, not less, relevant, to our European relations. One need only look at the situation in Ukraine. Since the work programme was published, we have had the shootings at Charlie Hebdo, which were a terrible reminder of the common threat we face from extremism. It is therefore important when debating the programme to realise that whatever was written last year has to keep up with the changing nature of events. When he sums up, will the Minister say a few words about what action is being taken on collective security, not of the kind that Mr Juncker referred to with the European army, but in terms of sanctions against the aggression that we have seen in Ukraine?
The work programme refers to migration—that is, migration from outwith the European Union into the European Union. Last week, I met Ministers in Rome. This Minister will be aware that migration is an issue of huge concern for the Government of Italy, given the steady flow of boats from the desperate situation in Libya. The Italian Government feel, with some justification, that they are dealing with a situation that affects all of Europe. We have seen the end of the Mare Nostrum programme and the adoption of the Triton programme. That does not resolve the intense humanitarian crisis nor the political problem in Libya, where there is no Government of any coherence.
Keith Vaz
My right hon. Friend is absolutely right about illegal migration. Obviously, one of the priorities in the Commission’s programme is migration. Some 3,200 people died in the Mediterranean last year, but a quarter of a million people crossed from north Africa into the EU, so this is a serious issue. Getting a common policy to stop the people traffickers exploiting migrants ought to be at the top of the EU’s agenda.
Mr McFadden
I very much agree with my right hon. Friend. The Italian Foreign Minister told me that of the estimated 270,000 illegal migrants who landed in the EU last year, 170,000 landed in Italy. This cannot be a problem for just one member state, because it is broader than that. I shall be interested to hear the Minister’s views on our Government’s input in dealing with both the consequences and causes of this problem.
Concerns have been raised about what is not in the programme. The Minister wrote to the Chair of the European Scrutiny Committee about the air quality package and the circular economy package. Concerns about that have been raised by Members of the European Parliament as well. A number of Select Committee Chairs have written to the Chair of the European Scrutiny Committee on the matter. It is therefore clear that there is a lot in the work programme that will concern the House.
Before I end, I want to turn to the amendment tabled by the hon. Member for Stone (Sir William Cash) and his colleagues on the European Scrutiny Committee. It asks that the Government ask the Commission to develop policies relating to the free movement of citizens. That is something that the Labour party has put forward, and before Christmas my hon. Friend the Member for Leeds West (Rachel Reeves) produced proposals that related to how free movement interacts with access to benefits and public goods. We would like the Commission to work with member states on that, because access to benefits and public goods is not an issue just for the UK but for other member states. We saw that in the recent European Court judgment on the Dano case, which was initiated in Germany and affected a lady who it was judged did not have the right to access social security benefits. We have an interplay between a founding principle of the European Union and social security systems that are national in nature, and it is right that we discuss work in that area with the Commission.
Mr Redwood
When the right hon. Gentleman said that Italy should not be expected to handle the problem of migrants to Italy on its own, is he recommending burden sharing? Is he saying that other member states should take a share of those migrants through a common policy?
Mr McFadden
It has already been agreed that Triton will be a European programme and not just an Italian one—the right hon. Gentleman is a little behind the pace if he thinks that is a new departure, because it has already been agreed. The question is about the resources given to the programme and whether it is capable of meeting the task it faces. I remind him of the terrible figure given by my right hon. Friend the Member for Leicester East of the number of people who have drowned in the Mediterranean over the past couple of years.
Mr McFadden
I have already given way to the right hon. Gentleman.
In conclusion, I believe that this work programme is a step forward from previous ones. It is closer to British priorities and reflects much of what we want to see, although we do not endorse everything in it and some of it does not apply to us. Like all such programmes, it is only a plan on paper and it will remain to be seen whether the Commission delivers as it has promised. It is certainly urgent that it does deliver to meet real and urgent priorities, and ensure that the European Union works in the interests of its citizens over the next five years. Whatever the plan says on paper, that is ultimately how it will be judged.
Sir William Cash (Stone) (Con)
I beg to move amendment (a), at end add
‘; and urges the Government to encourage the Commission to develop policies during 2015 relating to the free movement of EU citizens.’
It is truly shocking that it took more than a year for the Government to bring forward a debate on the free movement of EU citizens, given that the document in question was recommended as long ago as January 2014 regarding a matter of enormous significance that was discussed on 5 December 2013 in the Justice and Home Affairs Council. This issue goes right to the heart of the immigration question, which in turn lies at the heart of the European question as it applies to the United Kingdom, and it is a matter of intense political and controversial debate. It is inconceivable that this matter should have been so shockingly delayed, and that led the European Scrutiny Committee to ask the Leader of the House to give evidence and be cross-examined on why these important matters, including free movement as well as things such as the EU budget and the charter of fundamental rights, are outstanding. We were told by the Minister and the Leader of the House that they could not disclose how that decision had been arrived at because it was a matter of collective Government responsibility. The Committee is glad that by tabling the amendment it has forced the Minister to welcome it.
Jacob Rees-Mogg
I wonder if I might add to what my hon. Friend is saying. Although the Minister and the Leader of the House said that they could not possibly tell us who was blocking the provision, the Home Secretary, the Foreign Secretary, the First Secretary of State and the Minister for Europe all intimated that they were very much in favour of having the debate, and wished that it could be brought forward as a matter of urgency although forces beyond their control prevented it.
Sir William Cash
My hon. Friend is right in every respect and we have all the transcripts to prove it, including from various Secretaries of State. It is effectively an example of decisions being taken behind closed doors in smoke-free rooms. Those are the new modernising methods of government. I disapprove of them and so does my Committee, as shown by the fact that we tabled this amendment.
Let us move on and accept that we are now able to debate free movement; I particularly want to concentrate on EU migration and benefits in that context. I wrote a letter to the Prime Minister on 18 November, which was 10 days before he made his speech at JCB in Staffordshire on the question of free movement, and I drew attention to the fact that I believed we were faced with a real problem. However much we might want to make certain changes, unless we were prepared to dig in and make this Parliament supreme on matters of such vital national interest, we would not get the necessary changes because some of them required treaty change and others required overriding the charter of fundamental rights. Although the Prime Minister accepted in questions after his speech that some of those matters would require treaty change, in reality that is not on offer in any substantial way from the other member states.
The principle of free movement is embedded in the ideology and principles of the other member states, and particularly the European institutions and European Commission, despite how that may affect us as a small island with a greatly increasing population and pressures on social housing and education—the list is endless. Unlike other member states such as France, Germany and Spain that have large land masses and can absorb many more people, we simply cannot do so. It is therefore a matter of vital national interest—quite apart from questions that I will mention in a moment about abuse of the system—that has led us to a position where we have desperately wanted to put our foot down. Some of us believe that we should override European legislation and the charter of fundamental rights by using the “notwithstanding” formula—that is notwithstanding the European Communities Act 1972, which is past legislation as I have said many times before—so that we can ensure that our Supreme Court obeys the laws of this Parliament which is elected by our voters in general elections.
When the election comes—it is only a matter of 60 days or so—this issue will be at the centre of gravity in that election, and we will be asked whether we will take the necessary steps in line with what voters insist on. I am afraid the answer to that question is that there will be no treaty change or overriding of the charter, and when I have asked Ministers and the Prime Minister whether they will use the “notwithstanding” formula, I have been told no.
Mr Redwood
On the narrower point of benefits, the Minister gave us encouraging news that we have control of our benefits system, as that is a reserved matter under the treaties. Does my hon. Friend recollect that on several occasions Ministers have been unable to change our benefits system in the way the British public want because of European legal blockages?
Sir William Cash
That is completely right. People think—in elements of the BBC and elsewhere, I suspect—that this is somehow a matter of policy, and that by using the right words one can change the effect of European law. No, we cannot. We have to pass legislation. There has to be a majority in this House to override European laws and regulations. It is, ultimately and tragically, a legal framework rather than just simply a question of policy based on the wishes of voters, as expressed by their representatives in Parliament. This has only fairly recently begun to gain traction with some people in the public arena, but not sufficiently, I am afraid, to achieve the kind of impartial analysis I believe is needed, for example in the BBC. Without going into this now, I have invited—in fact, I have effectively forced—the director-general and the editor-in-chief of the BBC to appear before my Committee to explain this problem in the kind of language that ordinary people can understand. That will take place on Wednesday afternoon at 2.30 pm, for those who want to take note.
The Prime Minister’s speech had a lot in it, which demonstrated the extent to which he wants to try to resolve many of these questions. That is undeniable, but the question we have to address, and to which I now turn, is the extent to which it would require treaty change or otherwise—that is the acid test.
My first general remark is that the package includes only one proposal that directly limits or imposes a quota on the number of EU migrants. This would relate to future accessions and so could be part of normal negotiations. However, to impose a direct limit on migration from existing member states would certainly require treaty change.
My second general comment is that many of the relevant treaty obligations have already been interpreted in this context by the European Court of Justice. The Court plays a huge, vital and exceptional role, and cannot be appealed against. It has already interpreted these matters as providing limitation on the action that member states can take in this area. Indeed, the recent case of Dano, which is frequently referred to—the Foreign Secretary referred to it on “The Andrew Marr Show” only this weekend—demonstrates that the Court can change its approach.
However, some of the judgments mentioned are long-standing, well-entrenched and engage charter rights. Any change along the lines suggested by the Prime Minister would therefore not be sufficiently strong, to the extent that they rely on the Court of Justice changing its established jurisprudence. That is why we want the Commission to take account of these points—these are the issues. The European Commission is the legal guardian of the treaties. The point I am making in this speech is that, in order to change the law to ensure that we can actually deal properly with the problems that come from free movement, we have to persuade the Commission, in its work programme, to take account of such relevant questions. It could be inferred from what the Prime Minister had to say that he accepted that some treaty change would be required—and in fact, when he was asked questions, he accepted that towards the end—but there are a number of real problems, and I will now turn to them.
The first problem that the European Commission will have to consider in its work programme is a stronger power to refuse entry and to deport criminals. The free movement directive, which the European Commission has to enforce, requires decisions to be taken on a case-by-case basis on the grounds permissible by the treaty. That provision reflects Court of Justice jurisprudence extending across a wide range of treaty rights, including the freedom to travel to other member states to receive services, which is highly relevant to the work programme. It is likely that any significant stronger action will require treaty change, particularly if it detracts from the requirement derived from the principle of proportionality to look at each individual case.
Secondly, I believe a ban on re-entry for those who have abused EU rights may be possible, as this falls within the public policy exception to the treaty right of free movement. However, there are again questions of proportionality.
Mr Chope
Is this not all pie in the sky? There is no way in which the Commission or other member states will agree to these fundamental changes. Is that not why we need to go back to basics and have a free trade organisation without the free movement of people, just as we have free trade agreements with other countries without having to take in all their people as a right, without any control over them? Would it not be better to work towards, for example, visa waiver systems?
Sir William Cash
I very much agree with what my hon. Friend says. In fact, if I may say so, I have said it many times in the past myself. However, we have to be able to identify the problems that have been presented by making assertions that we want this and we want that, in order to demonstrate the fact that it cannot be done before we move to the next step, which is of the kind that he and I would want: to address this on a realistic footing and to say to the European Commission, the European institutions and the Government that these proposals are simply not going to stack up because they are not going to happen. There is no chance of a treaty change as far as I can see—my hon. Friend and other hon. Members in the Chamber obviously agree—that will result in getting rid of the dangers presented to the United Kingdom as a result of imagining we will be able to do things, when in practice we know perfectly well it is not going to happen because we will not get the treaty change.
There is also the problem of access to tax credits, housing benefits and social housing for four years. The law of the Court of Justice indicates that an attempt to do this would be contrary to the treaty rights of free movement insofar as the limits on benefit extend to benefits for jobseekers linked to labour market participation and benefits to those who are classified as workers. Such persons are entitled to equal treatment as a treaty right. There is another problem. These things are not going to go away. My hon. Friend is completely right, as I have said so often, not to allow ourselves to be induced to believe that because we say something it will happen, particularly when we are dealing with the acquis communautaire and the rules and regulations that are imposed, which we voluntarily accepted in this House under the 1972 Act. We are the only country of the 28 member states that has the right, because of our constitutional arrangements—we do not have a written constitution—to make changes and override that legislation if we so wish to do. We can do it. The question is: have we got the political will in relation to matters of vital national interest?
Any restriction on access to social housing would likely be regarded as discrimination on the grounds of nationality. Thus, that too would be contrary to the treaty. There is then the question of removal if jobseekers do not find a job in six months. The law of the European Court of Justice overrides even this Parliament, by our voluntary agreement, but we can unwind it if we wish to do so by using the notwithstanding formula to override it and pass a law in this place. If jobseekers do not find a job in six months and are faced with removal, we could legislate. Under sections 2 and 3 of the European Communities Act, however, Court of Justice law prevents it, on the grounds that it interferes with the treaty right of free movement—insofar as a jobseeker can demonstrate that he or she is continuing to seek work and has a genuine chance of being engaged. Thus—again—treaty change is likely to be necessary.
Then there is the requirement for a job offer before entry—the same case law points to the requirement for treaty change on that account, too. Then there is the further restriction on the entry of non-EU family members. The rights of family members to enter with someone who has rights as an EU worker are set out explicitly in the free movement directive and could in principle be adjusted by amendment to the directive, but limits to wholesale change are set by the requirements not to undermine the essence of the treaty right of free movement and to respect human rights.
As I mentioned in my lead letter in yesterday’s The Sunday Telegraph, there is also the problem of human rights issues in respect of the deportation of terrorists, who can also insist on the right to family life under the present arrangements. We have to get real about this. We have to change it. So far, the Court has taken a consistently firm approach in favour of ensuring family life where these matters arise in the context of free movement, and it is likely to continue to do so—with huge implications for the number of people who can enter.
Finally, there is the question of whether there should be no child benefit for non-resident children. The requirement to pay child benefit for children in another member state is currently in the social security co-ordination regulations. It is theoretically possible to amend the regulations to end these payments, but it would raise the serious question of indirect discrimination on nationality grounds—again contrary to treaty free movement rights— and the same would apply to the proposal to limit child benefit paid abroad to that paid in the child’s country of residence.
I do not mean to criticise for the sake of it. I have tried to present the House with a proper examination and legal analysis of the problems, which would not have been the case had we not been able to debate the amendment, and it is now on the record that these are serious problems that cannot simply be washed away with fine words and which in most cases will require treaty change. When I wrote to the Prime Minister 10 days before his speech, I asked if he would be good enough to seek the advice of the Attorney-General and Government lawyers on the questions I raised. I trust that the House, the Minister and the Prime Minister will listen, and that we will take the steps necessary to deal with the vexed issue of immigration in a manner that overrides the treaties and the charter, as and when it is in our vital national interest to do so.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. We have four Back-Bench speakers and we need to finish at 10-past 8. In addition, I am sure the Minister would like a couple of minutes.
Keith Vaz (Leicester East) (Lab)
I will be as brief as possible, Mr Deputy Speaker.
As ever, it is a pleasure to follow the hon. Member for Stone (Sir William Cash), who has always spoken with authority on European matters and whom I congratulate on his persistence in getting these issues debated in the House. We do not know quite how long the delay has been since the Commission decided to have its work programme—
Mr Lidington
The work programme was published on 17 December, the explanatory memorandum was laid before Parliament on 14 January, the European Scrutiny Committee referred it for debate on 28 January and we are debating it on 9 March. It is not as long a delay as there has, I am afraid, been with some others.
Keith Vaz
I am most grateful to the Minister. It might not seem long to him, but, picking up on a point made by the shadow Minister, it is good to have these matters debated in the House as quickly as possible. If Parliament is to have any influence on the Commission, it is good to have them before us as quickly as possible.
Jacob Rees-Mogg
I support the right hon. Gentleman’s comments entirely. The Commission work programme is the equivalent of the Queen’s Speech, and it is inconceivable that the House would wait nearly three months before debating the Gracious Speech and then allow only 90 minutes to do so.
Keith Vaz
Indeed. As the hon. Gentleman says, there is the time issue. Several right hon. and hon. Members wish to speak—even if they are the usual suspects—and to give these issues our proper attention, we need longer than 90 minutes. I know how much you enjoy these European debates, Mr Deputy Speaker.
May I again congratulate the Minister for Europe on lasting five years? To get a five-year sentence under the criminal law, one has either to have been trading in firearms or to have been guilty of violent disorder. I do not know what he did right, but he is obviously the Prime Minister’s blue-eyed boy, because he has kept him tethered to the Dispatch Box as Minister for Europe. I would love to see how many stamps he has in his passport—but it is the EU so there will be no stamps. Anyway, well done to him for surviving so many of these debates.
I want to concentrate on one aspect of the five headline points in the Commission programme—migration. The hon. Member for Stone talked about legal migration and the issues confronting the British electorate—issues that we need to discuss—but I want to concentrate on illegal migration. On a recent visit to Calais, the Home Affairs Committee accepted the point made by the Mayor of Calais that once illegal migrants get there, they can see the UK and it is therefore already too late. Even the fence, like that used to surround and separate G8 leaders from the constituency of my hon. Friend the Member for Newport West (Paul Flynn), though robust, has been blown down twice. It is too late, once the illegal migrants get to Calais; this issue needs to be dealt with by the EU and the Commission at the point of departure from north Africa.
As my right hon. Friend the shadow Minister said, the Italians are bearing the brunt of this problem. More than 250,000 people travel cross the Mediterranean every year; 3,200 have died—those are the ones we know about; and the Mare Nostrum initiative has been stopped because Frontex simply cannot deal with the problem. It is not just Italy, though. In the past five years, the Committee has also visited the border between Greece and Turkey. We know what pressure the Greeks are under, because of their economic situation, and people are flooding into Turkey from Iraq and Syria, despite the efforts of the Turkish Government. Once they arrive in Greece, they are kept in detention for up to three to four months, before being released on the border between Greece and Turkey. They end up in Athens, but their destination of choice is the UK and western Europe.
Illegal migration is the No. 1 issue facing the EU, and although it is recognised as such in the Commission’s programme, under the heading “Towards a New Policy on Migration”, actually we do not hear enough from the Commission and Ministers about this critical issue. It requires a new deal with the countries of north Africa, particularly in respect of how the Egyptians, Libyans, Algerians, and to a lesser extent the Moroccans and Tunisians, deal with the people traffickers, who take up to €10,000 each from each migrant on the boat and then leave them, sometimes without a captain, in the hope that the Italian Government will send ships to save them, which does not always happen. So although it is not necessarily on the conscience of people sitting in this House, it is certainly on the conscience of the Commission, if it has one.
Dealing with illegal migration requires an EU approach; it is not just a matter for the United Kingdom. As I have said, once the migrants have reached Calais, it is far too late. I would be keen to know from the Minister today, and from his successor—unless the Minister’s party wins the election and the Prime Minister is persuaded that the right hon. Gentleman is prepared to do another five years—what is happening in the EU with illegal migration, because it is a huge problem that needs to be resolved.
Mr McFadden
Before the Chairman of the Home Affairs Committee finishes, will he clarify his view on burden sharing? Does he really think that if these migrants land in Italy, they stay in Italy—or is not the reality that once they get there, they will try to travel to other countries?
Keith Vaz
My right hon. Friend is absolutely right, and this is not helped by the fact that the Italians, because they do not want to deal with this problem themselves, give people travel documents so that they can travel on their own to other parts of the EU. That is why we cannot simply leave it to Italy; we need to sort it out. I am not talking about burden sharing in the sense that we all say that we are going to take a similar number of people, because I am not sure that that is what the British people want. What it requires is a robust approach to a Mediterranean crisis—and it is a crisis and it does need to be resolved.
Mr John Redwood (Wokingham) (Con)
This debate is a disgrace. This is a massive work programme with huge implications for the British people and our own country, yet we have been given 90 minutes. I can now make only a few of the points I wanted to make because two of my colleagues rightly wish to join in.
The Minister told us that he was delighted that this was a small and compressed programme of just 23 measures. These measures are huge for the jobs, growth and investment area. There are proposals that will have a direct impact on the economies of the European Union. In the section on economic and monetary union, two new taxes are proposed—a common consolidated corporation tax and a financial transactions tax. The Minister did not even mention them: I believe that they will be opposing them for the United Kingdom. One would have thought that a couple of major European taxes might have been worth a mention.
Nobody has had a chance to discuss the energy union proposals, which will directly impact on the United Kingdom. It is put down as one measure, but it is a whole raft of measures. The one that is scored is a strategic framework, but the strategic framework will lead on to a massive programme of regulation and legislation. The Minister obliquely referred to the idea that we want to integrate the market. Why do we wish to integrate it? Why do we wish to integrate the United Kingdom’s rather different energy market—we are an island with access to a lot of its own energy—with the continent of Europe, which has a terrible geopolitical problem because it has made itself so dependent on Russian gas.
As if that was not enough, my hon. Friend the Member for Stone (Sir William Cash) rightly said that migration and border controls—one of the leading issues in the run-up to the general election—is at the core of this work programme. That is exactly right.
I found rather surprising the Minister’s remarks about our legal opportunities for benefit reform. It seems to me that most of the proposals for solving our difficulties on benefits for migrants in the United Kingdom would be illegal under the current treaty. I have been going on about this for years and have recommended to Ministers that they put our benefits on a contributory basis and that they should be paid only if people have paid in for a specified number of years and/or have been in full-time education in the United Kingdom between the ages of five and 16, so that all British people would qualify, without it being discriminatory on grounds of country. If we did that, we could make the changes we want, but Ministers do not respond. They pretend that they can make these other changes, but they have not delivered them all and I think they will discover that a lot of them are illegal.
The economic programme should be much more urgent. I find it extraordinary that the Labour party can come here and show no anger or passion about the mass unemployment on the continent. If there were anything like 50% youth unemployment in Britain today or 25% general unemployment, Labour Members would be outraged and they would be here in their hundreds—not just three Members as now.
Mr Redwood
I am sorry, but I do not have time. The hon. Gentleman wants to make his own speech.
Labour would be outraged, but because this is happening on the continent of Europe and is the result of the euro and economic union policies from which we have rightly opted out, they do not seem to care less. They just accept that it has to happen. I think this House should be deeply angry about the mass unemployment on the continent and deeply angry about the permanent recession that has hurt certain countries. We should be deeply angry about the shambles that is the euro, which is doing so much damage to prosperity, opportunity and life hopes. We have no time to discuss any of that because we have been given only 90 minutes.
Kelvin Hopkins (Luton North) (Lab)
I shall curtail much of what I was going to say. I had a lot to say, and I greatly agree with the right hon. Member for Wokingham (Mr Redwood) about the crisis in the eurozone. I personally feel very angry as do many people in those countries. The so-called socialist party has disappeared in Greece to be replaced by Syriza, while Podemos is now in the lead in Spain. Working people are getting very angry about the appalling state of their economies and the impact on their people.
Let me speak briefly about the amendment moved by the hon. Member for Stone (Sir William Cash), the Chairman of the European Scrutiny Committee, of which I am pleased to be a member. I support the amendment, and I am pleased that the Minister intends to accept it, although I hope this is not going to take the place of a proper full debate on free movement and some declaration of what Government policy will be on free movement and what they are going to do about it. It matters greatly to our constituents.
I spent some six hours knocking on doors in my constituency on Saturday and Sunday, and the issue that cropped up the most was immigration and free movement. We cannot run away from it. We have to reach a position. If we want to say that free movement is fine and we are not going to do anything about it, then we should say that, although I think it will bring about a degree of anger from people. I agree with my right hon. Friend the Member for Leicester East (Keith Vaz), the Chairman of the Home Affairs Select Committee that this matter has not been taken seriously. He mentioned Frontex, which is an administrative and policy organisation; it does not have a border force.
What we really need is a European border force to help out countries such as Greece—a relatively impoverished country, with a big land border with Turkey—and Italy, with its enormous sea border and islands close to the north African coast. If we are serious about the problem, those areas have to be helped by a border force that is European in scope. When we visited Frontex in Warsaw some two or three years ago, it could not say that free movement was a shibboleth that it could not talk about, but that is what it hinted at in its speech. I think we have to take these issues more seriously.
As the right hon. Member for Wokingham said, unemployment in some of the euro countries is quite appalling. If we had Spanish levels of unemployment in Britain, we would have 7.5 million unemployed instead of about 1.9 million. Ireland has overcome its unemployment problem by exporting 300,000 people. That is the pro rata equivalent of 4.5 million Britons leaving. Just imagine if we had 7.5 million unemployed and 4.5 million emigrating to find work. That is the situation that faces these European countries and no one should gloss over the fact that this is all the result of forcing a single currency on these countries, which then prove unable to adjust to it.
After the crisis, we in Britain devalued and depreciated sterling by 27% against the euro and by 31% against the dollar. That was a major factor in helping us to avoid some of the extreme stresses that happened elsewhere. Even in Europe, we are seeing a country such as Switzerland pegging its currency to the euro for a little while, but when the peg was taken away, the currency appreciated by 30% overnight. There are great distortions in currency values right across Europe.
Denmark has pegged its currency to the euro and it is taking desperate measures to try to hold its currency down. I do not call it the euro; I call it, privately, the deutschmark because that it what it really is. Other countries are effectively pegging their currencies to the deutschmark. Desperate steps have been taken to hold it down. We are in trouble now—the Government are right that this is a problem for Britain—because the euro is depreciating pretty rapidly against sterling, which will cause serious problems for our economy, too. All these problems are caused by the foolhardiness of imposing a single currency on different economies, which should be able to flex their currencies, choose their own interest rates and create demand in their own economies so that they can give jobs to their people.
Jacob Rees-Mogg (North East Somerset) (Con)
Let me begin by talking about the way in which we have arrived at this debate, and also about the amendment that has been tabled by my hon. Friend the Member for Stone (Sir William Cash) and all the other members of the European Scrutiny Committee who were present at Wednesday’s meeting. It is highly unusual for a Select Committee to table a cross-party amendment on a subject that was recommended for debate nearly 14 months ago.
The Government should bear it in mind that no Government are in office for ever. They should bear it in mind that the great protection of our liberties is the House’s entitlement to debate what it wishes to debate, and that they should treat that entitlement properly and respectfully by allowing such debates to take place. They should also bear it in mind that delaying deliberately, for 14 months, a debate on the free movement of people—a subject which, as we heard from the hon. Member for Luton North (Kelvin Hopkins), is being discussed on every doorstep in the country—shows a contempt for the House of Commons that constitutes a grave error.
When things change and another party is in government, that party too will notice that it is possible to ignore the Standing Orders of the House. That party too will notice that it is easy to clamp down on discussion in what ought to be a hotbed of democracy, and our freedoms will ebb away.
The Government ought to be ashamed of themselves for their delay, and the Ministers who claimed to be so much in favour of the debate when they appeared before the European Scrutiny Committee—or on the Floor of the House during questions to the Leader of the House—ought to recognise that they are powerful figures. When the Home Secretary, the Foreign Secretary, the Minister for Europe and the First Secretary of State all want a debate, it is extraordinary that we do not get that debate. Who is the mystery figure, hidden somewhere in the corridors of Whitehall, who vetoes debates?
Jacob Rees-Mogg
Is it our right hon. Friend the Member for Sheffield, Hallam (Mr Clegg) who vetoed the debate, or is it simply some mystery in the machine? Is it some faceless bureaucrat, some poor fellow sitting patiently in the officials’ Box?
Jacob Rees-Mogg
Or is it my hon. Friend the Member for Cheltenham, who now wishes to intervene?
Martin Horwood
It certainly is not the hon. Member for Cheltenham, or indeed, I suspect, my right hon. Friend the Member for Sheffield, Hallam (Mr Clegg). The purpose of my intervention, however, is to take a rare opportunity to agree with the hon. Gentleman. I, too, think that debate on European matters in this place should not be subject to undue delay, and that European scrutiny that is scrunched into two short periods after a long delay is utterly inadequate when it comes to what the right hon. Member for Wokingham (Mr Redwood) rightly described as a European equivalent of the Queen’s Speech. We should take a fresh look at all this in the next Parliament. Nevertheless, I should like the hon. Gentleman to substantiate any other allegations that he makes about individual Members.
Jacob Rees-Mogg
I am grateful for that helpful intervention. I was only speculating that the right hon. Member for Sheffield, Hallam—my friend—was responsible. In fact, I think that that is unlikely; I think that the person in question is more deeply hidden in the machinery than such an easy target as the Deputy Prime Minister.
This topic is of fundamental importance. According to press reports that have appeared over the past few days, 187,370 Romanians and Bulgarians were given national insurance numbers in 2014 alone. In other words, more than 200,000 people from Romania and Bulgaria have been given national insurance numbers during the period in which we have been waiting for this debate. That is an extraordinary state of affairs. According to a report from Oxford university, the population has risen by 565,000 in three years, and two thirds of those people are from European Union countries. In London alone, the population of EU member state nationals has risen by 161,000, from 711,000 to 872,000, during those three years.
The Government shy away from debates on this subject, thinking that if they do not talk about it, the nation will not notice; but the nation has noticed. I see that the hon. Member for Rochester and Strood (Mark Reckless) is present. His entire party is making hay with the subject, because other politicians, including the right hon. Member for Wolverhampton South East (Mr McFadden)—other major political figures—are shying away from it. They believe that if they keep quiet, no one will notice. However, this is an issue of great importance to our constituents, who are worried about the sheer number of people who are entering the country because of free movement.
The Government are not setting out the groundwork for the renegotiation properly. At the December 2014 Council, they agreed to the following words, which appeared in the Council’s conclusions in relation to Switzerland:
“It”
—the Council—
“considers that the free movement of persons is a fundamental pillar of EU policy, and that the internal market and its four freedoms are indivisible.”
That seems to me to be a pretty bold statement, especially in connection with what we have heard about the Prime Minister’s speech on immigration being sent to Mrs Merkel for approval before being delivered. It seems that our policy on immigration must have the stamp of approval from Berlin, but we must be so committed to the European ideal that we view the free movement of people as unchallengeable. If we think that in regard to Switzerland, how can we renegotiate ourselves?
When I raised that question with my right hon. Friend the Minister for Europe earlier, he said that Switzerland had tied itself into a number of treaty arrangements, and that if it removed itself from one of them, it might find itself being removed from all of them. Surely that is exactly what we are trying to do in a renegotiation: surely we are trying to remove ourselves from some of the treaties to which we have agreed, but not from all of them. Perhaps the Government think that that is an equally disgraceful approach, but if it is sauce for the Swiss goose, surely it is sauce for the British gander. It cannot be right for the Government to take such a strong pro-European line in this regard. It shows a lack of sincerity in their approach to renegotiation—and if they renegotiate with a lack of sincerity, the British people are far more likely to vote to leave the EU, and the Government will get precisely the result that they do not want.
Time is short, and you, Mr Deputy Speaker, have asked for the Minister for Europe to be given a couple of minutes in which to wind up the debate. It is illustrative of how little time we have been allowed that a debate on the equivalent of a much longer Queen’s Speech and the free movement of people has been so truncated because of the Government’s failure to deliver on their promises. However, I want to make one more comment, in support of my right hon. Friend the Member for Wokingham (Mr Redwood). The financial transaction tax and the uniform corporation tax base represent a fundamental effort to take sovereignty from this country in fiscal matters, and patriate it to a European state. The fact that we have been given only 90 minutes in which to debate a matter of such importance is pretty poor according to the Government’s standard.
Mr Lidington
With the leave of the House, Mr Deputy Speaker
I am grateful to all Members who have spoken. Let me begin by dealing with the point with which my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) ended his speech, and which was touched on by my right hon. Friend the Member for Wokingham (Mr Redwood). The United Kingdom does not intend to participate in the two tax measures to which they referred, although we take an active role in discussions as those issues evolve, in order to ensure that we can resist a design which, even if such measures were taken forward by enhanced co-operation, might have an inimical impact on the interests of this country. Of course, if either measure came forward through the EU process to a decision by the Council or the Commission, it would be subject to scrutiny in the usual way, and Treasury Ministers would, I am sure, give evidence to the European Scrutiny Committee if asked to do so.
My right hon. Friend the Member for Wokingham also asked about the Juncker initiative. It involves the reallocation of €16 billion from other headings in the EU budget, and €8 billion from European Investment Bank resources. That sum of €24 billion is intended to allow for leveraging from other sources to produce the total of €315 billion that is being discussed.
A number of Members, notably the right hon. Member for Leicester East (Keith Vaz), spoke of the challenge posed by migration across the Mediterranean from Africa. The Government are very active through, for example, the Khartoum process, which involves EU states working with countries in the Horn of Africa, through our support for the three EU common security and defence policy missions which are intended to stabilise Somalia, and through our support for a comprehensive EU approach to the Sahel region. If we bring about more stable governance and some hope of a job and an economic future for the people in those countries, there will be less opportunity for the people traffickers, because there will be less desperation among the people. That needs to be part of this process, along with co-operation on criminal justice to disrupt the people traffickers and prevent them from going about their nefarious trade.
The right hon. Member for Wolverhampton South East (Mr McFadden) asked about bids from this country under the EFSI. The EFSI is still formally to be established. We have drawn up a provisional long list based—
Backbench Business
Nuclear Non-Proliferation Treaty Review Conference
(9 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Margaret Beckett (Derby South) (Lab)
I beg to move,
That this House has considered the forthcoming nuclear non-proliferation treaty review conference.
I thank the Backbench Business Committee for finding time for this debate, which follows the most recent meeting of representatives of the P5—the declared nuclear weapons states—which took place in London a couple of weeks ago. That was the continuation of a process initiated by the recent Labour Government, and this debate in turn is followed by the NPT conference itself for which, sadly, the ministerial segment will, for the second time in recent years, occur after this Parliament has been dissolved.
Last Thursday marked the 45th anniversary of the entry into force of the NPT. Designed in the wake of the Cuban missile crisis, and on the basis of near universality with 189 signatories, the NPT is a global grand bargain, whereby nuclear weapon states commit themselves to disarming, non-nuclear weapon states agree to remain nuclear weapon free, and all have access to civil nuclear power. This grand bargain has served the international community well for the past 45 years by helping to prevent the proliferation of nuclear weapons, holding the nuclear weapons states to account, and promoting the peaceful use of nuclear energy, something which has assumed greater importance as the threat of climate change has called into question the continued use of fossil fuels.
Since the treaty was signed, global stockpiles of nuclear weapons have fallen by more than two thirds and several countries have given up their nuclear weapons programmes. Unfortunately, the review conference held in 2005 failed to agree a final document, raising concerns about the future of the NPT. Perhaps in consequence, and not long after, an initiative was taken in the United States by two Republican and two Democrat elder statesmen, Henry Kissinger and George Schultz with Bill Perry and Sam Nunn, calling for greater progress from the nuclear weapons states on their disarmament commitments, which the NPT itself urges them to pursue. Following their initiative, I, as Foreign Secretary, gave a speech to the Carnegie international non-proliferation conference in 2007, outlining our Government’s disarmament agenda: our decision to further reduce our operationally available warheads to the very minimum we considered viable to maintain an independent nuclear deterrent; and our commitment to a substantial programme of work, to the practical steps which would be needed to underpin moves towards a world free of nuclear weapons, to working on transparency and confidence-building measures between nuclear weapons states, and, indeed, others, and to the technicalities of verification, particularly methods of verifying commitments on warheads.
The then Defence Secretary Des Browne addressed the conference on disarmament in 2008 and proposed closer co-operation between the five official nuclear weapons states, including not just regular meetings of Government representatives of the P5, but scientific and technical collaboration and co-operation, and meetings among those scientists. Therefore, when President Obama spoke in 2009 of his ambition to work towards a world free of nuclear weapons, there was growing international political momentum for serious discussion about nuclear disarmament and non-proliferation and about strengthening the NPT.
Following all these events, the four American spokesmen contacted me to press us to set up in this country a group like theirs to continue to address these issues. We set up a group called, rather infelicitously perhaps, the Top Level Group, composed of people of all major parties and none, including a number of former Chiefs of the Defence Staff. The present chair is the right hon. Member for North East Bedfordshire (Alistair Burt), who is in his place.
More recently, however, the momentum we saw in that period has been waning. This year’s review conference could decide whether that momentum once again gathers steam or grinds to a complete halt, as unfortunately many have come to expect. Many argue that the NPT has been tested to breaking point by failure of the process to deliver disarmament by the nuclear weapons states; by North Korea’s withdrawal from the treaty and its nuclear weapons programme; by the threat of a potential Iranian nuclear capability; and by the fact that nuclear armed countries, India and Pakistan, sit outside the treaty regime, along with Israel, which refuses to acknowledge that it possesses nuclear weapons.
In 2010, with that momentum for change in the political air, the last NPT review conference agreed a 64-point action plan. Unfortunately, progress on the plan has been limited at best. There was, for example, agreement to hold a conference on a WMD-free zone in the middle east to be held in 2012, a zone which has been long sought and is widely agreed to be desirable. Indeed, the Finnish diplomat Jaakko Laajava was appointed to promote and facilitate such a gathering and has made strenuous efforts to do so over these intervening years. Nevertheless, that conference has not taken place and looks unlikely to occur in the near future.
Several other key initiatives identified in the action plan also remain stalled, including substantive dialogue between the P5 states. The recent London meeting has resulted in a glossary of agreed terms, but this joint P5 process has been limited in terms of further substantive disarmament efforts. In particular, and sadly, there has been no progress on ratifying the comprehensive test ban treaty or the fissile material cut-off treaty.
In spite of this, there have been some positive developments since 2010. The US and Russia signed and ratified the new START treaty, limiting the numbers of deployed strategic nuclear arsenals of the two largest nuclear powers, and despite current tensions this treaty still remains in force. The UK has further reduced the numbers of warheads deployed on its submarines; three nuclear security summits, instigated by President Obama, have now taken place; and a new initiative on the humanitarian impact of nuclear weapons use has seen growing interest and participation from states and civil society.
Angus Robertson (Moray) (SNP)
The right hon. Lady is making a powerful speech. Will she say a little more about the series of international conferences on the humanitarian consequences of the use of nuclear weapons? There have now been three, and record numbers of states have taken part. Does she agree that we should welcome the participation of the UK, even although it only followed a decision by the United States to attend? Does she also agree that every future conference should, as a matter of course, be attended by the UK?
Margaret Beckett
It is not for me to bind future Governments, much as I would like to do so, but of course I welcome the initiatives and discussions on the humanitarian impact. To be frank, I am not sure that we need to say a great deal, because the potential humanitarian impact of a nuclear weapons exchange is clear to all. I would say to the hon. Gentleman, however, that we did push the United Kingdom Government to participate in the previous humanitarian conference. I hope that I am not breaching any confidences in saying that it was a matter of concern for us in the Top Level Group that when we in the Government promoted the notion of the P5 working together more closely on these issues, the last thing we wanted was for that to result in a lowest-common-denominator approach whereby if some of the P5 did not wish to attend, none of them would do so.
We were therefore very pleased indeed when our own Government decided to attend the humanitarian conference. The hon. Gentleman is probably chronologically correct to say that that followed the decision by the United States to do so, but I think he is being a little unfair to the present Government—perhaps uncharacteristically at this stage of the Parliament—by implying that that was the only reason that they decided to go. We had been pushing for them to do so, and we had been conscious that they were not reluctant to attend. We are very glad that the partnership of the UK and the US attended. That was the first time that any of the P5 countries had participated in the humanitarian initiative, and along the trajectory of the events now taking place the negotiators are continuing to work hard to secure a deal with Iran on its nuclear programme.
There have thus been a few positive developments, but it is clear that more needs to be done. Concerns have been raised at every review conference of the NPT, and they continue to be raised, about the failure to implement many of the commitments agreed—and those agreements were often hard-fought. It is critical that we reiterate and reinforce the importance of the treaty to the international community and the global nuclear regime. Many take the opportunity of the review conferences to question the viability and role of the treaty and the effectiveness of the UN disarmament machinery. I can perhaps understand some of those concerns.
The humanitarian impacts initiative has been seen by some as a means to circumvent the slow progress by the nuclear weapon states on their NPT disarmament obligations. There is a danger that the NPT bargain will begin to fracture unless all members, nuclear and non-nuclear, work in good faith to implement the provisions of the treaty. The nuclear risks that we face today are growing, not falling, and it is vital—as the American Secretary of State, John Kerry, said a few days ago—that we work to strengthen the NPT, not to undermine it.
We need urgent progress in several areas. The US, China, Israel, Pakistan, India, North Korea and other countries that have not yet ratified the comprehensive test ban treaty should do so as soon as possible, allowing it to come into force. The long stalemate in the Geneva disarmament conference on a fissile material cut-off treaty must be overcome to allow for a prohibition of the production of the basic materials required to manufacture nuclear explosive devices. Global leaders also need to stay focused on nuclear materials security: locking down the materials that can be used to build a bomb should be among the highest priorities of Governments, and officials must work to build an effective global system to track, protect and manage them. I fear that, unless we face up to our responsibilities and seek collectively to address these challenges, we are likely to face an even more dangerous and unstable nuclear future.
Sir John Stanley (Tonbridge and Malling) (Con)
This is a necessary and timely debate, and I should like to congratulate the right hon. Member for Derby South (Margaret Beckett) on securing it. Like many others on both sides of the House, I had until recently been moderately optimistic that we were winning the battle against nuclear proliferation. We had seen South Africa, and Libya under Gaddafi, coming out of the nuclear weapons business. We had also seen a substantial swathe of the former Soviet Union countries—now supposedly, and hopefully, independent sovereign states—no longer having nuclear weapons stationed on their soil.
More recently, however, I have become concerned that the battle that we were winning appears to be in danger of going into reverse. On the Korean peninsula, the North Korean regime under Kim Jong-un seems determined to try to acquire a nuclear weapons capability. If that happens, I fear that it will call into question the nuclear weapons possession policy of, say, the Japanese Government. In south Asia, we have the wholly unresolved question of the nuclear weapons situation between India and Pakistan. In the middle east, whatever the outcome of the current negotiations on Iran, I believe that the Iranians will try to maintain a break-out capability. I understand from recent conversations with Ministers in Saudi Arabia that if Iran does break out and obtain a nuclear weapon, we cannot rule out the subsequent possession of a nuclear weapon by Saudi Arabia.
This debate is therefore necessary and important. We should not forget, when it comes to weapons of mass destruction, that we still have a chemical weapons convention that is not being adhered to or acceded to by key countries, including Egypt, Israel and North Korea. We also have a convention on biological and toxin weapons that remains without a verification regime, which leaves that convention resting on paper and on trust. I was grateful to the Minister for sending me, in my capacity as Chair of the Committees on Arms Export Controls, a copy of the Government’s national report to the 2015 nuclear non-proliferation treaty review conference. I have to say that I found the report strong on the pluses, but rather limited on the more negative aspects of nuclear proliferation—some key issues and problems were skated over and others were not referred to at all.
I should like to pick out some key issues from the Government’s report. As the right hon. Lady has said, the comprehensive test ban treaty is of key importance; as we all know, it is not possible to have a truly effective nuclear weapon unless it has been subject to testing. I agree entirely with what the Government say in their report:
“The UK recognises the CTBT as a key element of the global disarmament and non-proliferation architecture”.
That is absolutely correct, and it is a matter of immense frustration to all of us that we still have eight remaining countries whose ratification of the CTBT is necessary in order to bring the treaty into force: China, Egypt, India, Iran, Israel, North Korea, Pakistan and the USA. I hope the Government will take the opportunity of the review conference to try to mobilise the maximum possible international pressure on those countries to secure their accession to the all-important CTBT.
The Government devote two paragraphs in their report to the planned—I stress that it is still no more than planned—fissile material cut-off treaty. I find those paragraphs most disappointing. The Government do not even skate over the real problem; they omit any mention of it, which is deeply regrettable. We all know why negotiations on the FMCT have not even commenced —why they have been stalled for years in the Conference on Disarmament in Geneva. It is simply because neither India nor Pakistan can reach agreement on what should be the treatment of their existing fissile material stocks. Those two countries and their disagreement have put into baulk the start of any negotiation on the FMCT. That is coupled with the fact that the Conference on Disarmament works on the basis of “consensus”, which everybody chooses to interpret as unanimity only. I simply do not understand why the Government fail to indentify that in their report as the key stumbling block.
The Minister will doubtless say in his reply, “There’s no need to worry, because the FMCT Group of Governmental Experts is going to resolve the deadlock.” I believe that is considerably optimistic and it may prove to be purely wishful thinking. In the Committees on Arms Export Controls, we have recommended to the Government that they should set a deadline for negotiations to start. In the absence of a deadline, there seems to be a compelling case for starting the negotiations in another forum, perhaps in a specially constituted commission, possibly within the United Nations. It is imperative that the negotiation of this treaty begins and is not subject to permanent delay as a result of the obstruction created by just two nations.
Given the key importance of missile technology control in preventing nuclear proliferation, I was disappointed that the Government make no mention of the Missile Technology Control Regime in their report. There are key holders of nuclear weapons that remain outside the MTCR, including China, India, Israel and Pakistan. Will the Minister tell the House whether or not the Government are actively seeking those countries’ membership of the MTCR? That information would be of great use to the House.
Another key nuclear non-proliferation organisation, which I am glad to say is referred to in the Government’s report, is the Nuclear Suppliers Group, of which, again, some key nuclear weapons holders are not yet members. I am referring to India, Israel and Pakistan. Will the Minister tell the House whether it is the Government’s policy to try to seek the membership of those countries to the Nuclear Suppliers Group?
On the hoped-for middle east weapons of mass destruction free zone, the Government’s report makes all the right noises. It says:
“We look forward to convening an inclusive conference on the establishment of a Middle East zone free of nuclear weapons and all other weapons of mass destruction…as soon as the practical arrangements for that conference are agreed by the states of the region.”
The key issue here, and the catch in the Government’s wording, is that the conference will not take place until the practical arrangements for it are agreed by the states of the region. The point here of course is that Israel and Iran will not and have not managed to reach agreement over the terms of their participation in such a conference. On that I certainly agree with the Government that without the participation of Iran and of Israel, there would be little purpose in having such a conference.
Finally, I am pleased that the little known but increasingly important additional non-proliferation scheme, the UK’s academic technology approval scheme, at least gets one paragraph in the Government’s report. The scheme, rightly brought in by the previous Government and continued by the present Government, enables us to debar students from UK universities if they are considered to pose the greatest risk by access to subjects that could lead to the proliferation of knowledge about weapons of mass destruction.
When the scheme was introduced by the previous Government, it was limited solely to debarring students from abroad coming to study at UK universities. Even when it was brought in, that decision was possibly somewhat questionable. But today, I suggest that the limitation of the scheme solely to those from abroad is really wholly non-sustainable in security terms. We have a threat level in the UK that is almost unprecedented. We know that we have hundreds of young people, who, most regrettably, have chosen to go to fight for Islamic State terrorists in Syria and Iraq, and it has been widely reported that substantial numbers of those have now returned to the UK.
The Committees on Arms Export Controls have, in successive reports, advocated that the Government extend the academic technology approval scheme to cover those who are in the UK, and not just merely students from abroad. Inexplicably, the Government have so far refused to accept the Committees’ recommendation, and I urge the Government in strong terms to do so given the current threat that we now face.
In conclusion, I wish the Government well in trying to achieve a substantive and effective outcome of the nuclear non-proliferation treaty review conference. They most certainly need to do so, as we are living in an increasingly dangerous world.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I have four people who have indicated that they wish to speak. If we go up to 13 minutes but no more, we will get everyone in on the same time.
Jeremy Corbyn (Islington North) (Lab)
I am pleased we are having this debate and congratulate my right hon. Friend the Member for Derby South (Margaret Beckett) on her initiative in applying for it through the Backbench Business Committee. I hope that it sets a precedent so that whenever a major treaty discussion is coming up the Government take part in a serious debate in the Chamber to set out their stall ahead of the conference and allow Members of the House to put their points of view.
To follow what was said by the right hon. Member for Tonbridge and Malling (Sir John Stanley), who spoke powerfully and effectively, let me say that there are massive dangers facing the world with nuclear weapons. There are dangers of proliferation, so we have a huge responsibility in the forthcoming NPT review conference to decide what we will do about it and what role we will take in the conference.
I have attended previous NPT review conferences and some of the preparatory committees, or PrepComs, which happen every year. There is a five-year review and an annual PrepCom. I remind the House that the initiative in setting up the nuclear non-proliferation treaty system came in part from a previous Labour Government led by Harold Wilson in an era when there was hope that the declared nuclear weapons states could, by their own actions and the actions of others, bring about overall disarmament in this world.
Although there are many cynics around, the NPT system has worked quite well. It has two important pillars. Let me take the second first, which is that the signatories to it that are not in possession of nuclear weapons must undertake not to develop them, use them or seek to have them in any way. By and large, that has been successful. Indeed, some former nuclear states, such as South Africa, have disavowed nuclear weapons and made themselves into non-nuclear states.
Crucially, the five permanent members of the NPT, which are the same as the five permanent members of the Security Council, must do the following under article VI:
“Each of the Parties to the Treaty undertakes to pursue negotiations in good faith on effective measures relating to cessation of the nuclear arms race at an early date and to nuclear disarmament, and on a treaty on general and complete disarmament under strict and effective international control.”
Britain is committed to those words of the treaty and in the run-up to the review conference should therefore consider two points. The first is the good work that has been done by so many states to divest themselves of nuclear weapons and bring about nuclear weapon-free zones, such as in Africa and Latin America. Central Asia has achieved a great deal and should be congratulated on that. The second is the role we seek to play in that and how we bring about further nuclear disarmament around the world.
The right hon. Member for Tonbridge and Malling was right to point out that previous review conferences, led by the late Robin Cook, by my right hon. Friend the Member for Derby South and by others, consistently made a strong case for a weapons of mass destruction-free zone conference to be held for the middle east. It is crucial that that conference takes place. I have attended previous review conferences and PrepComs in which the inability of the secretariat to convene such a conference—the Finnish Government have been tasked with that—has led to threats and walk-outs from the review conference, although not from the treaty system, because people are concerned that that conference has not taken place. At the last review conference and the last PrepCom every single nation attending, including Iran—Israel is not a signatory to the NPT—agreed that the conference should take place and once again the Government of Finland and others were tasked with ensuring that that happened. So far, it has not.
If that conference does not take place and there is not some progress on general disarmament across the middle east, the consequences, as explained by the right hon. Member for Tonbridge and Malling, are obvious. Saudi Arabia, Bahrain and many other countries have the resources, whether they want these weapons or not. What about Egypt? We can think of many examples of very wealthy countries in the region that could either buy the nuclear technology or develop it in concert. If there is not a general agreement on disarmament across the region that includes Israel and Iran, we will see the start of a nuclear arms race with incalculable dangers to the rest of the world. I hope that when the Minister winds up he will say that the talks that have taken place with Iran and the Government’s close relationship with Israel will put a great deal of pressure on this year’s review conference to set the date when the middle east conference can take place so that we can begin that process. I do not underestimate the difficulties, but if it does not take place, the dangers will be huge. One should not run away with the idea that everyone in Israel or Iran wants nuclear weapons, or wants to use them, or believes that their security comes from nuclear weapons. There are substantial bodies of opinion in both countries that there is a different way forward in the region.
A parliamentary delegation from Iran are visiting the House this week; I met them earlier this evening. They are very welcome. We will have a discussion with them on Wednesday morning. I hope that talks with them will focus on the nuclear issue—I am sure that they will—and human rights in Iran; that ought to be part of the dialogue. We should have that dialogue with all countries.
The dangers are so obvious. I hope that in his speech the Minister will outline the view that the UK Government will take in New York. Now that we are apparently into fixed-term Parliaments, every time there is a non-proliferation treaty review it will coincide with the British general election. That is more than unfortunate, because clearly it means that Ministers cannot attend at least the early part of the conference. If there is a change of Government—most of us hope that there will be—only some time on will the new Minister, or newly appointed Minister, be able to attend. The coincidence in the dates is very unfortunate indeed.
The humanitarian effects of nuclear weapons have been referred to. Three conferences were held on this: one by the Norwegian Government in Oslo, a second in Mexico, and the third, more recently, in Vienna, hosted by the Austrian Government. I attended the conference in Vienna, along with my right hon. Friend the Member for Lewisham, Deptford (Dame Joan Ruddock) and the hon. Member for Moray (Angus Robertson), who is speaking for the Scottish National party tonight. We took part in a very interesting round-table discussion for parliamentarians on the humanitarian effects of nuclear weapons.
If anyone is ever in any doubt about the need to move on from a dry, strategic debate—from “Nuclear this, nuclear that” and “Threat here, threat there”—I ask them to read the documents that were presented to the conference, and to think of the videos that we saw, about what the effect would be of one nuclear explosion anywhere in the world. There is the effect on the local climate and local economy, and the death of very large numbers of the population living anywhere near the explosion. There are also the catastrophic effects of multiple explosions, including a nuclear winter that would damage the climate and life chances of the entire planet. We are dealing with not battlefield bombs, but weapons of total destruction; that is what a nuclear weapon is for.
The Austrian Government were very serious about the conference, organised it extremely well, and gave a great deal of time and space to scientists and others to speak, and then to Governments to speak on the second day. I was delighted when the British Government announced that they would attend, along with the US Government. I wish that China, France and Russia had also been there. I suspect that they were there in observer capacity, at least; there was certainly a very large number of people observing that conference.
I was quite disappointed by the British Government’s statement at the conference. I ask colleagues to think for a moment of the atmosphere when the South African representative outlined why South Africa gave up its nuclear weapons, and how the continent of Africa became a nuclear weapon-free zone, and to think of the moral strength that gave South Africa at the conference. That was followed by the British saying that we needed to keep nuclear weapons for our own security. If we need to keep weapons for our own security, we have to be very clear where the threat is coming from and what security the weapons bring us, given that they increase the danger of nuclear proliferation around the world.
Before I conclude, I will quote a very small part of the interesting Austrian pledge made at the conclusion of the conference:
“Austria calls on all states parties to the NPT to renew their commitment to the urgent and full implementation of existing obligations under Article VI, and to this end, to identify and pursue effective measures to fill the legal gap for the prohibition and elimination of nuclear weapons and Austria pledges to cooperate with all stakeholders to achieve this goal”.
The pledge goes on to say that Austria
“calls on all nuclear weapons possessor states to take concrete interim measures to reduce the risk of nuclear weapon detonations, including reducing the operational status of nuclear weapons and moving nuclear weapons away from deployment into storage, diminishing the role of nuclear weapons in military doctrines and rapid reductions of all types of nuclear weapons”.
Thank you, Austria. Well done for that.
Angus Robertson
I am grateful to the hon. Gentleman for his contribution and for stating the position of the Austrian Government and so many of the other countries that took part in the conference. Given where the UK’s nuclear deterrent is in relation to its lifespan, is it not possible for the UK to embrace the opportunity to follow the courageous moral lead of South Africa and say, “Rather than wasting £100 billion on a new generation of Trident submarines, why not play a positive role in the world towards disarmament by scrapping the Trident programme?”
Jeremy Corbyn
I agree that this would be an opportunity for us to say, “We have looked at the dangers of nuclear proliferation. We recognise our obligations under article VI and we are going to fulfil them this time.” If we go ahead with spending £100 billion, plus whatever the design and redesign costs are, we commit ourselves to a massive expenditure, and to flying in the face of the spirit and moral purpose of the nuclear non-proliferation treaty.
I do not suggest cutting the expenditure in order to throw large numbers of people out of work in this country. What I say is, “Cut the expenditure to invest in high quality engineering. Use those skills—they are brilliant skills—to make other things that do not destroy the world, but instead help to build the world, and we pledge ourselves in the direction of a nuclear-free future.” I believe these things are possible and we have a particular obligation to bring that about.
If the five permanent members refuse to move in the direction that they ought to, who are we to criticise India and Pakistan for not reaching an agreement? Who are we to criticise any other state that wants to develop nuclear weapons? If we want a nuclear weapons-free world, it is possible. We have a responsibility to play a role in that. I hope that when the Minister speaks, he will tell me that he and I will meet in New York. I will be there as an NGO representative. I do not expect to be a representative of any Government after the election. There is relief on the Front Bench. However, I will certainly be in New York because I want to see real progress on nuclear disarmament. It is possible if people have the courage to do it.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I suggest that speakers limit themselves to nine minutes now. We have an extra speaker.
Dr Julian Lewis (New Forest East) (Con)
I will do my best, Mr Deputy Speaker.
I always like to start on a point of agreement with the hon. Member for Islington North (Jeremy Corbyn) where I can, and I can certainly agree with him that whenever there is a major conference of this sort coming up, it is only fit and proper that it should be debated in advance on the Floor of the House of Commons. Therefore, he can always count on me to assist him from my very different point on the disarmament versus deterrence spectrum, and the right hon. Member for Derby South (Margaret Beckett) can count on me to assist her, as I did on this occasion, to obtain the debate. I shall always approach the Backbench Business Committee for these debates, just as the hon. Gentleman has always assisted me when I wanted to have a debate about the importance of Britain’s strategic minimum nuclear deterrent. That, I am afraid, is as far as the points of agreement go.
In the brief time available I will take up a number of the differing suggestions and arguments that we have heard so far. “Who are we to criticise this, that or the other country for obtaining nuclear weapons if we persist in renewing ours?” I’ve got news for people who use that sort of argument: countries that are on the verge of obtaining nuclear weapons are not going to take a blind bit of notice of exhortations or criticisms from the likes of us. When countries acquire nuclear weapons, it is the result of a hard-headed reading of their own strategic interests. They do not do it by reference to whether a peaceful democracy that has a minimum nuclear deterrent, as we do, decides to keep hold of it.
Bob Stewart (Beckenham) (Con)
What seriously worries me is the fact that Russia has declared that we are an enemy and also suggested that, if necessary, it will use nuclear weapons to pursue the problems it faces abroad. That worries all of us.
Dr Lewis
It certainly does, and to show the ecumenical nature of that concern, let me quote from a recent article in The Herald of Glasgow by a former Labour Defence Secretary, later the Secretary-General of NATO, Lord Robertson:
“Those people seduced by the SNP’s obsession with abolishing Britain’s nuclear deterrent should perhaps Google the Budapest Memorandum of December 1994. They would see there a document representing the deal struck when Ukraine, holding the world’s third largest nuclear weapons stockpile, agreed to give them up in return for solemn security assurances from Russia, the US and the UK.
These countries, with France and China as well, promised to a) respect Ukrainian independence and sovereignty in its existing borders, b) to refrain from the threat or the use of force against Ukraine, and c) to refrain from using economic pressure on Ukraine in order to influence its politics. Don’t these promises look good in the light of the carnage we see on our TVs every night?
Yet that is what Ukraine got in return for unilaterally disarming. Some bargain. And it is legitimate to ask this; would Crimea have been grabbed and Eastern Ukraine occupied if the Ukrainians had kept some of their nukes?”
Mr John Spellar (Warley) (Lab)
The hon. Gentleman rightly draws attention to the Budapest memorandum, for which the United Kingdom has a degree of responsibility. Does he not therefore find it extraordinary that the British Government are hardly involved in the talks on the future of Ukraine?
Dr Lewis
I am not sure that we want to start discussing the foreign policy dimension of this now. The only reason I brought Ukraine into this particular debate was in order to focus on the impact on its future of its one-sided disarmament in return for unreliable and undeliverable guarantees from other countries.
There are two ways of looking at the state of defence, armaments, security and peace in the world. The way to which I subscribe was summarised by an inter-war chairman of the League of Nations disarmament commission, Salvador de Madariaga. He was writing about disarmament, which was very much in vogue in the early 1970s. This is what he wrote in 1973:
“The trouble with disarmament was (and still is) that the problem of war is tackled upside-down and at the wrong end… Nations don’t distrust each other because they are armed; they are armed because they distrust each other. And therefore to want disarmament before a minimum of common agreement on fundamentals is as absurd as to want people to go undressed in winter.”
I must point out that the hon. Member for Islington North, being typically objective about the matter, quoted article VI of the non-proliferation treaty in full. That is very important, because often it is quoted only in part. I wish to focus my remaining couple of minutes on article VI. It states:
“Each of the Parties to the Treaty undertakes to pursue negotiations in good faith on effective measures relating to cessation of the nuclear arms race at an early date”.
In so far as that affects Britain, it can be seen that we do not engage, and never have engaged, in a nuclear arms race. We have a policy of possessing a minimum strategic nuclear deterrent. Indeed, over the years, successive Governments—both Labour and Conservative—have reduced the number of warheads in that deterrent. And what direct response has there been to each and every one of those unilateral reductions? A big, fat zero. The ending of the nuclear arms race certainly applies to Russia and the United States, but it does not apply to China, Britain or France, because none of us has ever engaged in it.
Article VI goes on with a commitment to
“nuclear disarmament, and on a treaty on general and complete disarmament under strict and effective international control.”
That leads me to my final substantive point. There has been a lack of emphasis on the overall picture of what is recommended by article VI. It recommends not only a nuclear-free world, but a conventional arms-free world, so that we do not end up in a situation whereby countries get rid of all of their nuclear weapons and leave conventional arms bristling in the hands of the protagonists. We do not want to create a situation where, unless we are crazy, we abolish one type of deadly weapons system—whose use lies not in the firing of it, but in the possession of it so that nobody starts firing any such weapons—and replace it with a world that is riven by all the old rivalries that bubble away beneath the surface and that would rise to the surface once again if the threat of the balance of terror is removed.
When we get to that happy state—when we have a world Government and the lion lies down with the lamb—we can be absolutely confident that the moment has come to get rid of those nuclear weapons and, while we are at it, get rid of the navies, the armies, and the air forces as well. Some might say, “That’s nonsense. We don’t want to get rid of those conventional forces, because aggressors would take advantage of that against victim countries.” However, if that is what we think those aggressors would do if we get rid of all our conventional arms, we should ask ourselves what they would do if, without resolving those tensions and rivalries, we get rid of the nuclear stalemate and open up the world once again for conventional slaughter on a massive scale.
John Woodcock (Barrow and Furness) (Lab/Co-op)
It is always a pleasure to follow the hon. Member for New Forest East (Dr Lewis). Indeed, I have followed him far more often during my five years in Parliament than I ever envisaged I would when I first entered the House. I have also found myself in agreement with him far more than I had expected. May I implore him, however, not to use again the analogy of going around undressed in winter? That would make for a happier experience for everyone in the Chamber.
I want my party and my country to lead the way on non-proliferation. I am deeply proud to be sitting next to my right hon. Friend the Member for Derby South (Margaret Beckett), who as Foreign Secretary made Britain the very first country in possession of nuclear weapons to sign up to the ambition of global zero. That was a hugely important moment. The question is not whether but how to advance the cause of non-proliferation and disarmament.
Had I known that I would be following the hon. Member for New Forest East, I would have calibrated my arguments, because I want to make exactly the point that he has made. Under the previous Government, as the hon. Gentleman has said, the United Kingdom did many laudable things on non-proliferation, including, unlike any other member country of the P5, the reduction to a single platform. That is often not taken into account in the debate about submarine renewal: every other nation has other platforms, but we have gone down to a single platform, hugely reduced our stockpiles and de-targeted our weapons system. But what progress has there been? It is very hard or impossible to show how that has advanced the cause of non-proliferation, despite our good intentions in doing it.
To those who think that further unilateral gestures could kick-start some new move towards a nuclear-free world, I would say that that is just a fundamental misconception of what motivates states to acquire nuclear weapons. They do so not because they fear that America or the United Kingdom will launch a nuclear strike against them, but either to protect themselves from their nearer neighbours or to be able to threaten them.
If we are to accept the idea that a unilateral gesture could bring further progress, we must be able to answer this question: if the United Kingdom and America decided tomorrow to give up their nuclear weapons, would the world be more safe or less safe, and would we be less likely to have a nuclear catastrophe? It is unquestionably the case that instances of nuclear blackmail or threats of a nuclear catastrophe that destroys the world would be very significantly more likely if America and the United Kingdom were simply to get rid of their weapons without securing disarmament by other nations, particularly Russia.
That is why my party will never return to the days of the unilateralism of the 1980s. We will never accede to the demands of the Scottish National party and disarmers in other parties. It is a shame that the hon. Member for Moray (Angus Robertson) has vacated the Chamber after making his fatuous and wrong point about nuclear weapons. We will not do so, because it would be irresponsible and would set back, not advance, the cause of non-proliferation.
Although some people would try to argue otherwise, there is no conflict between my spending most of the day in Barrow shipyard with my hon. Friend the Member for Wrexham (Ian Lucas), a shadow Defence Minister, looking at the programme for renewing our deterrent submarines, and my standing here to advocate the best course to advance non-proliferation.
If we decided not to proceed with renewal, that would be precisely such a grand unilateral gesture. It would be deferred, perhaps by two decades, but it would mean that the United Kingdom abrogated its responsibility to its own citizens and those in allied countries under the UK’s nuclear umbrella in Europe.
Adam Afriyie (Windsor) (Con)
The hon. Gentleman is making a very solid case about our participation in the treaty. Outside the general agreement across the House on maintaining our nuclear deterrent, could we not make good headway on fissile materials, the transfer of academic technology and the Nuclear Suppliers Group?
John Woodcock
Yes, exactly. The hon. Gentleman makes very well the point on which I shall finish in a moment.
Such a gesture would not only abrogate our responsibility to our NATO allies, but would harm, not help, the push for disarmament by giving away the prospect of the UK being part of a future binding multilateral deal that reduced the nuclear stockpiles and nuclear capability of other nations. We must be honest and realistic about the environment in which the treaty will be discussed, and understand that without the renewal of constructive engagement with Russia there is no prospect of the great breakthrough that we ultimately need.
It is essential to pursue all the measures that have been mentioned by Government Members and my right hon. Friend the Member for Derby South, both because they are important in and of themselves, and because they send the clear signal that we will never deprioritise the need for nuclear disarmament. Any future Labour Government will remain committed to the goal of global zero. We will do the right and responsible thing while the world remains unstable and while potential adversaries, such as Russia, are greatly increasing their nuclear capabilities, rather than engaging in meaningful discussions on scaling them back. We will push for change and for the binding multilateral deal that is the only way we will achieve our ultimate goal of global zero.
Alistair Burt (North East Bedfordshire) (Con)
I add my thanks to the right hon. Member for Derby South (Margaret Beckett) for securing the debate and the Backbench Business Committee for allowing it. I agree with all colleagues who have spoken about the need for and importance of this debate.
I am grateful to the right hon. Member for Derby South for referring to my role in convening the Top Level Group of UK parliamentarians for multilateral nuclear disarmament and non-proliferation. I commend the work of the European Leadership Network with which we are associated and that of its director, Ian Kearns, who has produced a very good briefing for us, which contains conclusions and a letter of statement about the steps that are needed to make the 2015 review conference successful. I commend that briefing to the Minister and to the House. I may return to it if there is time later, but I doubt there will be.
I was in the happy position of being the Minister responsible for this issue at the time of the 2010 NPT conference. I had the experience that was described by the hon. Member for Islington North (Jeremy Corbyn), of arriving as a new Minister and after just two weeks having to address the Security Council and take part in negotiations. I do not say that I negotiated, because I did not, but I did take part in the negotiations that were going on in the conference.
May I put on the record my thanks to all those who are involved in the NPT and the arms control team in the Foreign and Commonwealth Office? I thank Ambassador John Duncan, who was there in my time, Jo Adamson who succeeded him and Mark Lyall Grant. The work that is done by our mission at the United Nations in New York and by our team in Geneva is first rate.
Being at such negotiations gives one a sense that this whole business is not about grand gestures but about hard graft. Romantic though I am, and although on occasion I lean in the direction that the hon. Member for Islington North espouses on a number of different causes, my romantic nature comes to an end in dealing with this business, and I am much more on the realistic side set out by my hon. Friend the Member for New Forest East (Dr Lewis). My experience not just of the NPT but of the arms control treaty is that success is gained through hard graft and much detailed work. A lot of that work is unsung and is done behind the scenes. It is negotiated by people who appreciate each other’s positions. The grand gesture is left to those outside. The detailed work that maintains our security is more likely to be done by those who share the same interests and some of the same fears.
The role of non-governmental organisations and others in the conference is genuinely important. Often, their ideas are not quite as fanciful as their rhetoric makes out. They are pretty hard-headed and know what can and what cannot be achieved. They are a necessary part of the process because they nudge us along. At the end of the day, reality kicks in and they are usually sensible enough to know what can and what cannot be achieved. I pay tribute to them. I met a number of them in New York and subsequently. They play a valuable role.
The moment we leave our senses at the front door and opt for the grand gesture, we are to some extent at risk. There are places in politics where one can take a risk and if it does not work, so what? There are other places where taking a risk means putting oneself and others in peril. My sense of those negotiations and my hope for the next stage is that we remember that but keep going.
I have three observations on the treaty. First, on more than one occasion I have described the WMD-free zone in the middle east as the most optimistically titled endeavour I have ever come across, but it is really important. As the Minister knows, it was one of the keys to getting that 2010 agreement where a number of middle eastern countries—not least Egypt—were keen for progress to be made. I have always shared the aspirations of those who believe that it is worth keeping going in this endeavour. If it happens, it will be a symbol of confidence in the region and add to it, but that will not happen unless the confidence is there. The work done by my friend Jaakko Laajava has been intense, and I know that he has every support from the United Kingdom. That the initiative has not happened is not a dodge; it is because the necessary confidence must be slowly and carefully built up. As we see in negotiations with Iran, and in Israel’s concerns about its security, that will not happen unless painstaking work goes on, but it is important not to lose sight of the importance of this endeavour and to press ahead with it.
Secondly, the right hon. Member for Derby South referred to the NPT as a “grand bargain”, which it is, and there are rights all round. Part of that decision in 2010 was to reaffirm the inalienable rights of all parties to the NPT to the peaceful use of nuclear energy. That applies as much to Iran as to anybody else. The current process to convince Iran—as well as the need for others to abide by the treaties if Iran is to abide by its part—is equally important. That is why I believe that the work being done on that deal at the moment, which will involve recognition of Iran’s right to civil nuclear power, will be an important part of what is being done.
Thirdly, let me mention the humanitarian aspect. I slightly regret the fact that when I was in office I did not sign up to the humanitarian conference that took place in Mexico. I was very undecided, and in the end I was persuaded by the argument that it was some back-door attempt to get a convention and that we would lose what the NPT was about. I am not so sure that that is really the case, and I am pleased that the Minister agreed to this year’s conference. Just a few months ago someone from one of the non-governmental organisations said something that I agreed with about why such a conference is important, which was that my generation grew up with the idea of what nuclear war could be.
I am young enough to remember some of the old films, and the CND debates and cruise missiles and all that they meant in ending the cold war, and everything we achieved. I remember the awful films that the hon. Member for Islington North referred to, the destruction we saw in Hiroshima and Nagasaki, and the terrible warnings, but a generation is growing up now that has no knowledge of that whatsoever. It is history; it is not what it was for us, which was the threat that when we went to bed we did not know what might happen the next day. To remind the world of what could happen seems not fanciful but important, not so that people leap in the air and say, “We must have none of these things”, but to make us realise why we must continue this progress and get somewhere with what the NPT grand bargain means and that that involves multilateral nuclear disarmament. I commend those who work on those different aspects to remind us of that.
In conclusion, at the end of the day this will not be a matter of legalese and what is in a treaty. It is a matter not of law but of will, and the world has not yet demonstrated the will for this, although the patient hard work is designed to get there. It is not about the detail but about the trust that will lead to the final stages of what work on the treaty has been about. It is not about the substance of negotiations but what is going on off-conference. It is about Ukraine, Iraq and Iran; it is about Israel, India, Pakistan and North Korea. It is about all those things that are happening off-side, because that plays into the confidence that is needed. I therefore very much agree with the conclusion of an article in The Economist last week:
“But for now the best that can be achieved is to search for ways to restore effective deterrence, bear down on proliferation and get back to the dogged grind of arms-control negotiations between the main nuclear powers.”
When it comes down to dogged determination to get the best deal, I know that the Minister is supported by the best team in the world who will do their best to ensure that we and all others succeed in the eventual aim of this grand bargain.
Paul Flynn (Newport West) (Lab)
I believe that this debate is about to take a turn that we have not seen in recent years. It has been very difficult to discuss Trident in this Parliament. Although I hope and will do all I can to make sure that colleagues in my party in Scotland are re-elected, the message I see day after day is that we are likely to have a group of people here who have put the ending of Trident at the top of their agenda. That will be a very significant change in this place. The suggested alternative of a grand coalition, if it went ahead, would not include many Labour Members.
The cost of Trident is £100 billion over its lifetime. Last week, a £5 billion increase in the cost of the clean-up in Sellafield was announced. On the same day, the news that we had sold our share of Eurostar was given headline treatment. It was sold for a seventh of the increase in the cost of the clean-up of Sellafield. The cost of clearing up the waste from Sellafield, mostly from the weapons we have created, will eventually cost more than £100 billion. These are vast costs. If we have in the new Parliament a phalanx of Members who put a very high priority on the elimination of Trident, we will have a public debate. I believe that that public debate will have a very significant effect.
Mr Spellar
Yet again, my hon. Friend repeats the £100 billion figure. Would he mind telling us how much a year that actually represents?
Paul Flynn
Taken over the period, I have given the accepted figure. I am not going into the details. I know the arguments, but the figure is realistic. The costs are enormous, but for the waste it is even greater. Forget about the cost of Trident, just concentrate on the cost of the clean-up that is going on at the moment. The clean-up of Sellafield has just been nationalised by the Government. The Labour Government actually privatised it some seven years ago.
It is a pleasure to follow my right hon. Friend the Member for Derby South (Margaret Beckett), who I heard on “Desert Island Discs” say that her greatest regret in a very distinguished parliamentary career—I had the great honour of being part of her team with Robin Cook in the late ’80s on the different subject of social security—was that progress has not been made on nuclear disarmament. I think there is a mistaken impression that there are those who believe in getting rid of all weapons overnight. That has never been the aim of the anti-nuclear movement. The aim has been to progress towards countries reducing their stockpiles and reducing the risks, until eventually there are probably just two nations possessing nuclear weapons: America and Russia. I believe that is the likely way ahead.
The hon. Member for New Forest East (Dr Lewis) has been making speeches on this subject for many years. I believe he is in a state where he ignores from his calculations the existence of the United States and regards us as the key player. That is only right if we believe we are back in the gunship days of the 19th century. If there is an attack on the Baltic states, they will not come looking for us to defend them; they will look towards the United States. The NATO countries met in my constituency in September. Of those 28 nations, how many are nuclear powers? Just three of them. The rest are not. The belief that we must punch above our weight—a hangover from Victorian times—has done us much damage. We did it in Iraq and Helmand. We punched above our weight, spent beyond our interests and died beyond our responsibilities.
I received a letter today from the Minister about the event on Friday to recall the heroism of those who died in Afghanistan, saying we had to be grateful to them because they reduced the threat of terrorism in Britain. No they did not—our being in Iraq and Helmand increased the terrorist threat. We did not get rid of the Muslim bodies threatening us; we multiplied them. We went from small organisations in one or two countries to a threat in many countries throughout the world. I was once expelled from the House for saying that Ministers were not telling the truth when they said to our soldiers, “Go to Afghanistan and you will stop bombs coming to the streets of Britain.” It was never true. It was never true when Tony Blair said he was going into Iraq to stop terrorism.
We have this whole mismatch—this idea that the threats in the world can be held back by nuclear weapons—but the threats are very different. We cannot hold back terrorism with nuclear weapons. We cannot hold back global warming with nuclear weapons. We cannot provide clean water to our planet with nuclear weapons.
Bob Stewart
But we can hold back the Russians from firing their weapons at us with nuclear weapons, and they have declared they are prepared to use them.
Paul Flynn
Does the hon. Gentleman really believe that the Russians would do that, knowing they would be committing suicide and that they would be attacked by America, not us? This is the delusion. We do not believe that the 28 countries of NATO, protected by America’s weapons, will ever be attacked by Russia with nuclear weapons. Thank goodness, we have had this long period of 70 years during which, by luck and good management, no nuclear weapons have been dropped—well, four were dropped over Palomares, and one of them has never been recovered, but we have never had a situation where a nuclear event seemed likely, with all the consequences that my hon. Friend the Member for Islington North (Jeremy Corbyn) mentioned but about which we have forgotten: of a global winter and other horrors.
We have to learn lessons and unite the world. There are many reasons to be optimistic. John Kerry has said:
“All countries…profit when there is smart, continuous action in the direction of nuclear disarmament.”
President Obama has said:
“The United States seeks the peace and security of a world without nuclear weapons”.
On 6 February, at the conference organised in London by the Foreign Office for the P5, the UK, the US, Russia —significantly—France and China, the P5 issued a statement saying:
“At their 2015 Conference the P5 restated their belief that the Nuclear Non-Proliferation Treaty remains the essential cornerstone for the nuclear non-proliferation regime and the foundation for the pursuit of nuclear disarmament, and is an essential contribution to international security and stability.”
For goodness’ sake, can we not proceed positively by seeking disarmament and trying to build confidence among the nations, instead of wallowing in the old cold war antagonisms and fantasies about our supreme position among the family of nations? That is not our position. We should pursue what realistic chances there are to reduce the tension and great danger from nuclear weapons.
Mr John Spellar (Warley) (Lab)
I congratulate my right hon. Friend the Member for Derby South (Margaret Beckett) on leading this debate and on her role in these issues over many years, not to mention her role in our party in a number of positions. She set the tone for the debate by the way she introduced it. It has been a good humoured, but extremely well informed debate.
My hon. Friend the Member for Newport West (Paul Flynn) was right to mention a degree of optimism. If we look back to when the nuclear non-proliferation treaty was originally drafted, we see that the expectations for the spread and proliferation of nuclear weapons were far worse than has been the outcome. What happened is certainly not perfect, but it is much better than was anticipated.
We have seen significant reductions in weapons worldwide, and particularly among the arsenals of Russia and the United States, which reflects the theme running through the debate that disarmament follows confidence, rather than confidence following disarmament. Many fewer countries than anticipated, although still too many, have proliferated, and Britain has played a prominent role in that, which we should not underestimate.
Under the previous Labour Government, in which I served as a Defence Minister, we cut the number of operationally available warheads from 300 at the time of the ’98 strategic defence review to fewer than 160 by the time of the 2010 general election. We reduced the number of warheads carried by submarines from 96 to 48, and we withdrew the WE177 nuclear capability from service. It is important, too, that there has been a cross-party priority for the UK to continue on that path, and I am pleased that the current Government have continued in that vein, and that the UK has been one of the most transparent of the nuclear powers in dealing with that.
As I indicated, the relationship between the US and Russia is the crucial one in nuclear negotiations. Those countries are the clear and indispensable leaders, I suppose one could say, with the overwhelming majority of nuclear capability. Reference was made to the strategic arms reduction treaty and to the on-off discussions that go on. Considerable developments have taken place, such as a substantial amount of nuclear material being removed not only from the United States but with the co-operation of the United States and Russia—yet things are not necessarily heading in the right direction.
We need to be concerned about the expansion of Russian capability and a major modernisation of Russia’s strategic forces—involving the deployment of two new types of sea-launched ballistic missiles, a new class of ballistic missile submarines, a new type of intercontinental ballistic missile; and work on a new bomber and long-range cruise missiles. Sir John Sawers recently indicated that Russia is prepared to use those weapons in certain circumstances. So while there are some encouraging trends, the trends are not all in one direction.
The hon. Member for New Forest East (Dr Lewis) reminded us that the prospect of nuclear war is horrific, but that conventional war is pretty awful as well. A number of Members, including the right hon. Member for North East Bedfordshire (Alistair Burt) and my hon. Friend the Member for Islington North (Jeremy Corbyn), mentioned Hiroshima and Nagasaki, but the fire bombings in Tokyo consumed huge numbers of lives, as indeed did the fire bombings in Hamburg, and we have recently heard more controversy over what happened in Dresden.
The horrors of civil war in Syria show that it is not only state-on-state conflict that can cause such tragedy and devastation. It can happen in well-armed civil wars, as well. Nor is it only in this or the previous century that we have seen these horrors. It was not a general during this or the 20th century who aptly said “war is hell”. It was General Sherman, who had seen more than enough of that during the American civil war, which led to huge loss of life and injury.
As the hon. Member for New Forest East rightly said, countries do not distrust each other because they are armed, but are armed because they distrust each other. That applies to nuclear issues as between India and Pakistan. The issue is not their possession of nuclear armaments, but the incessant pressure that they exert on each other and the great distrust that exists between them. I was very encouraged by the fact that embarking on discussions with Pakistan was one of the first acts of the new President Modi in India. That process will not be easy, but it is enormously important. The same applies in the middle east: disarmament will proceed from confidence, not confidence from disarmament. That is why it is so crucial for peace talks to be restarted, notwithstanding the difficulties that have arisen along the way.
My hon. Friend the Member for Newport West repeated what has been said in other debates that have been based on the proposition that nuclear weapons are an inappropriate response to many of the very real contemporary threats that we face, such as terrorism, insurgencies, cyber-attacks and climate change. Of course, they were never designed for that purpose. That is not their role. They are focused on state-on-state conflicts.
In Europe, given the increasing assertiveness of Russia, we are starting to see the re-emergence of that scenario. It is not only the actions in Ukraine that are causing concern; they are merely the most extreme symptom of a number of problems that have been manifesting themselves. There are, for instance, increasing pressures on countries in the “near abroad”, especially the Baltic states. I am pleased that the Government have responded by engaging in military co-operation with those states, along with other NATO countries. There are the cyber-attacks by which Estonia has been hit particularly badly. NATO is currently discussing whether a significant cyber-attack constitutes an article 5 attack on a member state. There is also increased maritime activity, especially submarine activity. Let me depart briefly from the slightly more bipartisan attitude that I have adopted in this debate, and say that I think it was absurd for a country that is as dependent as ours on its sea lanes for both trade and security to lose its maritime patrol capability. We have also seen the testing of our aviation defences, which has been very well publicised recently.
Incidentally, it is not just the United Kingdom that is experiencing such problems. They are also being experienced by, for example, the Scandinavian countries. There is a genuine public debate across a wide part of the political spectrum in two countries that have maintained a position of neutrality, Sweden and Finland, about whether they should consider a relationship with, or even membership of, NATO.
While being cautious, we should also be constructive. Indeed, as one of the P5, we have a special responsibility to be so. That is why—as a number of Members have mentioned—my hon. Friend the Member for Gedling (Vernon Coaker) and my right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander) wrote to the Prime Minister in November 2014, urging him to ensure that the United Kingdom was represented at the Vienna conference on the humanitarian impact of nuclear weapons in December. I agree with the right hon. Member for North East Bedfordshire that that was a difficult and delicately balanced decision, but I think that it was the right decision, because engagement is important.
That is also why it is important for Britain to play a constructive role in working for a nuclear-free world by not removing itself from the equation through nuclear disarmament, and why, at the Labour party conference, we committed ourselves to a minimum credible deterrent delivered through a continuous at-sea deterrent, while taking a leading international role in pressing the agenda of global anti-proliferation. Contrary to the view of my hon. Friend the Member for Islington North, ours is not a unilateralist party. The Scottish National party, whose members are conspicuous by their absence—they seem to have plenty to say, but they did not actually participate in the debate, apart from one Member who intervened—want to abandon our nuclear capability, while still applying to be part of a nuclear alliance in NATO.
As a number of Members said, the NPT review is coming up at a very inconvenient time. International conferences have taken place at inconvenient times in the election cycle. Potsdam was slightly disrupted by that, with one Prime Minister at the beginning and another at the end—a very welcome change, of course, and an encouraging precedent—but we should still be engaged, and the right hon. Member for North East Bedfordshire rightly mentioned the officials, the sherpas, who will be working on that. As he rightly concluded, a successful conference will not be achieved by grand gestures; it will be achieved by dogged determination, and although many of the details may seem arid, they are hugely important and relevant. We pay tribute to the officials for their work, and I hope that we have indicated that the UK and this House as a whole are determined that those discussions should succeed. We remain alert, but we also remain positive to working towards achieving a nuclear-free world and a safer world.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr Tobias Ellwood)
May I begin by joining others in paying tribute to the right hon. Member for Derby South (Margaret Beckett) and to the Backbench Business Committee for allowing this informative, detailed and constructive debate to take place? I have an interest in the Top Level Group, which has been mentioned a couple of times. Back in May 2011, it contacted me, to my surprise, because I thought perhaps this was an invitation to join it. It is an elite group for senior parliamentarians. I was not being invited to join, of course, but I was invited to chair a meeting taking place in the UK with Senators George Shultz, William Perry and Sam Nunn—sadly, Henry Kissinger could not make it—for the launch of the film “Nuclear Tipping Point”, which the right hon. Lady might be familiar with. That was my introduction to the issues we have been discussing today. They are of such importance that I am very pleased we have had this debate, but, as has been said, the timing of the conference could not, perhaps, have been worse.
The right hon. Lady reminded us that this is now the 45th anniversary of the NPT, and of the importance of access to civil nuclear power. My right hon. Friend the Member for Tonbridge and Malling (Sir John Stanley)—who sends his apologies for not being in his place as I understand that there are engineering works on his line—raised a number of issues that I will do my best to cover, and if I do not manage to address any points I will write to him and other Members. He mentioned the comprehensive test ban treaty, and I pay tribute to him for the work he does as chairman of the Committees on Arms Export Controls.
The hon. Member for Islington North (Jeremy Corbyn) has debated these matters on many occasions in this Chamber. He talked about this debate being a precedent. I concur: it is important that we have a debate prior to these conferences. He also mentioned the Iranian delegation that is in the UK—in London. I will meet it as well.
My hon. Friend the Member for New Forest East (Dr Lewis) once again demonstrated his expertise in this area. He spoke of the Budapest memorandum and the comments Lord Robertson made, a reminder that that was a political commitment, not a legal obligation, and of the consequences of obligations not being honoured.
I recently visited Ukraine with the hon. Member for Barrow and Furness (John Woodcock), a pleasurable visit during which we learned about that country and the challenges it faces. I pay tribute to the work done at the shipyard in his constituency, which has served our Royal Navy for so many years.
My right hon. Friend the Member for North East Bedfordshire (Alistair Burt) speaks with some authority on these matters, being the only former Minister on the Government Benches who has gone to one of the conferences, because of the timing of these events. He mentioned both the Top Level Group—I am pleased he is now chairing it—and the European Leadership Network. He paid huge tribute to the Foreign Office in this context, and I am glad that he did so. I would certainly echo those comments. He mentioned the role of the non-governmental organisations, and I am pleased to say that they are now participating more in these conferences. They play an important role in adding to the debate. He also made an astute observation about the changes in the generational view of the threat, in regard to what we grew up with during the cold war and to how the present generation perceive the threat.
The hon. Member for Newport West (Paul Flynn) has not changed his views. He made a number of points, and I am sure he will not be surprised to learn that I did not really agree with any of them. As I have said, I will do my best to write to any hon. Members whose questions I have not managed to cover today.
This Government remain a firm supporter of the nuclear non-proliferation treaty and of its three pillars: disarmament, non-proliferation and the peaceful uses of nuclear energy. The NPT has been a major factor in keeping the world safe since it came into force in 1970, curtailing the nuclear arms race. It remains at the centre of international efforts to stop the spread of nuclear weapons and ultimately to create a nuclear weapon-free world. All but a handful of the world’s states have now acceded to the NPT, but these accomplishments are not enough, and the treaty will continue to face challenges, as we can see from the nuclear weapons ambitions of North Korea and Iran.
The Government acknowledge that there is frustration at the perceived slow pace of global disarmament and at the delay in convening a conference on a middle eastern zone that is free from weapons of mass destruction. Agreeing an outcome at this year’s review conference will certainly be challenging. Despite that, we remain confident that consensus can be reached and that the NPT can be strengthened. Consensus proved possible in 2010 when states agreed an action plan setting out a framework for balanced progress across all the three pillars. That was a real achievement and we hope that the review conference will confirm its continued relevance.
We are committed to doing what we can to bring all sides together and to underlining our commitment to the NPT. I am sure that the House will therefore welcome the fact that, despite the small matter of the forthcoming general election, the Prime Minister has asked the Minister of State for Foreign and Commonwealth Affairs, my right hon. Friend the noble Baroness Anelay of St Johns, to speak during the opening week of the review conference. In addition, our ambassador to the conference on disarmament and a team of cross-Whitehall officials will play an active role during the negotiations.
Let me outline some of the ways in which we have made progress. First, on disarmament and deterrence, no one in the House should be in any doubt that the UK supports multilateral nuclear disarmament, negotiated in a step-by-step manner. We have made tangible progress unilaterally, and we have steadily reduced the size of our own nuclear weapons stockpile, by well over 50% since the cold war peak. We now have just one delivery system, provided by four ballistic missile submarines. We have made further progress since 2010. The Secretary of State for Defence recently announced that the UK had reduced the number of warheads on each of our deployed Vanguard class ballistic missile submarines from 48 to 40, and the number of operational missiles on each of those submarines to no more than eight.
The Government have also set out their desire to reduce our total nuclear weapons stockpile to no more than 180 by the mid-2020s. We estimate that our warhead inventory now stands at approximately 1% of the global total. This openness reinforces our belief that the UK is the most forward leaning and transparent nuclear weapons state. In this vein, the House will recall that we recently revised our national report to the NPT, detailing our progress. In addition, the UK has led the way on nuclear disarmament verification research. This includes our ground-breaking work with Norway, as well as a long-running programme of work with the United States. We look forward to the continuation and expansion of that work in the next review cycle.
Multilateral nuclear disarmament will be achieved only if all states are committed to creating a world without nuclear weapons that is safer and more prosperous for all. Globally, we have come a long way, but more than 17,000 nuclear weapons still remain. We cannot uninvent them, nor can we rule out a future nuclear threat to the UK. Our own reductions have not always encouraged other states that possess nuclear weapons to follow our example, nor have they influenced those seeking a nuclear weapons capability to abandon their attempts. This Government will therefore retain a credible and effective minimum nuclear deterrent for as long as the global security situation makes that necessary. That includes a posture of continuous at-sea deterrence, known as Operation Relentless. We have delivered that without pause since April 1969. It is the UK’s most enduring operation and, as both a Minister and an Army reservist, may I pay tribute to the families and the crew of the Royal Navy and all those involved? Continuous at-sea deterrence is the best way to deter the most extreme threats, including nuclear blackmail and a nuclear attack against the UK, our vital interests or our NATO allies.
Secondly, on the P5 process and the P5 conference, which have been mentioned by right hon. and hon. Members, relations between Russia and the west have become increasingly strained over the past year, as hon. Members will doubtless be aware. None the less, the UK is committed to a cool but hard-headed approach with Russia. The UK has therefore continued to advocate dialogue between all nuclear weapons states; building trust and mutual confidence are essential first steps towards achieving our goal of a world without nuclear weapons, even during these testing times. The P5 process has therefore continued. We must not forget that before the dialogue was initiated by the UK in 2009 the five nuclear weapons states did not get together as a group to discuss nuclear disarmament issues. The UK hosted the sixth P5 conference in London last month and we believe that this engagement is beginning to deliver. I would recommend the statement I made to the House on 12 February to those who wish to read in more detail about the conference outcomes.
Thirdly, let me deal with the humanitarian impacts of the use of nuclear weapons. The House will recall that the UK participated in the most recent conference in Vienna, mentioned by right hon. and hon. Members, on the humanitarian impact of the use of nuclear weapons. Ministers took that decision in part because we recognise the importance that many NPT states and hon. Members of this House attach to this initiative. It was also done because we share the deep concern at the humanitarian consequences that could result from the use of nuclear weapons. Let me make it clear that we hope never to use nuclear weapons, but we do aim to deliver a deterrence effect at all times, and we would consider using our nuclear weapons only in extreme circumstances of self-defence, including the defence of our NATO allies. That is why we work to prevent the spread of nuclear weapons and their technology, and to keep weapons safe and secure.
Dr Julian Lewis
I entirely agree with the thrust of the Minister’s argument, but may I urge on him a change in terminology? I would prefer it if he would talk about “firing” nuclear weapons when he is referring to “using” them, because on our side of the argument we believe that they are used every day to keep the peace and prevent other nuclear powers from blackmailing us.
Mr Ellwood
I do not want to get caught up in the nomenclature, be it firing, launching or something else, but I understand the thrust of what my hon. Friend is trying to say.
Let me conclude on the conference. Our attendance in Vienna did not mean a deviation from our support for a step-by-step approach to multilateral disarmament. Some in the international community would like to force the pace of disarmament in a way that does not take into account wider security considerations, such as trying to set a fixed timetable for disarmament. We do not support that.
Fourthly, let me deal with the middle east weapons of mass destruction-free zone, which my right hon. Friend the Member for North East Bedfordshire said was an interesting description. The UK certainly resolutely supports the goal of the middle east zone free from weapons of mass destruction and the 1995 NPT resolution on the middle east. We also remained committed to convening a conference on such a zone, as was mandated in 2010 by the very conference that he attended.
Jeremy Corbyn
Will the Minister assure the House that the UK delegation to New York will make real efforts to try to ensure that there are side meetings and so on to try to bring about this conference, because the dangers of it not happening are huge?
Mr Ellwood
I agree with the hon. Gentleman. New York presents the next opportunity for us to ensure that we push these points forward. It is sad, as Members have said, that we have not been able to move on this matter. Many Members spoke passionately and with concern that, if we do not seek a resolution on this, we could see further proliferation, with nations deciding to turn their back and to seek to arm.
There has been real progress at the consultations over the past couple of years. Remaining differences can be bridged with political will on both sides. We regret that, to date, further consultations have not proved possible, and we accept, sadly, that a conference will not take place before the review conference. As the hon. Gentleman points out, New York might be the opportunity for us to reconvene on this matter.
Alistair Burt
Will my hon. Friend confirm that the idea of the facilitator, Mr Laajava, to have these consultations resulted from his not being able to secure the conference itself? The consultation, far from being a step away from the conference and therefore something to criticise because it was not getting to the end that we wanted to reach, was a necessary step to build the confidence that would allow the conference to take place. My friend Jaakko Laajava is to be commended for what he is trying to do.
Mr Ellwood
I certainly agree that, given the work that has been done in the past two years, there are grounds for cautious optimism. We can work towards that in New York at the UN General Assembly.
Turning to the fissile material cut-off treaty—the FMCT—the Government want negotiations on fissile material cut-off as soon as possible, and we continue to work with partners at the conference on disarmament to press Pakistan to end its block on the start of negotiations.
The comprehensive test ban treaty was mentioned by a number of Members. The UK has long been a supporter of the comprehensive test ban treaty, and was one of the first countries, along with France, to ratify the treaty in 1998. We continue to push for the eight remaining annex 2 states to ratify the treaty through bilateral discussions.
In conclusion, the UK remains deeply committed to the NPT and the principles for which it stands. In many ways, our aims for the review conference are simple: to uphold the NPT across its three pillars along with the web of regimes and controls that complement it; to deter non-compliance and see greater adherence to safeguards; to continue to work for the universalisation of the treaty, bringing the remaining few into the international non-proliferation architecture; to underline again our commitment to the goal of a world without nuclear weapons and to zero tolerance of proliferation; and to continue to support the global expansion of civil nuclear activity to high standards of safety and security, and in line with non- proliferation obligations. This Government are clear that we will maintain a credible and effective minimum nuclear deterrent based on a continuous at-sea deterrence for as long as the global security environment makes that necessary.
Margaret Beckett
I thank all those who have welcomed this debate, particularly the tone of it. I also thank the Minister for his commitment that such a debate should always precede the review conference in future. I think that everyone has accepted that establishing and maintaining trust is key and that the best way to do that is through the P5 process and other such steps, which continue that hard negotiation and detailed work to which the right hon. Member for North East Bedfordshire (Alistair Burt) referred. I echo the praise that has been uttered by Members on both sides for our team of officials, but say how much I think it will be a help to them for it to be as clear as it has been in this debate that there is cross-party agreement, across this House, on the importance of this issue, on Britain’s role in trying to help maintain the process of the NPT review conference and on improving and sustaining that vision of a world free of nuclear weapons to which all of us adhere.
This has been a constructive debate. I welcome all those who have participated and it seems to me that maintaining the vision to which so many have referred is the key to maintaining progress.
Question put and agreed to.
Resolved,
That this House has considered the forthcoming Nuclear Non-Proliferation Treaty Review Conference.
Business without Debate
Madam Deputy Speaker (Mrs Eleanor Laing)
With the leave of the House, we shall take motions 7 and 8 together.
Immigration
Motion made, and Question put forthwith (Standing Order No. 118(6)),
That the draft Special Immigration Appeals Commission (Procedure) (Amendment) Rules 2015, which were laid before this House on 15 January, be approved.
That the draft Immigration and Nationality (Fees) Order 2015, which was laid before this House on 2 February, be approved. —(Harriett Baldwin.)
Question accordingly agreed to.
European Union Documents
Motion made, and Question put forthwith (Standing Order No. 119(11),
European Semester
That this House takes note of European Union Documents No. 15985/14, a Commission Communication: Annual Growth Survey 2015, No. 15953/14 and Addendum, a draft Joint Employment Report from the Commission and the Council, accompanying the Commission Communication on the Annual Growth Survey 2015, No. 15988/14 and Addendum, a Commission Report: Alert Mechanism Report 2015 (prepared in accordance with Articles 3 and 4 of Regulation (EU) No. 1176/2011 on the prevention and correction of macroeconomic imbalances), and an unnumbered Document, European Economic Forecast Autumn 2014; and acknowledges the priorities identified in the Annual Growth Survey of boosting investment and renewing commitment to structural reform and fiscal responsibility, and the contents of the Alert Mechanism Report. —(Harriett Baldwin.)
Question agreed to.
Sittings of the house (Westminster Hall) (16 March)
Ordered,
That the Backbench Business Committee may determine that a sitting should take place in Westminster Hall on Monday 16 March to consider a petition which a Member of the House has requested be debated; and paragraphs (1) and (5) of the Standing Order No. 10 (Sittings in Westminster Hall) shall have effect as if the phrase “e-petition or e-petitions” and the word “e-petition”, wherever they occurred, were replaced by the word “petition”. —(Harriett Baldwin.)
Todmorden and Calder High Schools
(9 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Craig Whittaker (Calder Valley) (Con)
My predecessor, the Labour MP for Calder Valley, tried in vain for 13 years to convince her Government to rebuild both Calder and Todmorden high schools. The two schools have been at the top of the local authority priority list for many years, nay for decades. The problem with the previous Labour Government’s Building Schools for the Future programme was that these schools never hit the criteria to be rebuilt and without a change in the criteria they would never have been rebuilt. The two criteria of the Building Schools for the Future programme were deprivation and underachievement, but neither school was considered by the then Labour Government to be in an area of deprivation and both overachieved according to the criteria set by that same Government. It was therefore inevitable that my predecessor would fail in her attempt to get them both rebuilt under that programme.
Since becoming the MP for Calder Valley nearly five years ago, as well as for the three years before that, I have had a constant stream of people visit the schools, including the previous Secretary of State for Education, my right hon. Friend the Member for Surrey Heath (Michael Gove); the previous Minister responsible for children and families, my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton); the Minister responsible for school reform, my hon. Friend the Member for Bognor Regis and Littlehampton (Mr Gibb); the Prime Minister’s office; the director of capital at the Education Funding Agency; the director of finance and commercial at the Department for Education; the chief executive of the EFA; and a plethora of people from the funding agency. Every one has either pledged money or agreed that something needs to be done about these schools.
The problems at the two schools have been extensive, with gas leaks, electricity substations replaced, sewer collapses, banisters on stairwells too low for health and safety, heating systems that are so old that at one end of the building it is like a sauna and the other end it is like a freezer, asbestos, prefabricated buildings that are a couple of decades past their usable life, mould, water retention behind rendered walls, crumbling windows and crumbling windowsills, as well as the fact that both schools battle the blight of flat roofs that need constant repairs and leak like sieves. Those are just a few of the issues.
At Todmorden high school, the local authority has allocated an additional £250,000 per annum just for unexpected repairs. At Calder high school, when they built the Ted Hughes theatre not too many years ago in memory of our locally born national poet laureate they found that the part of the building on which they were building the theatre had no foundations at all.
Both schools are a mess. The fact that their teachers teach and pupils learn to their full potential is testament to the excellent heads, their management teams, excellent teachers and superb pupils. Calder high school was built in 1935 but did not open until after the war, in 1950. It was built for 350 students, but today it caters for 1,500 students and staff. It was also our country’s first comprehensive school, and with the exception of the separate sixth-form building, built over a decade ago, the building is mainly in its original form—all flat-roofed. Todmorden high school is a specialist high school for visual arts, but trust me, nothing at all about the buildings can be considered visual art. It was built in 1958, it too is all flat-roofed, and it leaks like a sieve. The Pennine wind howls through the windows, which constantly rattle, and the extortionate energy bills add to the global warming issue, rather than keeping the young people in the building warm.
Imagine the excitement, then, when it was announced that instead of the criteria used for Building Schools for the Future, there would be new criteria around dilapidation and places. Finally, after nearly two decades, these two schools were on a level playing field with others, and everybody assured me that justice would be served. Every school in the UK was to be surveyed, and finally, after the unfairness of Building Schools for the Future, both Todmorden and Calder high schools would be in with a real chance of getting the money, not only because they had been promised it by the Prime Minister, no less, and the Secretary of State for Education, but because the process for getting the money was finally to be fair.
In this Parliament, there have been only two lots of announcements of funding under the Priority School Building programme: PSBP 1 and, more recently, PSBP 2. Both schools narrowly missed out under PSBP 1; both, after the applications were ranked, came in the early 300s. The Government announced moneys to rebuild the first 261 schools. On that basis, it seemed a sure bet that they would be in the next round. PSBP 2, however, was done on a block-by-block basis, so schools applied to have blocks rebuilt, rather than the whole school. This time, because the Government used the surveys that had been done for prioritising schools, funding for 467 blocks was announced. This time, Calder high was the school with the lower block score, at around 1,700, and Todmorden, which everybody knows locally as being the most dilapidated of the two, scored 2,638, which is absolute nonsense.
I asked the Minister for Schools only last week about the property data surveys and why he would not publish the rankings of schools. My right hon. Friend replied:
“we have no plans to publish a ranking list of surveyed schools, which could be misleading without taking into account other information supplied by schools and local authorities with their PSBP 2 bids.”—[Official Report, 2 March 2015; Vol. 593, c. 661.]
If the DFE is taking into account other information supplied by schools and local authorities, why did we spend millions of pounds on property surveys? Why did the Department not use the statement of priorities, which every local authority uses as a working document, and uses to allocate maintenance spend? That could have saved the Department millions of pounds by preventing the carrying out of additional surveys—surveys that do not appear to be a true reflection of the real state of dilapidation. In fact, it was only a decade ago that it ceased to be a requirement for local authorities to submit those statements of priorities to central Government. I accept that not every local authority will now be using the same format. However, as it is down to individual local authorities to allocate maintenance spend priorities, they will have some form of working document that they use to allocate funds.
If the survey is not the only basis, in the interests of openness and transparency why will the Minister not let everyone know what other things are taken into account? We know locally that the surveys do not reflect the reality on the ground. If they did, Todmorden high school would be ranked as a higher priority than Calder high school. It is not.
After reviewing the survey data following the decision about phase 2 of the Priority School Building programme, I raised concerns about how robust the surveys were, in particular for Todmorden high school. After what seemed like a whirlwind tour of all and anyone who would listen, many of them agreed to my request for a second look to be taken at the surveys, particularly that of Todmorden high school. The director, finance and commercial, at the Department for Education and the chief executive of the Education Funding Agency have said they would look again at the surveys. The Prime Minister’s office has said that it would ask for a re-survey. The Secretary of State has said that she will ask for a re-survey. Even the surveyors have said they will do another survey.
The problem appears to be that the Minister seems to be blocking this. May I ask the Minister why he is blocking attempts to have at least Todmorden high school re-surveyed or the survey re-examined? Similarly, I am told that, even if we did manage to have Todmorden re-surveyed and it was correct, the Minister would not allow it to be added to the list anyway, despite there being contingency within the list. May I ask the Minister if this is true and, if he is blocking any other school being added to the list, why?
Finally, the Prime Minister promised money for Todmorden high school and the previous Secretary of State for Education promised money. Every person whom I have dragged around the schools over the years agrees that the schools need to be rebuilt, the 2,500 students and teachers at Todmorden and Calder high schools all agree that these schools need rebuilding, and every parent and grandparent of those young people who live and work in those communities know that the schools need rebuilding. Many parents tell me that the schools needed rebuilding when they went to them. Why does the Minister believe that he knows better than all these people? Why will he not reconsider having the schools looked at again? Why will he not agree to put them on the PSB2 programme if he got it wrong?
The Minister for Schools (Mr David Laws)
I congratulate my hon. Friend the Member for Calder Valley (Craig Whittaker) on securing this important debate. I understand how important this matter is to him, and I recognise that he is and has been a strong advocate for the schools in his constituency.
It clearly is not right for pupils and teachers to work in buildings in a poor condition where learning is disrupted and staff time is diverted from the necessary focus on teaching. High quality school buildings send out an important signal to young people and to those who teach in schools about the importance that we place on education. It can also help to raise the aspirations of many young people, in particular those from disadvantaged backgrounds, if they are educated in appropriate settings. Investment in the school estate is one of this Government’s highest priorities, and it is our aim that every child will have a good quality school place in buildings that are safe and fit for purpose.
Over this Parliament the Government have spent some £18 billion on school buildings. This year we allocated a total of £1.4 billion to help improve and maintain the condition of school buildings, and have recently announced a further £4.2 billion in school condition funding up to 2017-18. This is in addition to the major investments in the Priority School Building programme, and the announcement of a second phase of that programme. Since 2011, we have also invested £5 billion in the creation of new school places in response to need, and we recently announced a further £1.3 billion in basic need funding for 2017-18 for new school places.
The Priority School Building programme aims to rebuild or refurbish those schools or individual school buildings in the very worst condition. I entirely agree with my hon. Friend that we should prioritise on the basis of need, not on the basis of deprivation, attainment or other factors that were considered by previous Governments. Through the first phase of PSBP, 260 schools are being rebuilt or will have their condition needs met. We are now actively engaged with all 260 schools in the programme—19 are already open in new buildings, 82 construction contracts have been signed, and the other schools are all in various stages of design and development. We are still aiming for all schools to be open in their new buildings by the end of 2017, two years earlier than originally planned.
In May 2014, as my hon. Friend indicated, we launched a second phase of the Priority School Building programme—PSBP2—a £2 billion programme between 2015 and 2021 to undertake rebuilding and refurbishment projects in schools with buildings in the very worst condition. While the first phase of the programme worked on the basis of the condition of the whole school site, through PSBP2 the Department has refined the approach to target individual school buildings as well as whole-school rebuilds where appropriate. That is for the good reason, as I am sure he will understand, that some schools have a large number of buildings, some of which are in a very good state and some of which are in an absolutely terrible state. It is not reasonable to overlook buildings in a very bad state simply because of the state of some of the school’s other buildings. This allows limited funding to be focused much more tightly on addressing specific issues in a school estate.
That approach has been made possible by the introduction of the property data survey programme—the most comprehensive survey of the school estate ever undertaken—which has provided information on the condition of individual school buildings. It has sought to do so—I emphasise this for my hon. Friend—in a way that is consistent across the country so that we do not rely on surveys that have been undertaken in very different ways by different local authorities and responsible bodies, on the basis of which it would not be possible to allocate money from central Government because we would not know whether there was consistency across the country.
Craig Whittaker
I accept what my right hon. Friend says about surveys, but the local authority surveys of Todmorden and Calder high schools are consistent. For decades, Todmorden high school has been prioritised streets ahead of Calder high, yet under the national surveys it is completely the other way around. Surely there is cause to look again at the national surveys of those two schools, because they are completely at odds with what we know locally.
Mr Laws
My understanding is that, following my hon. Friend’s representations to the Prime Minister and the Secretary of State, the Department looked very closely at the judgments we made on those school buildings, and we continue to believe that they were right, but I will move on to that point in a moment.
I would like to make it clear at this point that I, as the Minister responsible for the capital programme, have not resisted any proposals that have been put to me in relation to buildings in my hon. Friend’s constituency, or any proposals from anybody in the Government. The Department received expressions of interest in the programme on behalf of 1,299 schools, covering over 3,300 property data survey blocks, which was a much greater number than for PSBP1. That was probably because of the willingness to accept individual block bids and, as my hon. Friend will know from his time on the Education Committee, because PSBP1 had a large private finance element, which put off some bidders, whereas PSBP2 is entirely from public capital.
Of the 1,299 schools that applied, 277 have been successful, which means that well over 400 school blocks will have their condition needs addressed, as my hon. Friend indicated. Individual school buildings were prioritised for inclusion in the programme on the basis of data from the property data survey programme, together with the information supplied in schools’ expressions of interest. Our aim was to identify those blocks where the poor condition is most highly concentrated, where the continued operation of the school is most at risk and where the cost of addressing the issues would present those responsible for schools with the greatest challenges, given the allocations we are able to give them at a responsible-body level.
I understand that my hon. Friend has concerns about the property data survey, particularly with regard to Todmorden and Calder high schools. The property data surveys were all conducted by professionally qualified building surveyors and engineers who are experienced in undertaking condition surveys in schools. Consistency among the surveyors was ensured by using detailed guidance and a standardised surveying pro forma developed by the EFA. The Royal Institution of Chartered Surveyors provided feedback to the EFA on the methodology we used throughout the development of the programme and it has endorsed our approach.
Data from the surveys were subject to a rigorous quality assurance and audit programme. Schools’ responsible bodies were also given the opportunity to review their data and they provided feedback to the EFA on any discrepancies prior to the data being used. I know that Calderdale council raised a number of queries about the property data survey information. They were reviewed by our independent technical advisers in line with our published criteria for changes, and they decided that the original survey information should stand. I am sure that my hon. Friend understands why we took the decision to base the initial property data survey on a visual inspection only. An intrusive survey of every one of the schools that applied would potentially have damaged the existing school buildings and increased the risk of our disturbing any asbestos present in each building. The additional costs, as well as the inconvenience to schools, would have been significant.
We recognise, of course, that every survey has its limitations, which is why we invited those applying to the Priority School Building programme to submit additional local information. We considered the information submitted on asbestos and structural issues alongside the property data survey information. We have published information on the Government website on the methodology used to prioritise the programme.
In the majority of cases, the schools prioritised for the Priority School Building programme were not even in the previous Government’s Building Schools for the Future programme, which shows the stark gap between the previous plans and the priorities in many areas. The cost of PSBP schools is up to a third lower than that of BSF schools, saving millions of pounds per school. We are building or improving more than 800 schools during this Parliament, compared with less than 400 under Labour’s BSF programme. We have already completed more than 200 new school buildings since the last election.
The starting point for deciding on schools for the programme was the information contained in the property data survey, specifically the degree of need shown in the worst two condition grades in the survey, namely condition grade C, where elements are exhibiting major defects and/or not operating as intended, and condition grade D, where they are life expired or at serious risk of imminent failure. The need shown in those grades was then divided by the gross internal floor area of the block to produce a relative condition need value per square metre, to allow sensible comparisons to be made.
We automatically included in the programme blocks with a significant structural or asbestos need issue that could only be sustainably addressed by rebuilding, as well as those with condition D need that required the most substantial funding and would not otherwise make the programme. The remaining blocks were then ranked by the need per square metre calculation, including any structural and asbestos costings.
In the case of Calder high school—I believe my hon. Friend has discussed these matters with some of the senior members of the EFA—three blocks were included in the application. In those blocks, the degree of grade C and D need was simply less than those schools that were successful in their application. Indeed, the need was considerably less, as my hon. Friend knows. As part of the prioritisation process, we reviewed the information that was submitted with the school’s expression of interest in relation to structural and asbestos-related issues. As with all structural and asbestos issues raised, they were analysed on a consistent basis by our technical advisers to identify whether the need was immediate and significant enough to be accepted for automatic inclusion or for additional need to be priced and considered in the ranking process. The issues identified at the school did not, unfortunately, pass that assessment.
In the case of Todmorden high school, the expression of interest covered six blocks that all made up a single block as part of the property data survey. Again, the simple fact was that in the worst two condition grades C and D, the property data survey showed the school to have low need. Actually, it was shown to have no need at all in the worst condition grade D, and certainly much lower need than schools that were ultimately selected as part of the programme.
My hon. Friend will know that another of his schools was successful in the Priority School Building programme 2. Cragg Vale primary school was successful on the basis of the structural concerns raised in the school’s expression of interest. Independent technical advisers reviewed the information submitted by the local authority and confirmed that a retaining wall had been condemned and posed a risk to the school. The cost of the repair to the retaining wall was priced in line with Priority School Building programme 2 and PDS pricing. However, that would have addressed only the wall, and we could not be confident that it would have addressed the underlying issues causing the movement. The school was classified as having no viable repair, and was therefore escalated to the list. As he will understand, sometimes more significant structural issues are not automatically visible to those of us who are not experts in such matters, so a school may look in a better state superficially, but have a higher condition need.
We should be clear that the fact that Todmorden and Calder high schools were unsuccessful is not to say that they do not have condition issues that need addressing. We encourage responsible bodies to bid only for their worst blocks, and selection for the programme was made by comparison with other blocks in poor condition. To put that in context, the property data survey holds data on almost 60,000 blocks across England. It is likely that the successful blocks had a combination of very poor condition elements in their building—in other words, failing boilers as well as issues with their external and internal walls.
PSBP2 is intended to sit alongside, not to replace, the responsibility that local authorities, governing bodies, trustees, dioceses and other bodies have for the maintenance of school buildings in their care. As my hon. Friend will probably know, since 2011 we have made available more than £23 million in capital funding for the provision of new school places and the maintenance of schools in Calderdale. We have announced a further £16 million of funding for 2015 to 2018. Academies in Calderdale have successfully bid for more than £17.5 million in funding through the academies capital maintenance fund, of which about £10 million is for academies in my hon. Friend’s constituency. Over the 2011 to 2018 period, Calderdale schools will receive £22 million for the improvement and maintenance of the school estate.
I understand that Calderdale council is considering using part of the allocations to address some of the issues at Todmorden school. I would encourage it to do so, because that is exactly what the money is for. Indeed, the fact that the local authority has put forward these particular schools as part of the bidding process for PBSP2 implies that it must be concerned about their condition. Therefore, they should be a real priority for the money we have allocated to the local authority. We understand that local authorities have competing priorities for their capital resources, but I am sure that my hon. Friend is making the case to Calderdale council for investment in these schools.
Because of my hon. Friend’s representations to me, the Secretary of State, the Prime Minister and senior members of the Education Funding Agency, I have asked EFA officials who lead on the delivery of our national school building programme to contact Calderdale council to offer their expertise in the development and procurement of capital schemes. I invite the council and my hon. Friend to make any further and final representations that they wish to make following either my comments or his in this debate.
In addition, I hope that EFA officials, who are able to offer expertise in the development and procurement of capital schemes, can review the full range of options for addressing the building condition need at Calder high and Todmorden schools. As I have previously said, we are delivering school building projects at a third of the cost of the previous Government's BSF programme, and, if appropriate, we intend to provide Calderdale council with access to the same procurement routes that allow us to deliver such savings. As a local council, it can, if it thinks it appropriate, use the money we have devolved to it to seek to prioritise these schools, and, following the efficient methods of procurement to which the EFA has access, to do so as effectively as possible.
We want to allow those responsible for the maintenance and improvement of school buildings, such as Calderdale council, to plan well across their estates. It is precisely for that reason that we have, for the first time, provided certainty on school condition allocations over the next three years. That is why my hon. Friend’s local council now has a significant amount of additional money to tackle this need.
I am enormously grateful to my hon. Friend for drawing attention to the building issues facing schools in his area. I hope that I have explained the process of prioritising schools in the Priority School Building programme. I am sorry that he has so far been disappointed with the results, but I hope that we can work with his local council to deliver the right result for these schools in his constituency.
Question put and agreed to.
Written Statements
Oil and Gas Authority (Appointment)
The Secretary of State for Energy and Climate Change (Mr Edward Davey)
I am pleased to announce the appointment of Sir Patrick Brown as the Chair of the Oil and Gas Authority. His appointment is for a period of two years, commencing on 16 March 2015 and ending on 16 March 2017.
The process by which Sir Patrick was appointed followed the Office of the Commissioner for Public Appointments’ (OCPA) code of practice for ministerial appointments to public bodies, and was scrutinised by an OCPA public appointments assessor throughout.
I am delighted that this rigorous open competition has resulted in the appointment of a very capable and highly regarded Chair to establish the OGA at a crucial time for the UK continental shelf.
[HCWS357]
Pension Regulations
(9 years, 2 months ago)
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The Minister for Pensions (Steve Webb)
The Government intend to lay before Parliament the following amendment packages to private pensions regulations to ensure that the Budget flexibilities operate as intended:
The Occupational and Personal Pension Schemes (Disclosure of Information) (Amendment) Regulations 2015.
The Occupational and Personal Pension Schemes (Transfer Values) (Amendment and Revocation) Regulations 2015.
The Occupational Pension Schemes (Consequential and Miscellaneous Amendments) Regulations 2015.
A further set of private pensions regulations are subject to the laying of the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No.2) Order 2015
We intend to lay these regulations, as below, in due course once the above Order is laid:
The Pensions Schemes Act (Transitional Provisions and Appropriate Independent Advice) Regulations 2015
I am grateful to all those who have worked and engaged with us so positively in order to deliver these changes within a challenging timetable.
These regulations will confirm the Government’s commitment to providing individuals aged 55 and over with the freedom to access their pension savings whenever they like and to choose what to do with them.
The regulations will be published at: http://www.legislation. gov.uk once they have been laid.
[HCWS358]
House of Lords
Death of a Member: Lord Molyneaux of Killead
The Chairman of Committees (Lord Sewel)
My Lords, I regret to inform the House of the death earlier today of the noble Lord, Lord Molyneaux of Killead. On behalf of the House, I extend our condolences to the noble Lord’s family and friends.
Domestic Violence
(9 years, 2 months ago)
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Baroness Gale
To ask Her Majesty’s Government, following the rollout of the domestic violence disclosure scheme by all police forces in March 2014, whether a review has been held of how the scheme has been implemented by police forces in England and Wales; and if so, what are the results.
The Parliamentary Under-Secretary of State, Home Office (Lord Bates) (Con)
My Lords, the Government are currently reviewing how the domestic violence disclosure scheme has been implemented. Early indications show that it is highly regarded by practitioners, and we are encouraged by the latest data, which show that 1,335 disclosures have been made. We are committed to working with our partners to ensure that good practice is disseminated, and the scheme is optimised to help keep victims safe.
Baroness Gale (Lab)
I thank the Minister for his response. I am not too clear about when this review will be published. I understood that it would be contained in the report that the Home Office published yesterday. But that report contained only about two paragraphs on Clare’s law. It is welcome that this law is in place as it does help to reduce domestic violence, but will the Minister say why only 39 police forces responded? Does the Home Secretary have any power to compel the other four forces to give their reports? We need a clear understanding of what is happening. After the pilot scheme a very good report was produced with 29 pages of recommendations. Is a similar report going to be given after we have a full review of the scheme? It is important that it is implemented properly throughout all the police forces.
Lord Bates
The review that the noble Baroness refers to is actually ongoing. It started in January. Data are being collected and interviews with survivors are taking place. It is probably not going to be published until about May but it will include a report and recommendations to be acted upon. With regard to the police forces, one of the recommendations that came out of the excellent report by Zoe Billingham at HMIC, which the noble Baroness referred to, was that all forces should have an action plan, including reports, and that should apply to all 43 police forces. That is something that the national oversight board is looking into now.
Baroness Hussein-Ece (LD)
My Lords, alongside the disclosure scheme, police and magistrates in England and Wales are able to issue domestic violence protection orders. Can my noble friend the Minister say how many of these have been issued and how effective they have been in protecting victims?
Lord Bates
Domestic violence protection orders are part of a suite of things, including the domestic violence courts and independent domestic violence advisers. We have been a little bit unsure about how these are working in practice on the ground. They have been included in the review that is ongoing. So there will be a review, and recommendations as to how they could be strengthened will be brought forward as well.
Baroness Seccombe (Con)
My Lords, does my noble friend agree that in November of last year an extra £10 million was put into a fund to help support this very vulnerable group of women in their time of anguish?
Lord Bates
My noble friend is absolutely right. We have sought to ring-fence resource—£40 million—during the lifetime of this Parliament for support of victim and survivor groups. The £10 million to which my noble friend refers was an additional amount to support in particular the availability of places in refuges for victims of domestic violence.
Baroness Thornton (Lab)
The Minister is quite right: that £10 million was made available to try to make way for all the refuges that have had to close down and all the women and children who have been made vulnerable by the cuts programme of his Government. Why was it necessary to use a freedom of information request to obtain the release of the information in January of this year which led to us now knowing that there have been 3,760 applications under Clare’s law so far and 1,300 disclosures? Can the Minister assure the House that it will never again be necessary to use the freedom of information legislation to get important figures on how Clare’s law is progressing, that such figures will be available annually, with the kind of breakdown that my noble friend has mentioned, and that each police force reveals how it is delivering Clare’s law?
Lord Bates
The publishing of data is a very important part of the plans which the police should have. The reality is that we would have preferred to take the time to cross-check as part of the review all the data that had come forward, the number of applications for release of information and the number of releases which were granted and the reasons for that. We had to honour the freedom of information request, but if there had not been that request, the data would have been published anyway in the annual review.
Lord Laming (CB)
My Lords, can the Minister assure the House that the police will be encouraged to pay particular attention to family situations which involve young children, not only because of the vulnerability of young children but because of the awful role model that is given to them when they think that violence between adults is acceptable on any basis at any time?
Lord Bates
The noble Lord is absolutely right. Some excellent work is going on through the troubled families programme, which DCLG is leading. In our schools, the This is Abuse campaign is addressing young people’s own issues around how they conduct relationships.
The Earl of Listowel (CB)
Is the Minister looking at the perpetrators of domestic violence, the men and sometimes women who do it, and ensuring that if they have drug or alcohol problems those are being addressed? If they have a history of domestic violence in their families, will those problems also be addressed, so that, ideally, many such families can begin to work again and become safe over time?
Lord Bates
The noble Earl is absolutely right in the sense that, according to the crime survey, while there were 1.4 million female victims of domestic violence in 2013-14, there were also 700,000 male victims. It is very important that perpetrators come forward to get help where they need it. There are perpetrator programmes being piloted at this very time.
Gender-based Violence: Screening
(9 years, 2 months ago)
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Baroness Gould of Potternewton
To ask Her Majesty’s Government what steps they are taking to improve screenings at healthcare settings, including HIV clinics, to screen for gender-based violence and to provide the necessary support for affected women.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)
Routine inquiry of domestic abuse is in place in maternity and mental health services. It will be introduced in maternity services for FGM from April 2015 and for child sexual abuse in some targeted services next year. Accident and emergency departments in England have been sharing data on attendances involving body injuries with their local police forces to help prevent violent crime.
Baroness Gould of Potternewton (Lab)
I thank the Minister for his reply. Currently, there is professional guidance on screening, particularly for domestic violence, for health visitors, school nursing programmes and antenatal clinics. Does he not agree that such guidance should be expanded to HIV clinics, because we know that there is a correlation between women who have HIV and domestic violence, so that they can get the help and support that they need, because they have two problems to sort out for themselves?
Earl Howe
I do agree. Sexual health and HIV services are already sensitive to the risk of domestic violence, including gender-based violence, in their routine consultations. One of the most important elements in that is to have an environment and atmosphere that is welcoming, comfortable and calm, so that it engenders a sense of trust. Most sexual health clinics have developed local templates to identify those at risk of domestic violence, with signposting and referral to police and other support services if needed.
Baroness Knight of Collingtree (Con)
My Lords, could there be a greater example of gender violence than the acceptance that it is perfectly legal to abort an unborn child who is a girl? There is so much disagreement about that—I know my noble friend agrees that it is a wrong policy and ought to be illegal—but the fact is that abortion nursing homes do it every day, and there is great uncertainty about whether this is illegal or not. Ought it not to be quite clear that it is an illegal practice?
Earl Howe
My noble friend has emphasised an issue which I am sure all noble Lords feel equally strongly about. The Department of Health has been quite clear that abortion on grounds of gender alone is illegal. We reissued that guidance last year in no uncertain terms. It is a pity if there is any misconception about that.
Baroness Barker (LD)
My Lords, health and well-being boards have a responsibility under the Health and Social Care Act to commission sexual and reproductive health services and HIV services. Are they being asked to include gender-based violence in the commissioning formats that they put forward to the NHS?
Earl Howe
Most certainly. Gender-based violence is one of the issues which sexual health clinics, and indeed all parts of the NHS, are now alert to. New guidance from NICE was issued in February last year on domestic abuse and how health and social care services and the organisations with which they work can spot and respond to abuse earlier in a more joined-up and preventive way.
Baroness McIntosh of Hudnall (Lab)
My Lords, does the noble Earl agree that not all domestic abuse results in physical symptoms? In his Answer, he mentioned mental health services. What is being done to deal with emotional abuse and to discover and refer people who suffer from it?
Earl Howe
My Lords, the provision in the Serious Crime Act on controlling behaviour is one of the ways in which we have addressed that. The noble Baroness is absolutely right: abuse can take many forms. It can be physical, sexual, emotional or psychological. Thirty per cent of this abuse starts in pregnancy, and existing abuse may get worse during pregnancy or after giving birth. In the context of health and care services, the challenge is to alert staff to all those possibilities in a way that avoids them stereotyping the person sitting in front of them.
Baroness Wheeler (Lab)
My Lords, more than 26,000 women in the UK received HIV care in 2013. What are the Government doing to assess the relationship between women with HIV and domestic violence, so that effective counselling, advice and support can be given to the women at greatest risk?
Earl Howe
My Lords, NHS England is working with the Department of Health to identify the right pathways, access to and availability of psychotherapeutic support for victims of sexual abuse and, in that context, the risk factors at play for women who have HIV. It is vital that the support services that we have and the alerts in the system are sensitive to the issue which the noble Baroness raises.
Baroness Farrington of Ribbleton (Lab)
My Lords, would the Minister care to reassure the House on the progress towards parity between mental health services and the rest? It is no good identifying people who need mental health service support and psychological support if those services are not there, and in many parts of the country they have been decimated.
Earl Howe
My Lords, we are concerned about the sometimes patchy provision of mental health services in certain parts of the country, and we have channelled additional money to address that in recent months. One of the main ways in which we have demonstrated our commitment to parity of esteem is by introducing, for the first time, waiting-time standards for mental health treatment. That it is a landmark.
Baroness Manzoor (LD)
My Lords, can the Minister please give an assurance that FGM is given a high priority in the health commissioning groups’ plans?
Earl Howe
Yes, my Lords. The Government hosted the first ever Girl Summit last year on ending female genital mutilation as well as forced marriage and other issues. We set up a specialist female genital mutilation unit following that summit. We provided money last year for the FGM prevention programme, and as part of this we introduced the first ever data collection in the NHS for all acute trusts, which are now required to record in a patient’s healthcare record whenever FGM is identified. We have also said that front-line professionals will in future have a mandatory duty to report cases of FGM in those under 18.
The Earl of Listowel (CB)
My Lords, following on from my noble friend Lord Laming’s question on children in these circumstances, is the Minister ensuring that where gender-based violence is at play, any children in those circumstances are being identified and getting the help and support that they need?
Millennium Development Goals: Women and Girls
(9 years, 2 months ago)
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Baroness Kinnock of Holyhead
To ask Her Majesty’s Government what is their assessment of the United Nations Women analysis of the progress made towards meeting the Millennium Development Goals for women and girls.
The Parliamentary Under-Secretary of State, Department for International Development (Baroness Northover) (LD)
My Lords, despite many gains, progress across the millennium development goals has been uneven for girls and women. The MDGs did not effectively address the factors which underpin gender inequality. The United Kingdom is pushing for a post-2015 framework that has a strong and explicit commitment to gender equality and that will seek to transform outcomes for girls and women.
Baroness Kinnock of Holyhead (Lab)
I thank the Minister for her response and agree that we must build upon what has been achieved by the MDGs but acknowledge those goals’ shortcomings up until now, particularly on gender equality, women’s empowerment and violence against women—three major issues which have been neglected. The Minister will be aware that women across the world continue to face economic, social and political exclusion. At the current pace of change, it will take 81 years to reach parity in the workplace and more than 75 years to reach equal pay for work of equal value. Will the Minister clarify whether the Government have responded to the UN Women position paper on the post-2015 development agenda, which advocates a stand-alone goal geared to achieving gender equality and women’s empowerment? Has the UK responded to the UN Women proposal that there should be rigorous mainstreaming of gender equality concerns across the other priority areas and goals of the post-2015 agenda?
Baroness Northover
The noble Baroness is right to note that very uneven progress. We are indeed committed to the standalone goal and to mainstreaming.
Baroness Maddock (LD)
My Lords, the Minister will be aware that the Department for International Development and UNICEF have a project in Nigeria that is aimed at getting 100% of girls into school by, I think, 2020. How do they intend to monitor this project to ensure that it is making good progress?
Baroness Northover
It is extremely important to get girls as well as boys into school. A lot of progress has been made and there is almost gender parity, except in areas where there is conflict and, particularly, rural areas. The noble Baroness rightly highlights the project in Nigeria. We are working with UNICEF to manage the girls’ education project, which aims to get 1 million girls in school, and the results monitoring process has been agreed with UNICEF and is being implemented.
Baroness Hayman (CB)
My Lords, as the Minister acknowledged, the goal relating to maternal mortality reduction will not be met by 2015. However, a great deal has been achieved by programmes such as Making It Happen by the Centre for Maternal and Newborn Health at the Liverpool School of Tropical Medicine, and I declare an interest as a supporter. Will the Minister assure the House that support from her department for progress like this that has made a huge difference will continue, so that this is not unfinished business past 2015?
Baroness Northover
It certainly must not be allowed to be unfinished business after 2015. The noble Baroness is right that progress has been made—maternal mortality has dropped by 45%—but we need to take that much further forward.
Baroness Turner of Camden (Lab)
My Lords, is the Minister aware—I am sure she is—that, unfortunately, in large parts of the world there is a lot of conflict and fighting, and that it is always the women who suffer the most in such circumstances? What is being done at UN level to see that women who are caught up in battles and fighting are properly looked after? I fear that they are suffering more than the general population. It is women who suffer in these conflicts.
Baroness Northover
The noble Baroness is right that women and girls are especially vulnerable in such circumstances; I was hearing this morning about the particular vulnerability of adolescent girls. She will know that the international community is beginning to address this issue and that DfID is playing a leading role in trying to ensure that, for example, the women and girls displaced in Syria are well supported. She is right, however, that we need to move this further forward.
Lord Quirk (CB)
My Lords, mention has been made of Nigeria. What is the Government’s response to rumours that, as a result of Boko Haram activity in northern and eastern Nigeria, parents are reluctant to send their children to school there? This may be happening in other places where there is extremist activity, in Africa and elsewhere.
Baroness Northover
The noble Lord is right. Many families are concerned about the safety of their daughters and about sending them to school, not only in situations such as northern Nigeria but, if the girls have to travel by themselves to school, simply due to the question of whether they are vulnerable. This is something that DfID, along with other partners, is working to address.
Baroness Hussein-Ece (LD)
My Lords, what is the Government’s position on reports in the past week that there may be a risk that the rights that women in Afghanistan have earned in the last 10 years may be compromised, rolled back or lost as a result of the Afghan Government’s discussions with the Taliban?
Baroness Northover
We are acutely aware of the position of women in Afghanistan and the progress that has been achieved, and we are determined, along with them, to ensure that it is secured. We are in dialogue with the Government of Afghanistan about the position of women.
Baroness Gould of Potternewton (Lab)
My Lords, I have a question for the Minister about another country, regarding the effect of Ebola in Sierra Leone and the fact that girls are no longer able to go to school and schools are actually closing down. Can she give some indication as to what support we might be giving to help to get the schools reopened so that girls can start their education again?
Baroness Northover
The Government’s priory is to eliminate the Ebola epidemic in Sierra Leone. We are making extremely good progress, as the noble Baroness will know. We are not there yet, but one of our aims is to reopen the schools. In the mean time, we are seeking to support children who are out of school by distance learning.
Lord Collins of Highbury (Lab)
My Lords, very early this morning Radio 4’s “Thought for the Day” mentioned the impact of microfinance in giving women control over their own lives. What action is the Minister’s department taking to ensure that such programmes are supported in what are now described as middle-income countries? What steps are the United Kingdom Government taking to ensure that financial inclusion is properly addressed in the SDGs?
Baroness Northover
We have a wide range of programmes supporting financial inclusion. I stress that we need to make sure that in general in the economies of developing countries women have as many opportunities as men at every level.
Ukraine
(9 years, 2 months ago)
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Lord Spicer
To ask Her Majesty’s Government what is their most recent assessment of the situation in Ukraine with regard to its implications for United Kingdom defence policy.
The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever) (Con)
My Lords, developments in Ukraine and elsewhere underscore the need for flexible and adaptable Armed Forces. We are committed to providing a defence posture that is ambitious and responsive to the challenges we face, while being affordable. UK defence policy is underpinned by a defence budget that is the largest in the EU and the second largest in NATO. This Government are committed to the NATO 2% target.
Lord Spicer (Con)
My Lords, after what has happened in Ukraine and with the Russians probing our defences at sea and in the air, is it not time now to raise our guard and spend not less but more on defence? Will my noble friend confirm that the first duty of any British Government is the defence of the realm?
Lord Astor of Hever
My Lords, I absolutely agree that defence is the first duty of the Government. I reassure my noble friend that we will remain a first-rate military power. Sufficient defence spending will be required in light of all recent events. As well as maintaining our standing commitments, we must be able to deal with multiple challenges across all forms of the military spectrum, including new threats, such as cyber and asymmetric warfare.
Lord West of Spithead (Lab)
My Lords, in this very dangerous world, clearly defence cuts have gone too far. It gives the wrong message to people such as Mr Putin. What was the reaction of the Minster’s right honourable friend the Prime Minister when he asked him, as he promised he would last week, to talk to the leader of the Opposition about putting a commitment to 2% of GDP on defence in each party’s manifesto? What exactly did he say when he asked him that question?
Lord Astor of Hever
My Lords, I think my answer was that I would take it back to my department. I am sure that the Prime Minister will take notice of the discussions in this Chamber, but decisions on departmental budgets are a matter for the next Government.
Baroness Falkner of Margravine (LD)
My Lords, I welcome the Secretary of State’s decision to supply Ukraine with non-lethal arms worth £850,000. It is an important gesture. My noble friend will recall that in the recent battle for Debaltseve there was only one set of night-vision goggles for several units to use. Do the Government intend to build on this by providing extensive training as well as further equipment of a non-lethal nature?
Lord Astor of Hever
My Lords, we are providing non-lethal assistance that has been requested by the Ukrainian Government to enhance the capability of their armed forces, enabling them to defend themselves better and to reduce the number of fatalities and casualties that they are suffering. All this training will be conducted well away from the conflict zone in the east.
Lord Foulkes of Cumnock (Lab)
Does the Minister recall that Ukraine gave up its nuclear weapons in return for guarantees of territorial integrity from a number of countries, including Russia. Will he remind the people of this country, particularly the SNP, of that fact?
Lord Astor of Hever
My Lords, I do recollect the point the noble Lord made, and I agree entirely with what he says.
Lord Cormack (Con)
My Lords, there may be a great deal to be said for speaking softly and carrying a big stick. However, does my noble friend agree that there is very little to be said for using a megaphone and carrying a tennis racquet?
Lord Astor of Hever
My Lords, we very much follow the wise advice of former President Teddy Roosevelt to talk softly and carry a big stick.
Lord Rosser (Lab)
My Lords, so far there has been no real attempt by the Government to engage in any public debate about the 2015 strategic defence and security review and the future direction of defence strategy in the light of developments both at home and abroad, including in Ukraine—unlike the previous Government, who issued a Green Paper. Why have the Government so far declined to have any such public engagement, and is it not as a result becoming increasingly likely that if the next SDSR is to be finalised in 2015— in less than 10 months’ time—it will, like the last one, have to be another rush job carried out without the level and degree of engagement with key stakeholders and the public which such an exercise surely both merits and requires?
Lord Astor of Hever
My Lords, we are thinking very seriously about the next SDSR. The MoD has conducted some early thinking to prepare for the review, and this programme of work will provide a solid and sound basis on which we can consider whether adjustments to current policy and plans will be required when the review gets under way later in the year.
Lord Stoddart of Swindon
My Lords, it is this side—we have not had a turn yet. Did I hear the Minister correctly when he gave the assurance that the 2% of GDP would be maintained? That seems to conflict with what the Foreign Secretary said yesterday when he refused to confirm it. Finally, can he comment on the reports in the Daily Telegraph today that after the election the Armed Forces will be cut to 50,000?
Lord Astor of Hever
My Lords, I said that this Government are committed to the NATO 2% target—I said that clearly. I did read the article in the Telegraph about the RUSI report, but we do not recognise a lot of the figures it used.
Lord Palmer of Childs Hill
My Lords, my noble friend, in replying to the original Question, said, “if it is affordable”. Can he please tell us who will take the decision on whether the defence expenditure is affordable or not?
Lord Astor of Hever
My Lords, the decision will be made by the next Government.
The Lord Privy Seal (Baroness Stowell of Beeston) (Con)
My Lords, time is up.
European Union (Definition of Treaties) (Association Agreement) (Georgia) Order 2015
(9 years, 2 months ago)
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Baroness Anelay of St Johns
That the draft orders laid before the House on 13 January be approved.
Relevant document: 20th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 26 February.
Electricity Capacity (Amendment) Regulations 2015
Baroness Verma
That the draft Regulations laid before the House on 19 January be approved.
Relevant document: 20th Report from the Joint Committee on Statutory Instruments. Considered in Grand Committee on 3 March.
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)
My Lords, with the leave of the House, I beg to move the six Motions standing in my name on the Order Paper en bloc.
Electricity Supplier Obligations (Amendment & Excluded Electricity) Regulations 2015
Baroness Verma
That the draft Regulations laid before the House on 19 January be approved.
Relevant document: 20th Report from the Joint Committee on Statutory Instruments. Considered in Grand Committee on 3 March.
Electricity Market Reform (General) (Amendment) Regulations 2015
Baroness Verma
That the draft Regulations laid before the House on 19 January be approved.
Relevant document: 20th Report from the Joint Committee on Statutory Instruments. Considered in Grand Committee on 3 March.
Electricity and Gas (Market Integrity and Transparency) (Criminal Sanctions) Regulations 2015
Baroness Verma
That the draft Regulations laid before the House on 22 January be approved.
Relevant documents: 21st Report from the Joint Committee on Statutory Instruments, 25th Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 3 March.
Renewables Obligation Closure (Amendment) Order 2015
Baroness Verma
That the draft Order laid before the House on 27 January be approved.
Relevant documents: 21st Report from the Joint Committee on Statutory Instruments, 26th Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 3 March.
Infrastructure Planning (Radioactive Waste Geological Disposal Facilities) Order 2015
Baroness Verma
That the draft Order laid before the House on 21 January be approved.
Relevant documents: 19th Report from the Joint Committee on Statutory Instruments, 24th Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 25 February.
Scotland Act 1998 (Modification of Schedule 5) Order 2015
(9 years, 2 months ago)
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Lord Wallace of Tankerness
That the draft Orders laid before the House on 14 and 29 January be approved.
Relevant documents: 20th and 22nd Reports from the Joint Committee on Statutory Instruments. Considered in Grand Committee on 4 March.
International Development (Official Development Assistance Target) Bill
Lord Purvis of Tweed (LD)
My Lords, I beg to move that the Bill do now pass. In so doing, I place on record my appreciation of those from across and outside this House, including the noble Lord, Lord Collins of Highbury, and my noble friend Lady Hodgson of Abinger. I am particularly grateful to my Liberal Democrat colleagues and, especially, my noble friend Lady Suttie, who displayed the true skill of a great Whip in persuading people on occasions not to speak, rather than to speak, during the passage of this Bill. I am indebted to the kindly and professional advice of the Public Bill Office, and at each stage the support of my noble friend Lady Northover and her team could not have been stronger. However, I also recognise those who offered full and testing scrutiny to the Bill, over many hours, and agree with them that proper scrutiny of the effective delivery of aid going forward is now of the utmost importance.
Finally, this Bill was brought to us from the Commons by my right honourable friend Michael Moore. His vision to see this Bill on the statute book, and the manner in which he took it through the Commons, is a real testament to his own formidable skills. However, this Bill is not about Peers or MPs; it is simply about a girl who wants to have an education and to learn in a safe school; a mother who wants to feed, wash and nurture a child with good health, clean water and access to a hygienic hospital; a woman who wants to be empowered to represent others or to lead in a corrupt-free political system; and a boy who simply wants to play outside and have a childhood not in a war zone. If we can help others to take these simple things for granted, as we do here, we will be making a worthwhile contribution.
Small Business, Enterprise and Employment Bill
Baroness Neville-Rolfe
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Neville-Rolfe) (Con)
My Lords, we come to several sets of amendments on pubs, a subject that has been much debated in this House and in the other place. We need to set the scene for today’s debate, which I think falls more naturally under the heading of the next grouping of amendments on market rent only. I suggest we proceed on that basis if noble Lords are content and treat this group of government amendments as the relatively technical group that it is.
For the first time, tied tenants will have a statutory code they can rely on, with an independent adjudicator to enforce it, with real sanctions at its disposal. There seems to be agreement in both Houses that a statutory Pubs Code and an adjudicator should be established. In setting up the Pubs Code Adjudicator, we have generally followed the Groceries Code Adjudicator model. This included specifying in this Bill:
“The Adjudicator may make arrangements with the Secretary of State or any other public authority for staff to be seconded to the Adjudicator”.
However, the GCA has experienced significant difficulties in securing staff on secondment from within the public sector. There is no single reason for this, but both the niche nature of the GCA and the ongoing pressures on departmental staffing levels are factors. We are keen to avoid the Pubs Code Adjudicator encountering similar problems. Amendments 33A and 33B to Schedule 1 therefore enable the adjudicator also to take secondees from the private sector. This will provide much needed flexibility for the adjudicator to find suitable staff from a wider pool—for example RICS-qualified surveyors to advise on rent assessments. We considered whether the adjudicator should have the ability to employ staff directly. However, we concluded that allowing secondments from the private sector would provide the flexibility needed without imposing employer responsibilities on the adjudicator.
Amendment 33C ensures that the adjudicator’s secondment policies are approved by the Secretary of State. This will enable the Secretary of State to specify that remuneration and the terms and conditions of persons on secondment to the adjudicator are in line with the department’s secondments policy. The amendment also provides that a person seconded to the adjudicator remains an employee of the employer he or she was seconded from.
Finally, Amendments 33E and 33F ensure that the staff of the adjudicator are subject to the House of Commons Disqualification Act 1975, in common with staff of government departments. I beg to move.
Lord Mendelsohn (Lab)
My Lords, we are happy to support these government amendments and are grateful to the Minister for the way in which she has dealt with this matter. We believe that our debate on the more substantive issues in the next group of amendments will cut to the heart of many of the important issues.
We support these technical amendments and are encouraged that the Government have learnt lessons from the introduction of the Groceries Code Adjudicator, which will be applied to ensure that the Pubs Code Adjudicator works effectively from the beginning. The only point we would make is that secondees should be drawn not just from the private sector but from a range of different areas so that they will provide the necessary experience to make the adjudicator’s work as effective as possible. Indeed, even within the context of the private sector they should be drawn from a range of disciplines. Apart from that point, on which we would be grateful for clarification from the Minister, we are happy to support these amendments.
Baroness Neville-Rolfe
My Lords, I am happy to clarify that we will take secondees from the best place possible, which could include—the noble Lord is probably referring to this—another Government, a non-profit organisation or some other source. This is to give us the flexibility to find the right people.
Baroness Neville-Rolfe
“( ) A period of secondment to the Adjudicator does not affect the continuity of a person’s employment with the employer from whose service he or she is seconded (and a person employed in the civil service of the State continues to be so employed during any period of secondment to the Adjudicator).
( ) Before making arrangements under sub-paragraph (1), the Adjudicator must obtain the approval of the Secretary of State as to the Adjudicator’s policies on—
(a) the number of staff to be seconded;(b) payments to be made to or in respect of seconded staff;(c) the terms and conditions on which staff are to be seconded.”
Baroness Neville-Rolfe
Baroness Neville-Rolfe
My Lords, in the light of the concerns raised about our government amendments in Committee, I committed to further engagement with noble Lords and wider stakeholders, with a view to returning with further amendments on Report. My ministerial colleagues, officials and I have since had extensive discussions with noble Lords, honourable Members in the other place, and pub company and tenant stakeholders. I am grateful for the constructive engagement of noble Lords opposite, including the noble Lords, Lord Stevenson, Lord Mendelsohn, Lord Whitty, Lord Snape and Lord Berkeley, as well as my noble friends, including my noble friends Lord Hodgson, Lord Borwick, Lord Younger, Lord Stoneham and Lord Ridley, who joined us last week.
I should say before I turn to my amendments that the problems we are trying to address in the pubs industry have a long history. The difficulties that arise from the imbalance in bargaining power between tied tenants and their pub-owning companies have been well documented. The measures in the Bill are designed to ensure fairness for tied tenants of large pub-owning businesses and to respond. They are a proportionate and targeted response, and represent a significant step for the sector.
Incorporating the “market rent only” option into the Bill in the limited time available to us, while also ensuring that it will work in practice, has not been easy. But we have made good progress, which has enabled us to bring forward these amendments. We believe they will make for a better Bill and more closely reflect the wishes of the other place. The principle of market rent only is that at certain trigger points a tied tenant should have the right to move to a free-of-tie agreement and pay a market rent for the property. A market rent will generally be higher than a tied rent, because a free-of-tie tenant is free to purchase all drinks and other products and services from wherever he or she wishes, rather than from the pub-owning company. The only exception to this is insurance, where it is common practice in any commercial lease for this to be arranged by the landlord and charged to the tenant.
I was clear at Second Reading that the Government accept the will of the other place that there should be a market rent only option. Our work since has been to ensure that it delivers the protections for those tied tenants without potential unintended consequences. The questions that have arisen and the discussions that have taken place are over exactly how the market rent only option should work in practice. I am pleased to say that we have now reached a position where the Fair Pint campaign and CAMRA are content with our amendments. I also met my honourable friend Greg Mulholland last week and he is supportive of the approach we are proposing. I should like to say we discussed it over a pint, but actually I had a scotch, supporting another of our important industries. I pay tribute to his dedication to this cause, his relentless campaigning for the rights of tied tenants and his willingness to move forward.
I am also pleased to say that, although some differences remain, at a recent meeting that Jo Swinson and I hosted with stakeholders from all sides, pub companies, too, seemed to recognise that much progress had been made. Two of the issues most keenly debated in our discussions since Committee have been how to ensure that investment in tied pubs continues, which is important for the industry, and whether the pub franchise agreements should be covered by the code.
We have made good progress here, too. I can announce that Government will be using existing powers in Clause 42 to set out in secondary legislation how tenants and pub companies can agree the waiver of two MRO triggers in exchange for significant investment in a pub. We will also use powers in Clause 71 to exempt genuine franchise agreements from the market rent only clauses of the Bill. I am conscious that noble Lords have tabled amendments relating to these issues. If noble Lords are content, I will turn to the detail of the Government’s proposals in these areas when we debate those amendments.
I now turn to Amendments 33AC to 33AF, which deal with the process of agreeing a rent after the MRO trigger is engaged. Those amendments provide that the Pubs Code must specify a reasonable period in the market rent only process for both stages of that process. The first stage is where a tenant and their pub company try to agree a rent; this was over a 21-day period in the original MRO clause laid in the other place. The second stage involves the settling of a market rent by the independent assessor. The other amendments in this group, Amendments 33AA, 33AB, 33AD and 33AE, clarify that the term “market rent” applies only to a rent set in the second stage by an independent assessor.
The market rent only clause introduced in the other place established the principle that, when MRO is triggered on a brewer’s pub, the brewery should retain their route to market as long as tenants can buy the brewer’s beer from any source. This route-to-market principle was accepted by all sides. Amendment 33AS clarifies the requirements that may be placed on pubs in terms of stocking requirements after MRO has been triggered. The Bill as drafted already allows brewers to place conditions around the stocking of their own brands of beer and of cider in terms of volume and range. The amendment confirms that brewers may also protect their route to market by allowing some restrictions on the sales of competitors’ products. Brewers will not be able to require that their market rent only pubs sell only their products; they will need to satisfy themselves that they are compliant with competition law.
Turning to Amendment 33AV, there was concern in Committee about removing the sale of title and administration triggers for market rent only, which were in the original Commons amendment. Noble Lords were worried that this would leave tenants at risk if their pub was sold or if their pub company went into administration. What has become clear through our various discussions is that it is not a pub sale or administration itself that is of concern; rather, it is the potential for a pub sale—whether as part of an administration or the normal course of business—to result in adverse consequences for the tenant. The sale of a pub to another of the large pub companies is not a problem as the code will still apply. The concern is therefore the potential loss of protection for tenants if their pub is sold to a company that is outside the scope of the Pubs Code—for example, if Fuller’s or Young’s buy a pub from Punch Taverns.
The Government are addressing this concern through Amendment 33AV, which extends the protections of the code—apart from the market rent only option—to tenants whose pub is sold by a “code company” to a company outside the statutory code. The protection will last until the next rent assessment and will mean that the tenants concerned will be able to refer any code breaches during that period to the adjudicator.
As soon as the purchasing pub company presents the tenant with new terms, the deal it offers will have to be fair and comply with the code. The tenant will have the right to refer these terms, including the rent, to the adjudicator if he thinks that the code has been breached. If a breach is found, the adjudicator has wide powers of redress. The tenant will also have the option to request a parallel rent assessment—a provision we have brought back since Committee, as I will explain—if agreement is not reached.
If the purchasing company does not change the tenant’s terms when the sale is made, the protection of the code remains until there is a new rent assessment or when the lease agreements expire, whichever comes first. In that period, if there is an event outside the tenant’s control that affects his ability to trade, or a significant price increase, this would trigger a rent assessment, which must comply with the code. The tenant could also request a parallel rent assessment in these circumstances. These provisions preserve tenants’ rights to a fair tied rent after sale.
Noble Lords will remember that, in the other place, there was concern about overburdening family brewers through our provisions. We agree and therefore we do not propose to include market rent only in the continuation of protections when a pub is sold. Nor would the adjudicator have investigatory powers relating to those companies. This is because the investigation function is designed to uncover systemic breaches of the code. It would not be right to include in that power companies that are obliged to follow the code only because some of the pubs they own used to belong to a “code company” and which are covered by the code only in respect of those pubs.
Lord Hodgson of Astley Abbotts (Con)
My Lords, in this group I have tabled Amendment 33L in response to government Amendment 33J, to which my noble friend was kind enough to refer in her opening remarks. It tackles the reintroduction of parallel rent assessments, which were abandoned, or removed from the Bill, at an earlier stage. Before I go any further, I need to remind the House, as I have previously, that I was until January a year ago a non-executive director of one of the companies affected by this Bill. It was one of the integrated pub companies: we operated five breweries and about 2,000 pubs, of which about 500 were managed and about 1,500 were tied in various forms.
That having been said, I regret that this Government, my Government, should have allowed themselves to be carried along on a tide primarily fuelled by emotion and with insufficient attention to the underlying hard economic realities of the pub trade. The trade faces acute pressures as a result of fundamental changes in our society and in our way of life. I fear that the changes we are proposing to endorse today may well increase those acute pressures rather than reduce them. However, I recognise the settled will of the other place and this House about the introduction of a market rent only policy. I also recognise another acute pressure; namely, that faced by my noble friend on the Front Bench in trying to square the circle. I would like to place on record my thanks to her and her long-suffering team of officials for the time and effort that they have taken.
I begin my remarks from a point on which I hope all parties can agree. We want to find a way to keep as many pubs as possible open and the challenge is how to achieve that. The answer must be to agree policies which balance, on the one hand, tenants’ rights and, on the other hand, the need to provide a degree of certainty about the future to the pub owner, the brewer and the pub investor, and to do so while incurring a minimum degree of bureaucracy, paperwork and administrative cost. I recognise the steps that the Government have taken in introducing amendments to the Bill today. In this group, for example, government Amendment 33AV, while far from ideal, at least recognises the need to provide for an aftermarket in pubs. I trust that the Government will resist the blandishments of the noble Lord, Lord Whitty, in a few moments when he speaks to his Amendments 33AW, 33AX and 33AY. I have to warn the Government that there may be unintended consequences even from that change.
CAMRA and others claim that there is a wave of money wanting to pour into the pub trade if and when the tie is removed. As I explained in Committee, that is far from the truth. Even if it were true, this amendment will not reassure individuals or companies wishing to buy pubs from big companies. Big companies own the bulk of the pubs and therefore usually will be the seller. Those individuals seeking to buy will try to avoid taking on a property carrying with it the uncertainties of the Pubs Code and the adjudicator, and the way in which he may operate. When looking to sell a pub, the pubcos may well be left with no option but to look more readily at alternative non-pub uses for their assets.
I am afraid that I am forced to the conclusion that the Bill does not provide the appropriate balance between the parties. I have tabled just three amendments, which would redress that balance and give an appropriate degree of certainty to pub owners and their investors. The first of these, Amendment 33L, is in response to the Government’s proposal in Amendment 33J to reintroduce parallel rent assessments.
Parallel rent assessments were introduced voluntarily by the pubcos as a means of reassuring tenants that, by providing an assessment of what a free-of-tie rent would be, they were being fairly treated. It was not the case that the pubcos got any credit for doing this. These PRAs were not popular with the Royal Institution of Chartered Surveyors, first because of the challenge of finding comparable properties—imagine trying to find a comparable property for a small village pub—and secondly, and no less significantly, the challenge of how to value the back-up provided by the pubcos to the tenant, known in the trade by the rather unattractive name of SCORFA, special commercial or financial advantages, which vary a great deal from company to company and pub to pub.
When the open market rent option was introduced, it was right that the PRAs were abandoned. After all, tenants could now apply for a market rent option as of right. However, for reasons that are quite obscure, other than riding the wave of emotion, the Government are reintroducing parallel rent assessments through Amendment 33J. I hope the Government will accept—I think from her comments in her introductory remarks my noble friend does accept—that to have two separate and different valuation methods to procedures cannot be a good way of providing clarity to tenants, certainty to the pub companies or even a level playing field for the adjudicator. Nor should we forget the administrative costs of having two entirely separate procedures. This trade is insufficiently profitable and its profitability is probably still falling. Let us not establish duplicate procedures which will still further reduce that already inadequate return.
Amendment 33L proposes one procedure. If a tenant asks for a parallel rent assessment—I accept that the Government wish to bring that back—the procedure to be followed should be the same as the first step in the market rent only procedure. At the end of the assessment the tenant can decide whether to stay as he or she is or to proceed with the MRO option. What should not happen in the latter case is to go back to square one and start again with an entirely separate procedure which, in due time, the tenant may or may not wish to accept either.
When my noble friend comes to wind up, could she confirm on the record that the rent assessment trigger for MRO relates only to rent assessments carried out in formal rent reviews and renewals of existing agreements? I am sure this is the case, but concern has been expressed in the industry that the MRO assessment trigger is wider than that. If my noble friend wants to cut down duplicative administrative costs for the pub industry, she will accept my amendment, which does nothing more than require that PRA and MRO evaluation procedures follow the same steps.
Lord Whitty (Lab)
My Lords, I too have some amendments in this group. The House may be surprised, but I agree with the first remarks of the noble Lord, Lord Hodgson, that we have seen a clear response from the Government to the anxieties on this section. While there was some concern that the Government had come up with a whole new clause to the Bill rather than the one that was passed in the Commons, and a fear that the Government were under some pressure to dilute the effectiveness of the amendment carried in the Commons, the Minister and her officials, in the amendments they are proposing, have seriously recognised that danger and have responded admirably in general to fulfilling the intent of the Commons’ Motion while making it less subject to doubt or indirect unforeseen consequences.
It is quite a complicated amendment in the first place, and the additional amendments which, under pressure, the Government have added today make it more complicated. Nevertheless, it is a basis on which we can all move forward. Certainly most of the campaigning groups in the area recognise that this is a huge step. There are, however, three anxieties which these and my later amendments address in part.
The first is that by leaving quite a lot of this to secondary legislation, it is probably inevitable that the actual right to the MRO will not come into force until about a year later. That is a disappointment. Nevertheless, I understand the reasons for it. I also have some problems about the threshold, which I shall come to in a later group. In this group, my main anxiety and that of other noble Lords and those who have met the Minister is that one of the triggers for the MRO, which was clearly required under the Greg Mulholland proposition and relates to the point of the MRO still being available after sale, is greatly reduced as a result of the government amendments. I agree with some of the amendments tabled in this area by the noble Lord, Lord Stoneham, as I do with some of the others.
I am sorry about the complication here, but my Amendments 33AW, 33AX and 33AY are themselves amendments to the fairly long government Amendment 33AV. They deal with a situation where the pub is sold in the course of a rent agreement to an owner who is not covered by the code. All the protections in the lease seem to move over, but the right to the MRO does not. The Government have addressed this in part by ensuring that the restructuring of companies will not be a way around the provision. In other words, the large pub companies cannot break themselves up so that they fall under the threshold. However, it is still the case that if a non-large brewer or pubco takes on a tied pub, while all the other protections in the code will apply the MRO option will not.
The Government have said that the option will apply for the duration of the lease, but that is not much comfort to those who are nearing the end of their lease. My first two amendments therefore deal with giving a bit more certainty to people who are faced with the sale of their pub, generally speaking over their heads, when they are not at the end of their lease. In other words, they suggest that there should be a 10-year period. I am not absolutely wedded to 10 years, but there should be a period during which whoever is the new owner, this one aspect of the rights of the tenant should be carried over with the lease in the same way as all other rights are carried over. The two amendments assume a period of 10 years. As I say, if the Government want to come up with a slightly different formulation, I will be happy to consider it.
The final amendment, Amendment 33AY, relates to the drafting of government Amendment 33AV, which seems to drive a coach and horses through the interaction of proposed new subsections (2A) and (2E). They would both restrict the availability of the MRO post sale to a non-qualifying company and dilute the role of the adjudicator in relation to the new circumstances. There may be a more subtle way of doing this, and the Government may say that there already is one, but I cannot see it in their amendment. A tenant who has the lease and by the clear will of the House of Commons now has the right to an MRO ought to continue to have that right under a new owner for a period of time and to have the right to enforce the MRO option by right of access to the adjudicator. Taken together, my three amendments would do that.
The Government may have a better way of doing this, and if they do we would like to hear about it either now or at Third Reading. Indeed, I remind the Minister that the point of sale issue was one of the great many contentions put forward by Greg Mulholland in the Commons and was clearly one of the triggers which the House of Commons voted for. If that is pulled away, the will of the Commons will not be fully represented in that respect. I repeat that I pay tribute to the Minister and her officials for respecting the other aspects of the Commons amendment. I would be interested in what the Minister has to say on this point, but I think that my amendments would actually help the situation.
Lord Stoneham of Droxford (LD)
My Lords, I congratulate the Government on making significant moves with these amendments to deal with some of the problems that we identified in Committee. Obviously, one of our major concerns is that a lot is still to be decided by secondary legislation. We have to make sure that as far as possible we are precise at this stage about what that legislation is going to seek to do.
I accept all the points that the noble Lord, Lord Whitty, made about the point of sale issue. I would like to see stronger safeguards, but I also recognise the move that the Government have made, which I give them credit for, in ensuring that even though sale is not a full trigger point, the amendment will enable certain protections to still be in place, particularly that of the code.
I would also like to hear my noble friend spell out the timescale, because I share some of the concerns of the noble Lord, Lord Whitty, that we need some clarity on the timescale, although I suspect that 10 years is probably a little optimistic. I support the government amendments and ask for clarification on the point of sale issue.
Lord Berkeley (Lab)
My Lords, I support everything that my noble friend Lord Whitty said, but my main reason for rising is to challenge the noble Lord, Lord Hodgson. He said that there is a wave of money wishing to flood into the market—I hope I have got that right—but that the investors are not planning to do so at the moment.
Lord Hodgson of Astley Abbotts
I said that CAMRA claims that there is a wave of money. I said that there is not; the briefing that CAMRA sent us claims that there is a wave of money and that if you remove the tie, people will start to put money into pubs.
Lord Berkeley
I am grateful for that clarification. I do not know whether the noble Lord is aware that a dozen or so tenants of Punch and Enterprise Inns have gone public today, listing all the defects that have not been corrected by their owners—including unsafe gas appliances, leaking roofs, unsafe fire exits and so on —with the companies claiming that they have done the work and having put up the rents to some extraordinary degree to cover that when they have not actually done it. It confirms that something is seriously wrong and needs to be put right.
Viscount Ridley (Con)
My Lords, I declare an interest in that I own two properties that are operated as pubs but they are not beer-tied pubs. I congratulate my noble friend on guiding us through the complexities of these amendments. I have to say, I found the topic of mitochondrial heteroplasmy two weeks ago much easier to understand.
On the whole, I subscribe to the revolutionary idea that people should be free to come up with any commercial arrangements between consenting adults that they wish to, but I certainly recognise that there is a clear wish in this House and the other place for some version of a pub code and a market rent only option. I welcome the Government’s sensible and measured approach to bringing all sides together in this but, as my noble friend Lord Hodgson said, the key question is whether this will keep pubs open.
The industry is clearly warning us that the Bill, unamended, could cost a lot of money—maybe £20 million a year—and could result in the closure of hundreds of pubs. This is confirmed by an independent study by London Economics. It may be wrong and it may be crying wolf, but if it is not, the Bill will have done precisely the opposite of what we all want: it will have closed pubs and thereby damaged communities. It behoves us to tread carefully.
The Government have listened carefully to all sides of this debate and made, as the Minister said, a proportionate and targeted response. They have made important changes to the MRO which will make it more workable, less open to legal challenge and fairer to all stakeholders, while maintaining its spirit. Without the government amendments, there is a risk that we would see less investment. It is a simple fact that many beer-tied pubs have received significant investments. Without the safeguards, the MRO would create uncertainty that deterred investment. We would thereby also lose a low-cost entry into the sector: tenants without the capital to invest in a free-of-tie pub would not necessarily come forward at the same rate—we have heard something on that already. It is crucial that if tenants want to go to an MRO and find investment outside they can do so, but if they want to defer MRO to the next rent review in exchange for investment they should be able to do that, too.
The one law that we keep passing in this House is the law of unintended consequences. Can my noble friend give the House some reassurance that these complicated amendments will minimise the risk of widespread pub closures?
Lord Snape (Lab)
My Lords, I join noble Lords on both sides in welcoming the government amendments and particularly the amendment proposed by my noble friend Lord Whitty—I cannot say the same about the amendment proposed by the noble Lord, Lord Hodgson, but that will not surprise him given our discussions during the passage of the Bill.
As I understand my noble friend’s amendment, he seeks to ensure that if a pub is to be sold, a tied tenant can take action to ensure that the tie terms are not used by a future owner to restrict choice of products or unreasonably increase tied product prices. I think that that would be the effect of the Government not accepting the amendment. I would be grateful for the Minister’s comments.
I have some concern about the emasculation of the adjudicator as far as any code protection is concerned and the events which I have just outlined taking place. I wonder why the Government have decided in the way that they have as far as the adjudicator’s powers and duties are concerned.
The noble Lord, Lord Hodgson, as ever, warned us all of the consequences of what we are doing, as did the noble Viscount. I appreciate the view expressed on the law of unintended consequences—it has happened on lots of other occasions, particularly in the pub business. Nowhere did it operate in greater detail than in the case of the Conservative Government’s beer orders back in the 1990s. I thought that they were a good idea at the time, but the law of unintended consequences meant that, instead of brewers owning pubs, pubcos owned them. If we could turn the clock back, I think that we would prefer to rely on the charity of the brewers, although that might in itself be a fairly inexact term, rather than rely on the pubcos.
The noble Lord, Lord Hodgson, told us again that the pubcos would look elsewhere for investment if some of the provisions of the Bill were to go forward. I have to say that the pubcos have been looking for alternative investment for very many years. If one looks at the investment that they have made in their pubs compared to the money that they have taken out from the sale of their properties—I could give the House the figures—one sees that far more has been taken out in the form of sale of buildings by pubcos than has ever been invested. Indeed, I could give the noble Lord a list of deeply unhappy tenants who have been promised and have expected investment in their property from the pubcos which has either turned out to be pretty shoddy or has never materialised. If the noble Lord is going to try to frighten us all during the remaining stages of this Bill, he will have to do a bit better than he has done so far.
I would be interested to hear the Minister’s view about the noble Lord’s Amendment 33L. I hope that she will reject it as the ploy that it is it on behalf of the pubcos to, if not maintain the status quo, undermine the decisions taken by the other place, which, by and large, have been welcomed by both sides of your Lordships’ House.
Lord Mendelsohn
My Lords, I shall speak to Amendment 33Y and cover some other issues. I congratulate the noble Baroness on her helpful approach to this. A great deal of work has been conducted and the Government are to be congratulated on the spirit in which they have worked to try, consistent with their word, to replicate the amendment passed in the Commons. They have done some very good work. The officials, of whom I have seen rather more than I expected, have worked diligently to do that, and I am encouraged and pleased to be able to say that we have made a great deal of progress. I think that the amendment meets the objectives of the Commons, which is to support all participants in the industry while recognising that we have challenges in the history of relations between the pubcos and the tenants which also need to be addressed.
I am not a pessimist regarding the concerns of some noble Lords about the commercial interests that will be affected by this. I have read the London Economics report—I was not convinced by it, but I have read it. I think that the impact of supermarket prices, for example, has been far more significant than other factors, so we have to put this into context. Our opportunity through the amendments and the Bill is not just to make those changes but to create a framework that will work for the industry and the development of the sector. That is an important objective for us to keep in mind.
This large series of amendments covers a lot of ground and a number of issues which lie at the heart of what was agreed in the other place on the issue of the market rent only option. As I said, the noble Baroness and her team have worked diligently in the face of time and other constraints to deal with them. In the particular circumstances of this part of the Bill, it is inevitable that our debate today has been rather more like Committee than Report, and it may be helpful to the Government if I explain that I think that the right thing to happen now is for a very limited range of issues to be given further consideration—a process in which we are happy to participate—and brought back for final decision at Third Reading. The noble Baroness stated in her introduction that she was happy to say that there is a great deal of support for some of the government amendments from CAMRA, Fair Pint, and others. In their briefings, they expressed their support for the amendments tabled by the noble Lord, Lord Stoneham, and my noble friend Lord Whitty and others standing in our names. There is a great deal of support for the amendments, which need to come together in some fashion to provide a coherent Bill.
We believe that the Government have made excellent progress on some matters, which we are pleased to support. I will outline those shortly. However, we still have profound reservations and are strongly opposed to some of the amendments before your Lordships’ House today. We are keen to ensure that they are dealt with through further discussion at this stage, and strongly recommend that they be finalised in time for Third Reading—and certainly before they go back to the other House. As I said, we are keen to work constructively with the Government, as we have done to date.
In that context, I particularly support the point made by the noble Lord, Lord Stoneham, that much of what we are now considering will be in secondary legislation. At this stage and at this time, as we move towards Third Reading, we need a lot more clarity on some things to know what is meant by the amendments, because that is where the direction of secondary legislation will go. It is worth being as expansive as we can in those circumstances.
We are happy to support a number of the government amendments: for example, making the minor but vital drafting changes to “market rent only option” and the “no worse off” principle, although I should be grateful if the Minister can confirm, as a tidying-up exercise, that if the Government have missed a change, they will bring it forward at Third Reading. We are happy to support the reinstatement of the parallel rent assessment for existing tenants—which means by implication that we are resolutely opposed to Amendment 33L.
We are very pleased to see one particular drafting change. I note that despite being told constantly of the legal impossibility of changing a “may” to a “must” in discussion on the Bill, we have one in government Amendment 33U. I had previously said that I might not mention that but I cannot resist. We understand that this drafting change is also there to express properly the Government’s commitment to this, which is very welcome.
We are also pleased to support the definition of market rent being brought in line with the guidance by the Royal Institution of Chartered Surveyors, and are content with the changes to the market rent only option procedure. We also hope keenly that the Minister will make a few comments on timings.
We have some questions in relation to the protections of the brewers’ routes to market. In general, we are happy to ensure that there are some protections. Our Amendment 33AR seeks clarification in the Bill that this route to market will allow some restrictions on the sales of competitors’ products, although not a complete ban. As now, brewing companies will have to look at their individual circumstances and ensure that they comply with all aspects of competition law. We will probe this to see what “some restrictions” means and are keen to seek some assurances on a number of points. Will the Government confirm that their provisions mean that tenants can be sure that they are no worse off than a free-of-tie tenant, because they will have access to free-of-tie pricing for all the alcohol that they sell? Will the Government assure the House that the stocking restrictions mean that brewers could require that their beer or cider is sold in their pubs, but not that products made by other specific brewers are purchased? We would also be grateful if the Government can confirm that tenants could purchase the required products from any supplier, and therefore access free-of-tie prices.
We are also keen to have the Government’s clarification as to how this will work. Tenants are not prevented from selling beer and cider from other brewers. The stocking requirement can restrict these sales but cannot provide exclusivity for the brewer. It would be interesting to understand how this will work. Any restrictions could be tested by the adjudicator as being reasonable or unreasonable but it would be very useful to get some better understanding of how the Government see this operating, since it covers placement, category, offers and marketing. If the stocking requirement was drawn too tightly, it could be deemed to be a tie in and of itself. We hope that the Government will acknowledge this possibility and confirm that it must comply with competition law.
As an example of what has been considered reasonable or unreasonable in the eyes of industry, and what it considers that it might look like, it has been suggested to us that the starting point would be what products are sold in the pub prior to a market rent only option. A stocking requirement which restricted the choice significantly post MRO would likely be unreasonable. We would like to have the Government’s observations on this point.
We accept that there has to be a balance and agree with the aim of the amendment: to ensure that the stocking requirement is meaningful. However, we also believe that there should be protections to ensure flexibility for the licensee to be able to vary their businesses to deal with the varied, and usually local, factors that they may need to address to ensure that theirs is a viable business—albeit those may be national trends about prices in supermarkets, other leisure facilities and substitutional activities. We believe that this leaves a lot of flexibility for the adjudicator and while we accept that the amendment allows for tenants to choose which wine, spirits, soft drinks, food and other services can be provided for all aspects of their pub, and who the providers can be, we are keen to ensure that nothing in the Bill allows for the asymmetries of power and information to be enshrined in legislation which in and of itself is designed to support small businesses and deal with those asymmetries. Together with the pub companies and tenants, we are keen to make sure that the balance of judgments is reasonable.
I look forward to the Minister’s reply and hope that she can address the issues in detail. We are of course happy to have further discussions on this between now and Third Reading. In the circumstances that she is unable to provide sufficient clarity of the tramlines on which this should operate, I am happy to address it again at Third Reading.
However, we are strongly opposed to the Government’s decision to weaken and water down the amendment from the Commons by eliminating the market rent only option on the sale of title or in administration. We are grateful to the Government for their discussions on this but are yet to be satisfied that there is any substance to the arguments that they presented to us. I am sure that threats of being taken to the European Court of Human Rights by the pub companies have exercised the Government, who have sensibly sought legal advice, but we strongly believe that either or both the legal advice and the client’s examination of that advice are wrong or flawed.
We have sought to deal with this question before coming to the Floor of the House; indeed, we asked for the advice that the Government had sought from counsel, which is experienced in competition, European and public law, to be published so that this could be dealt with. Our consultations with learned counsel and experts in these areas, and indeed in property law litigation including the European dimension, led us to vastly different conclusions. I know that the Minister has had a very distinguished career in business, and there is a crucial element when taking the advice of lawyers: beyond briefing them—indeed, in some cases I have heard of occasions when you can tell them what you want to hear—there is also a role for a client to examine the advice that is given and to challenge it. It is of course a choice for Ministers to decide what level of risk there is, but in this case Ministers seem to have chosen a threshold so low that we cannot fathom why, in our view, they have been as timid as they have.
The Government have said to us that they are restricted in publishing the legal advice that they received because it is privileged. The claim to privilege is quite odd, as all legal privilege can be waived. What are they worried about in relation to any such waiver? Not the advice falling into the public domain and hence fortifying any challenge, as it is already equally in the public domain that they believe there would be a basis for any such challenge. It is our view that this matter can be resolved in discussion, not on the Floor of any Chamber, if they would allow a full and open legal debate.
I hope that noble Lords will forgive me if I quickly outline why we do not accept the Government’s legal arguments on these provisions—if they were retained—fettering rights, causing improper pre-emptions, being challenged on the grounds of affecting value or, in the Government’s view, being uniquely placed for certain destruction under the weight of the ECHR. First, let us not forget that the MRO option is at market rent—by definition—so Clause 43(10) imposes on the parties only a method of determining rent that affects supply and demand for those premises. Infringements of property rights occur when you depart from the free workings of supply and demand, not when you insist on them. Therefore, the more numerous the points at which this can be insisted upon—point of sale rather than just point of entry—the better.
Secondly, without a sale triggering the MRO option, the option could be gamed as there is no benefit during the currency of the existing lease term, and this could become an avoidance tactic to ensure that delays in some cases could lead to tenants being the subject of improper pressures.
Thirdly, the point of sale of the reversion—the landlord’s interest—is a natural point to introduce MRO because the purchaser of the reversion, the new landlord, will be deemed to know the new law and hence that its purchase triggers the MRO option. The new landlord will know the effect of their purchase and be under no illusions as to where they stand.
Fourthly, there are many statutes that infringe property rights, some of them doing much more than simply adjusting the terms of the lease, as this proposes. Some actually confiscate property rights, such as the Leasehold Reform Act 1967, which gives tenants of houses the right to “enfranchise”—that is, buy the freehold off the owner against their will—and the Landlord and Tenant Act 1987, which gives owners of flats a right of first refusal to buy the freehold on any sale by the freehold owner. If this proposal raises human rights or other fundamental issues, so would most of the lease-related legislation on the statute book already.
Fifthly, there is enormous scope for safeguards, flexibility and evolution by the MRO option being overseen by the provisions of the Pubs Code, as reviewed every couple of years, and with the adjudicator’s retained rights to resolve disputes about MRO. This machinery has the ability to limit unfairness to landlords in individual cases because of the swifter introduction of the MRO option.
Sixthly, recent legislation has shown the need for, and has included, wider, more catch-all anti-avoidance provisions. The most effective is in the Landlord and Tenant (Covenants) Act 1995, enforcing the release of original tenant liability on assignment of the leasehold term, which, in Section 24, prohibits anything that seeks to avoid or frustrate the Act. The experience is that the wider the anti-avoidance net, the more it will catch. Making MRO triggered by sale strikes down in one go attempts by landlords to sell to get below the threshold applying to large pubcos.
We have been presented with other partial legal arguments, which I think are useful to set out our understanding and complete rebuttal. There is an argument that the pub company is not free to dispose of its property as the MRO trigger binds the new owner. There is no real limitation—it can still sell or choose not to. It is no different from restrictions on the freedom to dispose of freeholds of blocks of flats under the Landlord and Tenant Act 1987 and other such measures. There is also a variety of other restrictions placed by means of legislation in other areas that have a similar effect and have not been struck down or even significantly challenged.
Additionally, there is an argument that the MRO trigger results in preferential treatment for this class of commercial tenant. It does not give preferential treatment; it simply removes discriminatory, anti-competitive treatment. All these clauses and, indeed, much of this Bill are about this. I am rather pleased that this counsel has not pronounced on most of the rest of the Bill, because obviously that would undermine other provisions.
Baroness Neville-Rolfe
My Lords, I thank noble Lords for their contribution to this important debate within this Chamber and outside it. I especially thank my noble friend Lord Hodgson for his broader comments about the industry and his warnings about investment in the industry, which of course warms all our hearts, and my noble friend Lord Ridley for similar comments. Clearly, we are seeking to create certainty on the basis of the new system that Parliament will, I hope, pass in a very few days’ time. One would hope that that would lead to more investment in the industry and fewer closures. The planned consultation on the subordinate legislation will give us an important opportunity to look again at these important issues.
Before I answer the various points, I should also thank the noble Lords, Lord Whitty and Lord Stoneham, and all noble Lords for their acknowledgement and empathy and the thanks that they have accorded to my excellent team, who have worked long and hard on all this. I also thank the noble Lords, Lord Berkeley and Lord Snape, in particular for the pivotal role that they played in our discussions in Committee.
On Amendment 33L, I emphasise to my noble friend that the parallel rent assessment and the market rent only are different tools. PRA is a comparative illustration of the likely tenant profit in a tied and free-of-tie scenario for their pub; it has at its heart a projected profit and loss account for both scenarios. MRO, on the other hand, is about the market rent for the pub: in other words, what it would fetch as a pub on the open market. That starts from a different premise from a PRA. In addition, apart from being technically different, we have decided to reinstate PRA for existing tenants for a specific reason: because some tenants who do not wish to be free of tie would prefer the PRA, as they consider it a less confrontational way to secure a fair tied deal.
None the less, my noble friend will know that I am always keen to minimise bureaucracy, and as I said earlier it is our intention to streamline and integrate the two processes as far as possible, but we need to do the detailed work and process mapping to understand where and how the processes dovetail. This will benefit from further formal consultation, which will inform how we set this out in secondary legislation. I look forward to input from other noble Lords, including my noble friend, on our consultation.
My noble friend Lord Hodgson also felt that PRA was complicated and expensive. Pub companies are generally experts on the costs of running their own pubs under different models and their trading history. Therefore the extra complication and expense will be limited. As I have said, my officials will work with stakeholders on all sides when finalising the code to ensure the optimum streamlining.
My noble friend also asked about the rent assessment trigger for MRO. As I said in my opening remarks, we are aware that we need to ensure that the MRO triggers for rent assessments and renewals do not cover, for example, a predetermined rent increase, or a rent reduction to help a tenant through a difficult time. We will look at whether the drafting of the Bill needs to be improved to avoid such consequences.
Amendments 33AW, 33AX and 33AY from the noble Lord, Lord Whitty, would amend the Government’s own Amendment 33AV, which relates to the extension of code protections. I thank him again for his constructive contributions to our debate. As I said earlier, the Government will provide the continuation of protections when and where it matters. After a sale from a code to a non-code company, when the purchasing company offers new terms those must be prepared in line with the statutory code. This includes the transparency and rent negotiation provisions, and these changes will ensure that we have preserved the tenant’s right to a fair tied rent.
If the terms do not change, the tenant will not be in a worse situation but will have the right to a rent review under the code if local economic circumstances change and impact on their trade or if there is a significant price increase. If the purchasing company breaches the code, the tenant can refer the dispute to the adjudicator, who has ample powers of redress under the Arbitration Act, including the power to set a fair rent. It is appropriate and proportionate to ensure that the code protections apply until the first occasion when the tenant negotiates a new deal with the purchasing company, because this is when any disadvantage from the sale first presents itself and can be remedied through negotiation between parties.
In setting the threshold of 500 tied pubs for the code, the Government respected the wishes of the other place not to overburden smaller regional and family brewers. Therefore if we are to require that they are to be subject to the code in certain circumstances, this must be in a targeted and proportionate manner.
The noble Lord, Lord Whitty, would like to provide code protections for a longer, 10-year period. While I can accept that in one sense it is attractive to protect the tenant for a longer and fixed period, we need to have evidence for the period we would choose. Bearing in mind the concern of the other place not to overburden family brewers, the Government consider that it is proportionate to continue with the code protections until the first rent assessment and that after that the tenant is on the same footing as existing tenants of the purchasing company. Independent Family Brewers of Britain has committed to continuing the industry’s self-regulation system for its members, with access to a dispute resolution system.
Finally, I also do not consider that the noble Lord’s Amendment 33AY meets the test of proportionality. It would mean that despite not being subject to the code, a family brewer buying a code pub would be required to provide the market rent only option for that pub. This would potentially deny the family brewer the right to exercise their chosen model and discourage it from buying pubs from code companies for continued use as pubs. In addition, after taking advice from government lawyers and from external counsel—a highly respected competition, public law and European specialist—it is the Government’s view that it would be a disproportionate infringement of the property rights of pub-owning companies for the market rent only protection to continue in the case of a sale. Frankly, I do not agree with the noble Lord, Lord Mendelsohn, having seen the advice, and it is not normal practice to publish such advice because of loss of legal privilege.
The uncertainty created by the possibility of MRO would negatively impact on the property’s sale value. We have therefore sought a more proportionate way of protecting the tenant’s interests, which I have already set out. Achieving a proportionate balance between the interests of tenants and pub-owning companies is important to successfully defend any legal challenge.
The noble Lord, Lord Mendelsohn, referred to the Landlord and Tenant Act 1987, whose purpose was to protect the co-tenants of a block of flats in the event of a sale by the landlord. The Act allows tenants to be collectively offered the purchase of the residential property before the landlord can offer it for sale on the open market. Business tenants, and so pub tenants, are excluded from such protections, as the purpose of Parliament was to protect residential tenants of a multioccupier property. This is not analogous with the case of pub tenants. Furthermore, we do not think that this protection is appropriate in relation to pub premises, as pub tenants are not constrained from making an offer for the property should the pub company wish to sell it.
The noble Lord’s amendment would also mean that the investigatory powers of the adjudicator, and its related enforcement powers, would be included in the code extension. These powers have a specific function, which is to investigate systemic breaches of the code. It would not, therefore, be reasonable to apply them to family brewers that are covered by the code only by virtue of pubs they have purchased from code companies.
The noble Lord, Lord Snape, expressed a fear that the adjudicator would be emasculated—I think that was his word—in cases of the code being extended to tenants when their pub is sold. I assure him that the adjudicator is not being emasculated. He will be able to arbitrate on any alleged code breaches, including setting a fair tied rent, if necessary. The only powers that the adjudicator will not have after a pub is sold are the power to investigate a purchasing company and to impose such sanctions afterwards. That seems to me to give the right balance.
I share the noble Lord’s wish to extend protections to give a fair deal for the tenant where his pub is sold to a new company. This we have done in the amendments that we have proposed today, and this includes the ability to turn to the adjudicator for arbitration if they have a problem in doing so. That will be an important guarantee of tenants’ rights. The noble Lord has been very persistent and very constructive, and I hope in the circumstances that he will not press his amendments and that my noble friend Lord Stoneham will also feel content with my explanation.
The noble Lord, Lord Mendelsohn, asked how the stocking requirement would work. Under Clause 43(5), the Secretary of State may set out in the code terms that are required to be in a lease for it to be MRO compliant, including any terms that would be considered unreasonable. For example, if the requirement has the effect of reintroducing a product tie-in, the lease will not be MRO compliant. We will consider this in detail when we come to implement these provisions in the code. Of course, Clause 62(3) gives the adjudicator the power to set out guidance in relation to any matters regarding the Pubs Code, including the application of its provisions as well as steps that pub-owning businesses must take to comply with the code.
Lord Mendelsohn
Will the Minister confirm that we may return to matters contained in Amendments 33AS, 33AW, 33AX and 33AY at Third Reading?
Baroness Neville-Rolfe
My Lords, I was about to make the point that there are concerns on both sides. If the noble Lord wishes to press these amendments, we should test the opinion of the House.
Baroness Neville-Rolfe
“Member of staff of the Pubs Code Adjudicator.”
Baroness Neville-Rolfe
Lord Stoneham of Droxford
Lord Stoneham of Droxford
My Lords, I do not want to detain the House too long on these amendments and have a long argument on the respective merits of “may” and “must”, as I understand there are certain legislative interpretations of that. However, as I said earlier, we are concerned that a lot remains to be decided in the secondary legislation. Therefore, we want to be as firm as we can about what the primary legislation lays down. If the Minister can confirm that “may” means “must”, I understand that there will be no problem. All I seek is clarity and to leave the draftsmen to draft what is appropriate in the circumstances in legislative speak, hoping that “may” equals “must” in a layman’s understanding.
However, Amendment 33AR is a more substantial and significant amendment as it seeks to align and clarify the definition of “tie”. Clause 68(5) defines “tie”, saying:
“Condition D … is subject to a contractual obligation that some or all of the alcohol to be sold at the premises”,
et cetera. Amendment 33AR seeks to widen that by inserting,
“product or service tie supplied or provided by”,
as other ties exist in pubs. We want to align this definition with the definition in Clause 43(4)(a)(ii), which states,
“does not contain any product or service tie other than one in respect of insurance in connection with the tied pub”.
We are seeking to clarify the definition of a tied pub. I beg to move.
Lord Mendelsohn
My Lords, I rise briefly in support of the amendments tabled by the noble Lord, Lord Stoneham, who has been an assiduous follower of the Bill. These are important tidying-up amendments that help correct and clarify some key measures in the Bill. In particular, Amendment 33AR is an essential requirement to make sure that there is consistency in the Bill. I hope that either the amendment will be accepted or the Government will agree to bring it back at Third Reading.
Baroness Neville-Rolfe
My Lords, I am afraid that I cannot agree to this amendment. I explained why we could agree to “must” elsewhere in the Bill but we are unable to agree to this amendment for reasons that I have also explained.
Lord Stoneham of Droxford
In that case, is my noble friend going to talk about Amendment 33AR? I will probably have to accept what she says about the other amendments, but I should like a definitive response on Amendment 33AR.
Baroness Neville-Rolfe
My Lords, I apologise for the confusion. There are a lot of different amendments here and perhaps I may have noble Lords’ patience. Perhaps the noble Lord could clarify to which amendments in which groups he seeks a response, because there are two or three different ones that relate to “must” and “may”. I explained where I was happy to accept “must”. If he is asking me to accept it in other places, there are reasons that I can go through.
My apologies to the House; we have moved on more rapidly than I could possibly have believed. I thank the noble Lord, Lord Stoneham, for his amendments. Amendments 33H and 33K would change two references to “may” in Clause 42. This would turn the powers in the Pubs Code to require pub companies to provide parallel rent assessments and give the adjudicator functions in relation to PRAs into duties. We have made a commitment to this House to introduce PRA. This commitment, together with the duty on the Secretary of State to produce the Pubs Code in Clause 42(1), means that the Government must deliver on these provisions in the secondary legislation one year after these provisions come into force, as I explained a minute ago. There can be no doubt that we will introduce these provisions.
We had similar debates on a number of topics in Committee. As I set out then, it is standard legislative drafting to refer to provisions that “may” be set out in secondary legislation to preserve some flexibility. If we were to change these “mays” into “musts”, we would need to be aware of the possibility of overly restricting and restraining the use of these powers. For example, we have said that the adjudicator “may”, in the interests of fairness and administrative effectiveness, choose not to charge fees to smaller pub companies that have bought only one pub formerly owned by a pub company. These amendments would remove such flexibility and I hope my noble friend will recognise the undesirability of that. I can assure him that the Government will include all the provisions set out in the Bill in the statutory code, which will be made by secondary legislation and subject to parliamentary scrutiny by the affirmative procedure.
With noble Lords’ permission, I shall comment on Amendments 33AJ, 33AL and 33AP. Where the Bill provides that the Secretary of State “may” by regulations give the adjudicator functions in relation to dispute resolution and determining rent for market rent only, it is clear that the Government must set out these functions for the adjudicator in secondary legislation. Clause 42(1) sets out a clear duty on the Government to introduce the statutory code within 12 months of the Bill coming into force—14 months from Royal Assent, as I have said—and to establish an adjudicator to enforce the code. The code must include the market rent only option and the adjudicator must therefore be able to enforce the market rent only option.
I turn now to Amendment 33AR. The definition of a tied pub set out in Clause 68 determines the scope of the regime and deliberately focuses on the alcohol tie, rather than other product and service ties. This is because it is in the abuse of the combination of the alcohol tie and property rent that we have evidence of problems in the relationship between tenants and pub-owning companies. This has been documented in the evidence we received to the Government’s consultation, in the continued correspondence the department receives from tied tenants, and in the multiple reports into the sector carried out by the BIS Select Committee. These reports and the evidence we have received point to problems with the alcohol tie.
The requirements for a market rent only-compliant agreement set out in the Bill specify that an agreement made once the tenant has opted for MRO must not include any alcohol, product or service ties. This is to ensure, when a tenant opts for MRO, that he or she is offered a genuinely free-of-tie agreement. However, it does not follow that all pubs with any kind of tie should be brought into the scope of the code at the outset. Amending the definition of a tied pub in the way proposed is a different prospect, as this changes the scope and application of the measures as a whole. For example, this would mean that a pub with no alcohol tie but with a service tie of some description would be covered by the legislation. This would bring into scope a pub that is contracted to a pub-owning company for something like cleaning services, but is in all other respects free of tie and able to purchase beer and other products from any source. This is not the sort of pub where we have evidence of a problem, and I believe we must avoid inadvertently capturing free-of-tie pubs and creating greater uncertainty in the regime. Focusing these measures on those pubs that are tied for their beer and alcohol will ensure that we target that part of the market where we have evidence of a problem.
I hope that my noble friend Lord Stoneham has found my explanation reassuring. I know it is all very complex, but on the basis of my full explanation, which I think has explained why the Bill says “may” and “must” on different occasions, I hope that he will feel reassured and able to withdraw his amendment.
Lord Berkeley
My Lords, could the noble Baroness clarify—I, too, feel that it is a bit complicated—that the first five amendments in this group from the noble Lord, Lord Stoneham, which replace “may” with “must”, will in fact be done in secondary legislation? Even if she does not accept these amendments, will their spirit and meaning be in the secondary legislation?
Baroness Neville-Rolfe
I am sorry; I think he is a friend on this occasion. The noble Lord, Lord Berkeley—I will have to go back to Lords school shortly. As I explained in my long reply, it is standard legislative drafting to refer to provisions that “may” be set out in secondary legislation. In practice, we will do all the things that I have described. Therefore, I feel that these “musts” are not needed.
Lord Stoneham of Droxford
I thank my noble friend for the reassurance that we will do these things. On my last amendment, Amendment 33AR, which I will be happy not to move, all I ask, in the final phases of looking through, is that the clauses I mentioned, Clause 68(5) and Clause 43(4)(a)(ii), coincide with each other.
Baroness Neville-Rolfe
Lord Mendelsohn
“Investment agreements
(1) The Secretary of State shall establish regulations and guidance for cases where the extension of the rent assessment for pub tenants beyond usual terms is granted in return for a sum of investment from the pub company.
(2) These regulations and guidance shall include, but are not limited to, the following—
(a) the definition and amount of investment;(b) the maximum deferral period of MRO in return for investment to be five years;(c) the deferral period for MRO to begin after investment sums are fully expended;(d) the buyout of agreement provisions whereby a tenant can opt for MRO;(e) the tenant’s option to allow for alternative and blended finance to maintain MRO;(f) an investment agreement will be a trigger event for MRO;(g) an investment agreement will trigger the Parallel Rent Assessment; and (h) clarification that an agreement of investment means no opt out of the Landlord and Tenants Act 1954.(3) Any investment agreement must recognise the different nature and size of pubs and relevant investment requirements.”
Lord Mendelsohn
My Lords, Amendment 33M makes provision that the Secretary of State may, through secondary legislation, create an opt-out for an MRO in return for a sum of investment. The amendment tries to outline important provisions and considerations and to ask the Government to be clear on what that means. It also asks that they implement safeguards to ensure that the MRO is not watered down. Our belief is that if the investment offer is fair, reasonable and attractive to a tenant, there will be little or no risk of the tenant taking up the MRO at that time. The MRO trigger would be there to ensure that pub companies made reasonable investment offers and were not just bullying or cajoling tenants into signing away rights cheaply.
My reasons for tabling the amendment are twofold. First, we do not fully accept the Government’s argument concerning Clauses 42 and 43 on the Pubs Code. We think that the legislation is insufficient and would be very interested to hear the Minister’s view on this. Secondly, this measure has the capacity to undermine the Commons amendment. We do not feel that it is appropriate to accept the measure without a detailed indication of what it entails and without some markers on the face of the Bill.
There are many horror stories in relation to this, as in relation to the operation of how pub companies deal with the provision of a sale. Indeed, I heard this morning from a tenant about how all their rights were bullied out of them and how they were moved dramatically from a position of reasonable success and security, with the pub company using the provision in a dispute over a sale. Many Members of this House will have heard stories from a variety of sources about issues concerning investment. We are concerned to make sure that these are dealt with adequately, and that the problems that led to this part of the Bill and to the issues that arose in the other place are dealt with properly.
We are also very keen to make sure that the industry, in and of itself, has the capacity to continue to develop and invest, finding a way to work with its tenants productively, sensibly and creatively so as to grow, commercialising the sector to full effect. Therefore, we are looking to the Government to provide a clear view on how they will deal with this. We accept that much of this will be dealt with in secondary legislation, as with other things, but because of the nature of some of these provisions, and the speed at which they have been made, we will be very keen to have some idea of what the Government see the regulations and guidance as including and how they will be framed.
We would be very grateful for some clarification on the following: the definition and amount of investment; what the Government consider to be the maximum deferral period of MRO in return for investment, and their view on whether it should be capped at five years; the stage at which the deferral for an MRO will begin— that is, will it be after the sums are agreed or when they are all fully expended?—the buyout of agreement provisions, whereby a tenant can opt for MRO; the tenant’s option to allow for alternative and blended finance to maintain MRO and how this will operate with investment agreements; and the ability for an investment agreement to trigger the parallel rent assessment. We would also like to have a strong reassurance about how the investment agreement will be a trigger event for the MRO. We would like clarification that an agreement of investment will mean that there is no opt-out of the Landlord and Tenant Act 1954, and an assurance that the investment agreement will recognise the different nature and size of pubs and relevant investment requirements. There is a considerable difference between a large pub in, say, the centre of London and one in a remote village, and it needs to be recognised that a one-size-fits-all model does not work.
There are other considerations, such as who commissions the work, to what standard, who signs it off and is responsible for overruns, the examination of the current condition of properties and other matters. These are not the only relevant factors. We have also received correspondence on problems between pub companies and tenants, and on how these mechanisms have specifically been used. We believe that it is in everyone’s interests to have a working mechanism that allows for investment and makes that investment work. We feel that more clarity now will ensure that problems can be avoided in the future.
I hope that the Minister will be happy to consider these matters in full. Given their sensitive nature, we will be happy to return to them at Third Reading following this debate on the substantive points. I beg to move.
Lord Hodgson of Astley Abbotts
My Lords, I have Amendment 33W in this group. The noble Lord, Lord Mendelsohn, has done us all a favour by tabling Amendment 33M, which has the great virtue of ensuring a reference in the Bill to the importance of investment in the sector. There are aspects of his amendment which would be operationally and definitionally problematic, which I will come to in a minute or two, but there is a germ of a good idea and I hope that we may be able to persevere with this over the next few days. By contrast, I find the Government’s position less satisfactory, in that, as I understand it, there is to be no reference to the importance of investment in the sector anywhere in the Bill. It will all be left to the consultation process, with all the attendant uncertainties which all sides of the House have referred to during the debates this afternoon.
The Government have made a practical argument that the pubcos could achieve certainty by offering tenants a new agreement at the same time as the offer of investment. In the explanatory note that the Government circulated last week, there is a suggestion that the Bill does not prevent pub companies from issuing a tenant with a new lease alongside the offer of investment. Sadly, most tenants will not be attracted by this because of the problems of stamp duty. A lessee on a 15-year lease with a rent, say, of £50,000 will pay stamp duty of around £5,000 at the outset. If they are in year two or year three of the lease, and the pub company has to grant them a new agreement in order to make an investment with a five-year payback, they will have to write off the £5,000 they have already paid, pay another £5,000 in stamp duty for the new lease and then pay all the legal costs associated with it, which are estimated at around £1,500. Not surprisingly, this is not a particularly attractive option for the lessee. In essence, the Government’s position now is to force small businesses who want to take advantage of pub company investment to pay additional tax to do so. That is surely contrary to the aim of the Bill, which is to increase access to finance for small companies.
I think all noble Lords agree that investment in pubs is urgently needed if the trade is to prosper, because pubs are having to reinvent themselves to meet new competitive conditions, with a greater emphasis on food, facilities for families and so on. These investments are what bankers called “messy lends”, because they tend to be a mixture of: land works, for example extending the car park; construction—increasing the footprint of the pub; internal fittings, such as enlarged kitchen facilities; and general work such as new signage, new fixtures and fittings, and general decoration. A banker will have some doubt as to the ultimate value of that investment if it is unsuccessful. They are not always therefore very attractive to third-party lenders, but they are attractive to integrated pubcos, because their own estate is an important route to market for their own beer, often accounting for up to 25% or 30% of their production. It needs to be made clear that there is no requirement for a tenant to accept the pub owner’s money. If he or she can find funds elsewhere, on better terms, so be it, although the fact is that an integrated brewer usually is able to offer the best terms.
I referred to the need for pubs to reinvent themselves as a result of changes in society. That brings me to the downside of the amendment of the noble Lord, Lord Mendelsohn, as currently drafted. He referred to the vast range and diversity of investment needs, but I fear that parts of his amendment represent a straitjacket. What is a “rent assessment” in relation to MRO in the introductory section of his amendment? Reinventing yourself as a gastropub in a prosperous London suburb is a vastly different proposition from reinventing yourselves as a value-conscious family-friendly pub in Middlesbrough, but both are important if we are to maintain the pub trade in all its glory and all its diversity.
I argue that the maximum deferral period of five years, as proposed in subsection (2)(b) of Amendment 33M in the name of the noble Lord, Lord Mendelsohn, is not appropriate to appear in the Bill. Secondly, the proposed buyout provisions under subsection (2)(d) are likely to act as a disincentive to investment. Thirdly, for reasons that were clear from my previous amendment, I am anxious to pull MRO and PRA together, whereas the noble Lord has separated them under paragraphs (f) and (g) of his amendment.
My Amendment 33W does not suggest a new clause— as the amendment in the name of the noble Lord, Lord Mendelsohn, would do—but the insertion of two paragraphs in Clause 43, “Pubs Code: market rent option”. My amendment envisages a situation where the Pubs Code would clearly set out what can and cannot be included in such a deferral agreement. Tenants would continue to enjoy all the protections of the Pubs Code and the Pubs Code Adjudicator. No tenant could enter into a deferral agreement without having first taken appropriate professional advice to ensure that he or she is aware of the terms of the agreement and has taken advice on its suitability for their business. The tenant must choose to opt into the deferral agreement; that is, he or she has the right to refuse to enter into any such agreement. The adjudicator should oversee the deferral system to allay concerns from tenants around the process of entering a deferral. A deferral would apply only to significant investments to be defined in the Pubs Code and would not therefore be available for incidental investments for maintenance or repairs which are the responsibility of the owning pub company. The deferral agreement could last for a mutually agreed period of time.
The Pubs Code could set a maximum period of time for a deferral agreement if appropriate. Some flexibility may benefit both tenants and pub companies depending on the scale of the investment, as the noble Lord, Lord Mendelsohn, pointed out, and the length and nature of existing lease arrangements. For the avoidance of doubt, during the deferral agreement the tenant will maintain their right to exercise all other MRO triggers, including significant price increases and material change in circumstances as defined in the Pubs Code.
Whatever approach is followed, it is critical that there is some reference to the importance of investment in the sector in the Bill. Without that certainty, the flow of investment, most of which will inevitably come from the big pubcos and are the subject of the restrictions in this Bill, will reduce. Having heard the remarks of the noble Lord, Lord Mendelsohn, as well as my own, I hope very much that my noble friend will be able to accept the spirit of what is intended and agree to table a suitable amendment to address this issue at Third Reading.
Lord Snape
My Lords, following what the noble Lord, Lord Hodgson, has said, I hope that the Minister will do no such thing as regards his amendment. Amendment 33W seeks to legitimise a loophole in the legislation. The pub-owning businesses are seeking to introduce a provision in the Bill permitting them to defer market rent only option in exchange for significant investment. The fact is that there is nothing now and, as I understand it, nothing proposed in the Bill to restrain pub-owning businesses from undertaking such an exercise. A pubco could simply offer an investment in conjunction with the surrender of the existing lease in exchange for a new lease and a deferred period until the next rent review. I hope that the noble Lord, Lord Hodgson, who has tabled this amendment, agrees with that. I do not believe, and I think that most pub tenants do not believe, that there is any necessity to have this opt-out in the Bill.
As ever, the noble Lord talks about investment being urgently needed in some of these buildings. The reality is that this investment is not taking place. There is a queue of licensees and tenants who are anxious to tell noble Lords on both sides that this investment is not taking place. It would not take place if the Minister were to be unwise enough to accept this amendment, no matter how ably spoken to by the noble Lord, Lord Hodgson. As licensees see it at present, only pubs which accept an increase in rent to cover any investment by the pubco receive any investment. Much of the investment, such as it is, that takes place in pubs takes place in closed pubs in order to tart them up to sell them on the market. I am afraid that pubcos have a pretty bad reputation in these matters.
Viscount Younger of Leckie (Con)
My Lords, I shall speak to Amendments 33M and 33W.
In Committee I supported my noble friend Lord Hodgson in proposing an exemption from an MRO for a tenant in return for an investment by a pub-owning company. It is necessary for the companies to have reassurances that investments—some of which are significant—made in their pubs are realised in both financial and non-financial returns. The latter would include good will and more intangible aspects such as reputation, quality of service and better atmosphere, which all serve to draw new customers in over a longer period of time. My noble friend the Minister was not minded to accept an exemption but I am pleased that she has been willing to engage with all after Committee and the word “deferral” seems to have replaced “exemption”.
Like my noble friend Lord Hodgson, I have some sympathy with many of the inserts proposed by the noble Lords, Lord Mendelsohn and Lord Stevenson, in their Amendment 33M, which, essentially, seeks to place considerable detail in primary legislation in the Bill by seeking clarification of the regulations, the Pubs Code and guidance. However, the noble Lords would place too much information in the Bill and the detail is more suited to secondary legislation and proper debate at this stage.
For example, subsection (2)(f) of the proposed new clause states that regulations and guidance shall include an investment agreement as a trigger for MRO. This is too vague and there is no substance in the timescales attached. Equally, in Amendment 33M subsection (3) of the proposed new clause states:
“Any investment agreement must recognise the different nature and size of pubs and relevant investment requirements”.
This is an aspiration but it is too short on detail. Finally on Amendment 33M, in subsection (2)(b) of the proposed new clause, the noble Lord, Lord Mendelsohn, cites that the maximum deferral period of an MRO in return for an investment should be five years. My noble friend Lord Hodgson alluded to this. That is too prescriptive and further work is required to determine the length of deferral time in relation to the amounts invested.
However, the overall tenor of Amendments 33M and 33W, tabled by my noble friend Lord Hodgson, I hope will go some way to persuade and encourage the Minister to commit to giving more thought to the details in a review—or is it called a consultation?—and to debate it thoroughly as secondary legislation.
There remain important unanswered questions, including what constitutes a major or minor investment, over what periods these investments might be considered to be reasonable to allow a decent rate of return and how one might describe “decent” and how it should be defined. Perhaps my noble friend can give the House further reassurances here on Report as to the process of how the details will be debated and presented.
Baroness Wheatcroft (Con)
My Lords, it is clear that pub companies need to be encouraged to invest in their estate: it is an obvious thing to do. The pubcos claim that they invested £200 million in their properties over the past two years and so, although there are complaints from tenants, there must be some happy ones out there.
Lord Snape
I apologise for interrupting the noble Baroness so soon in her speech. If there are some happy ones out there, could she list them for the benefit of the House?
Baroness Wheatcroft
I am afraid that I do not have the details of the happy ones because they are obviously getting on with running their businesses rather than contacting me, and I hope that they are doing very well.
Lord Hodgson of Astley Abbotts
My noble friend might like to know that I produced three or four examples for the noble Lord in Committee. He just regards them as anecdotal evidence, but the fact is that there are anecdotes on both sides of this argument. There are just as many happy ones—or perhaps more—as unhappy ones.
Baroness Wheatcroft
I thank my noble friend Lord Hodgson and I support him in his amendment because it finds the balance between being overly prescriptive and legislating to give some comfort to pub owners, thus persuading them that it is safe for them to invest. I cannot support the noble Lord, Lord Mendelsohn, in his amendment. It seems to be far too prescriptive for the Bill, as others have said, and somewhat contradictory. The Bill already states that a trigger event for an MRO will be something that was unforeseen. An investment agreement, by its very nature, will have to be something that is negotiated.
Surely there are pub owners and pub landlords who are capable of negotiating an investment agreement that suits both sides. I do not subscribe to the view that all pub owners are out to do the dirty on their tenants or that all tenants are weaklings. Indeed, the Pub Landlord, that character who is so well known to television viewers, is standing up to Nigel Farage in South Thanet, although it has to be said that that particular pub landlord has not been seen there very often.
We need to offer landlords some protection so that, if owners invest in their pubs, they will not immediately be forced into an MRO. The trigger, as cited in the amendment tabled by the noble Lord, Lord Mendelsohn, would have that option. What sensible landlord is going to put money into his pub if the recipient could instantly trigger an MRO? There needs to be some scope for negotiation. My noble friend the Minister has shown that she is open to negotiation and consultation, and the amendment tabled by my noble friend Lord Hodgson would be the best way forward. However, perhaps the Minister could reassure us that she sees the need for investment to be encouraged and that she will find a way of giving pub owners and landlords the protection they need in order to invest in their estate.
Baroness Neville-Rolfe
My Lords, I am grateful to the noble Lord, Lord Mendelsohn, and my noble friend Lord Hodgson for their amendments and for providing us with an opportunity to debate further the very important question of continued investment by pub-owning companies in tied pubs. That is especially the case because, as my noble friend Lord Hodgson has just said, pubs are having to reinvent themselves in the 21st century. As we have heard, these two amendments approach the issue in rather different ways, and I understand the motivations behind both. I can reassure the noble Lord and my noble friend that the Government absolutely want to see investment in tied pubs. That is key to the success of the industry, both for pub companies and for tenants. We want to see pubs thriving and the new arrangements to work.
I think we all accept that the possibility of pubs exercising the market rent only option will create some uncertainty for pub companies, and it is possible that there might be more uncertainty than they can live with if they are thinking of making a substantial investment in a pub. It is equally clear that there is some nervousness around asking tenants to defer some of their MRO rights in return for investment and that serious consideration needs to be given to how this would work in practice and the safeguards that need to be in place. As I said earlier in our debate, we have been considering how best to address this and strike the right balance. I can reassure my noble friend Lord Hodgson that the Bill as drafted does not prevent pub companies issuing the tenant with a new lease alongside an offer of investment, and no amendment to the Bill is necessary to enable companies to do so.
As my noble friend pointed out, a new agreement may attract costs for tenants, including legal costs and stamp duty.
The situation means that the MRO triggers on rent review or renewal would not be available to the tenant for a period of five years, as that is the maximum interval that the code will currently allow between rent assessments. It would, however, provide the pub company with some certainty. We recognise that there will be occasions where a larger investment—
Lord Hodgson of Astley Abbotts
I am not quite clear whether my noble friend said that there was or was not a problem with stamp duty. My understanding is that there are repeat stamp duty obligations; in other words, you write off the stamp duty of the lease that is running and have to start again every time you have a new agreement, and for five years that is another £5,000, plus whatever you have written off before, plus the legal costs. I am not clear whether she said that was a problem. If this is too difficult and technical, I am happy for her to write to me.
Baroness Neville-Rolfe
My noble friend is right: a new agreement would appear to attract costs for tenants, which would include legal costs and stamp duty.
As I was saying, we recognise that there will be occasions where a larger investment requires a longer return-on-investment period. After careful consideration and discussion with stakeholders, the Government have decided to address this issue, but to do so via secondary legislation, using the powers in Clause 42. I can reassure the noble Lord and my noble friend that the Government are committed to using these powers to set out in the code different rent assessment periods for different amounts of substantial capital investment offered. We will consult on what constitutes substantial capital investment and what the waiver period should be for different amounts. But we are clear that this could extend the rent assessment interval beyond the usual five years where it is appropriate to do so. This would mean that MRO cannot be exercised during the waiver period unless one of the triggers of a change of circumstances beyond the tenant’s control, or a significant price increase, is met.
In our discussions with stakeholders, we have heard varying calls for the length of waiver period that would be required to enable a pub company to see a return on its investment. These calls have varied between the five years suggested by the amendment moved by the noble Lord, Lord Mendelsohn, and 10 years. Clearly, individual circumstances will differ and we need to understand the details through consultation before we set this out in secondary legislation. The code will set out the safeguards that must be met to ensure that the tenant is protected from attempts to abuse a waiver. Again, it is vital that we consult on these to get them right.
I was glad that the noble Lord, Lord Mendelsohn, welcomed the idea of providing for investment. He set out a number of understandable concerns and potential safeguards where I think there is a lot of agreement but where we will need to work out the detail; for example, ensuring that the investment is substantial, that the tenant must take independent advice before agreeing to the deal, and that it is a genuine investment and not running repairs. He also mentioned that the pub company should not be able to require that a waiver agreement involves opting out of the Landlord and Tenant Act. I can reassure him that, using existing powers, we could restrict a pub company from requiring an opt-out of the Landlord and Tenant Act protections as a condition of investment.
My noble friend Lord Hodgson set out two areas of protection in his amendment: “significant investment” and “specified period”. Again, I think we all agree that these are important, and the secondary legislation I am proposing will set them out in detail. To meet the concerns of my noble friend Lord Younger, it will indeed be by affirmative resolution, which will enable us to have a debate.
There are other potential safeguards which will really benefit from consultation. The noble Lord, Lord Mendelsohn, asked whether the tenant can buy out of their agreement at a later date or source the finance from elsewhere. We will want to consider safeguards around ensuring that a pub company delivers the investment it promises, including when the deferral period should start. The adjudicator will have the power to intervene and arbitrate disputes where the landlord has breached the relevant provisions of the code. Remedies under the Arbitration Act are wide-ranging and the adjudicator can order redress which includes the payment of money in appropriate circumstances. I agree with the noble Lord, Lord Mendelsohn, that we need to take account of the fact that different sums of investment are significant for different types of pub—I think that he talked about urban and rural pubs, but it is probably even more complex than that. This is again a matter for secondary legislation and consultation.
Lord Mendelsohn
I thank the Minister for that reply. It is worth making a few brief points, the first being on the genesis of the amendment. Since our discussions in Committee, we have all been looking for ways in which we can still support the industry and the sector. We have been kicking around the draft of a partnership investment agreement between the pub companies and the tenants to find a framework that will work. What is important about the investment agreement arrangements is that the discussion has been about a partnership. It has become clear throughout the process that there is great difficulty and, in some cases, there will be a large variety of problems which prevent the sector moving forward in the sense of partnership. The amendment is intended to address that and to ensure a reasonable balance of options. Where there is investment, we want to ensure that there are no circumstances where it could be argued that a tenant did something which they did not mean or that they could be fooled, and that they enter into nothing without full appreciation of the situation. We also want to bring out the best in the pub companies as they seek to work with their tenants towards achieving a better outcome.
It would be nice if the £200 million of investment that we have heard about had actually gone into developing estates. We have tried to address this over a long period; we have even been through the annual reports and other things. Most of that investment is for things that go wrong or the general upkeep of buildings. Development of the commercial future of the estate represents a very small proportion of that. It is important that investment is considered on the basis of what it achieves for the ongoing development of the businesses and the sector. In trying to put something in the Bill, we wanted to set some tramlines. Unless there is a clear sense in the Bill—in that regard, I am grateful for some of the Minister’s comments on the tenant Act—our fear is that arguments over secondary legislation will be less helpful, will have the problem of unintended consequences and will poison discussion between the parties. In this debate, we have seen how that affects things. We feel that it would be sensible to consider such a provision. We would be grateful if the Government could consider the matter again and come back at Third Reading with something which gives us a better indication of how the framework of secondary legislation can be put together or at least some of the tramlines. I beg leave to withdraw the amendment.
Baroness Neville-Rolfe
(i) such rent as may be agreed between the pub-owning business and the tied pub tenant in accordance with the MRO procedure (see section 44), or(ii) failing such agreement, the market rent.”
Baroness Neville-Rolfe
(a) that the tenancy or licence concerned is entered into —(i) on the date on which the determination of the estimated rent is made;(ii) in an arm’s length transaction ;(iii) after proper marketing; and(iv) between parties each of whom has acted knowledgeably, prudently and willingly; and(b) ”
“( ) The requirement to offer a market rent only option set out in subsection (1) does not apply to franchise agreements, defined as agreements whereby no rent is paid by the franchisee and their share of the profit is unaffected by the price paid for tied products.”
Lord Hodgson of Astley Abbotts
My Lords, with Amendment 33Y, we come to the issue of franchises—another great issue that has concerned us during discussion of the Bill. I and other noble Lords referred in earlier debates to the need for investment to allow pubs to reinvent themselves. I argue that there is an equally urgent need to allow pubcos to reinvent themselves by trying out and examining new corporate structures more in keeping with modern times, with less of the baggage of suspicion that traditional models carry with them, about which we heard from the noble Lord, Lord Snape, and about which other noble Lords clearly have similar concerns.
Noble Lords will know that I do not believe that changing the pub tie in any event is any more than a marginal answer to the fundamental challenges faced by the pub trade. The real challenges are: cheap beer in the supermarket at £1.13 a pint, compared to three quid in the pub; the increased drinking of wine, which people do not drink very much in the pub; the increasing tide of regulation of drink-driving, smoking and licensing; the rapid change in the structure of our society and the deindustrialisation of large parts of the United Kingdom; and, last but not least—in fact most importantly —the brutal hours required to run a successful pub. The presence or absence of a tie will have little or no effect on any of those.
I accept that the weakness of the tie is that it has two inbuilt conflicts of interest between the owner and the tenant: first, the rental level—the higher the rent, the lower the profit for the tenant—and, secondly, the price for which goods and services are supplied. To get around that conflict, pubcos have been developing the idea of a franchise. After all, that is how Burger King, McDonald’s, PizzaExpress, Starbucks, Costa Coffee and other successful companies have developed on our high streets in recent years. That is a revenue-sharing model. The tenant pays no rent and all goods are supplied on a sale or return basis. The tenants’ only responsibility is for the wages paid to staff of the pub and the council tax. Both parties, owner and tenant, thus have a joint interest, a joint incentive to maximise revenue.
My Amendment 33Y is again about the Pubs Code and the market rent option. I seek to amend the clause so that it is clear beyond peradventure that all the provisions and protections of the Pubs Code apply to those franchises, including the fact that franchised pubs will count as part of the 500 pub level which triggers inclusion in the provisions of the code, which I know that the noble Lord, Lord Whitty, will discuss shortly. This is not a way to get around the code. All the provisions and protections of the code are there, except for one—the market rent option, which is of course because no rent is being paid. It is a revenue-sharing model.
My noble friend on the Front Bench again wishes to leave all this to consultation. That is not satisfactory. The hard edges of how this new world is going to operate are all in the Bill; the soft edges may—I repeat, may—come about as a result of consultation. This consultation will take place after 7 May and while I am 100% confident that the next Government will be a Conservative one, the industry will be thinking, “What if?”. For example, it will be wondering what the outcome of a consultation is likely to be with a Lab-Lib coalition, with Mr Mulholland leading a charge for no changes as a result of the consultation process. That is why there needs to be some reference to this new model in the Bill, otherwise we risk tying the industry back into an operating model which all experience has shown has some fundamental flaws and inbuilt mistrusts.
The Minister has argued that all this can be achieved under the powers of Clause 71, which is not to do with the market rent only option and the Pubs Code’s operation. It is concerned with power to grant exemptions from the Pubs Code. This clause has become known as the Harry Ramsden clause. Harry Ramsden, the well known purveyor of first-class fish and chips, wishes to be certain that if his fish and chip shops supply beer and cider they will be exempt from the code. I understand that the Government are proposing to give that assurance. I know that Mr Harry Ramsden is talking to pubs to see whether he could sell his fish and chips in a pub. That would mean that fish and chips sold inside a pub would come under the code and beers sold inside Harry Ramsden’s fish and chip shops would come outside the code. Where is the sense in that? Further, Starbucks is now beginning to think about obtaining licences to sell beer and wine in its coffee shops, which are of course run on the franchising model. Where is this going to leave the traditional pub and the traditional pub model? The answer is: operating at an ever greater disadvantage.
All these developments emphasise the need for the industry to be freed up to try new ways of meeting the exceptionally competitive nature of our leisure market. The issue today is not whether 5,000 pubs are going to close. In my view, 5,000 pubs are probably doomed under any scenario. They are in the wrong location and have the wrong footprint, construction and reputation. The challenge for us is to prevent these 5,000 becoming 10,000 or even 15,000 pubs, and new corporate models such as franchising are one way to help.
My final words as we come to the end of this long saga are to those who think that the changes in the Bill will somehow herald a return to the golden age of the pub. I say to them: be careful what you wish for. I say the same to my Front Bench and to the noble Lords, Lord Mendelsohn and Lord Stevenson, as well. As we have heard already this afternoon, 25 years ago our predecessors introduced the beer orders. The orders were the result of a belief that big brewers with big chains of pubs were shutting out small breweries, so the answer was to limit the number of pubs that a brewery could own. The small breweries would then have a place in the sun, with the market space to thrive. No doubt to our predecessors, that all seemed extremely logically persuasive. As we know, the result was completely different. On the one hand there emerged the pure pubco, the focus of so much fury today, and on the other the market gap thus created was filled not by small breweries but by large, foreign brewers, so that noble Lords visiting a pub today will find the bar dominated by Stella Artois, Grolsch, Heineken, Foster’s, Castlemaine XXXX, Kronenbourg, Carlsberg and Peroni, with not a single UK brand among them.
At an earlier stage of the Bill, I suggested that there was the possibility of a similarly unpredicted and unwelcome outcome to these proposed changes. A pure pubco—not an integrated brewery, which does not have the same flexibility because it needs the pub to sell its beer—could say to itself: “Parliament wishes us to behave as a property company. So be it. We will behave as a property company. We will increase our short-term profitability by reducing or eliminating our support to our tenants. Where they can pay the rent, fine; where they can’t, we shall begin to look for alternative uses for the premises”. I have never been involved in a pure pubco so this is pure supposition on my part, but the pure pubcos own the overwhelming proportion of the current tied estate so, if this were to be developing trend, it would be a very serious one for the pub trade generally.
Lord Snape (Lab)
My Lords, I fear that I am going to miss the dulcet tones of the noble Lord, Lord Hodgson, on the rest of the Bill. I have sat through this paean of praise for the pubcos at Second Reading, in Committee and so far during the proceedings in your Lordships’ House today. I have some sympathy with the noble Lord’s view about the events of the late 1980s; it is a pity that he was not around in the other place when a Conservative Government were insisting that the power of the brewers at that time should be curbed. He obviously feels that the outcomes of that legislation, such as the beer orders that followed, have led to the situation in which we find ourselves now. Yet the contradiction appears to be that, while it is fair to say that he deplored the effects of the beer orders and what took place—the sell-off of the pubs and the relinquishing of the tie between the brewers and pubs has led to the pubcos that we have today—he has spent every stage of this Bill defending those same pubcos. He cannot really have it both ways; if the beer orders and their aftermath were so bad in the 1980s in creating these organisations, I wonder why he has spent so much time defending them during the passage of this legislation.
Lord Hodgson of Astley Abbotts
My Lords, I know that this is Report, not Committee, but if I may say so to the noble Lord, I have made it perfectly clear that there are between 20,000 and 25,000 tied agreements between pubcos and tenants, and not every one of them behaves like a saint; clearly, mistakes are made. I have explained, if he was not listening to my remarks earlier, that the problem with the tie is that built into it are two inherent conflicts of interest.
Lord Snape
I am grateful for that clarification; perhaps if the noble Lord had made it at Second Reading we might have spent less time bickering. The noble Lord’s Amendment 33Y seeks to put into the Bill some exemption for franchise agreements. The Minister will correct me if I have got this wrong but I think the Government have taken care of those franchise agreements and arrangements within the Bill itself. If they have not, they left themselves enough time, with the consultative procedures that the Minister has so ably outlined, to look at them again over the next few months, when these consultative arrangements are actually taking place.
The problem with accepting the amendment, of course, is that in effect it would pre-empt that consultation and we would be likely to see the pubcos working their way around the legislation in the way about which the noble Lord, Lord Hodgson, warned us. So although I found him as lucid as ever, I think that he convinced one or two of us on this side of the House that his amendment not only was not necessary but, were it to be accepted by the Minister, would lead to an even worse situation than we are in. Surely the noble Lord can see that making exemptions in the Bill, denying the adjudicator and the Pubs Code the opportunity to consider what agreements should be exempt, and to reverse that exemption if it transpires that the exemption is being gamed at a later date to circumvent the legislation, is the proper way forward. I hope that the way in which the Minister indicates the Government’s attitude to this amendment will indicate the way in which they will take this matter forward.
Like the noble Lord, Lord Hodgson, I am coming to the conclusion of my own remarks on the Bill. I would like again to say a few words about investment. It has been a consistent theme of the noble Lord that the Bill and the failure to accept his amendment would have a serious negative effect on investment that the pubcos make in licensed premises generally; I think that that is a fair summing up of his position. However, when one looks at what I repeat is the myth of investment by the pubcos, a different situation is immediately apparent. In 2014, for example, Punch invested £43 million in its core estate but sold pubs to the value of £111 million. It has already announced that it hopes to make £307 million from selling over 1,000 of its non-core estate. Enterprise Inns invested £66 million in pubs that year, then disposed of £73 million-worth of them. This does not sound to me like either a prosperous industry or an industry controlled by those who seek a sensible and profitable way forward for it, regardless of the legislation before your Lordships today.
Lord Berkeley
Could my noble friend clarify whether those investment figures are those quoted by the companies concerned, or are they the figures that they told the landlords they were investing but in fact did not, so the landlord had to do it and then got charged extra for the investment that did not happen?
Lord Snape
My Lords, the figures that I gave were the ones that the pubcos themselves published, but I certainly agree with my noble friend. Again, without detaining your Lordships too long, I could produce in the course of the debate on this amendment 14 or 15 independent licensees who told me—along, I am sure, with other noble Lords on both sides of the Chamber—about the broken promises made by the main pubcos about investment.
I admire the oratory and indeed the optimism of the noble Lord, Lord Hodgson, who not only told us that these institutions—the pubcos, whose creation he inadvertently deplored as a result of the legislation passed by a Conservative Government back in the 1980s —were really decent chaps who are anxious to invest in their property, but forecast the result of the election as a Conservative majority. However, my reaction is: has he put his money where his mouth is? Even better, perhaps he could put the pubcos’ money in that direction because, like me, he does not know the outcome. None of us does. Not even those well known pundits, the pollsters, can tell us the result of the next election. I admire his optimism, if not his sentiments, as far as the pub industry is concerned. I hope that the Minister will do as she has done with the two previous attempts made by the noble Lord, Lord Hodgson, at amending this legalisation and will smother him with honeyed words but kick his wishes into touch.
Lord Mendelsohn
My Lords, I shall speak to Amendment 33AZ. I support the Government’s position on this. Before I explain why we support their position, I say to the noble Lord, Lord Hodgson, that we are very keen for the sector to prosper and develop and that initiatives by the pub companies and individual tenants will create a vibrant environment. I do not recognise the “sky is falling in” scenario that he presents, and I do not believe that the fact that some companies are looking at the potential of REITs is a big indication of things that have happened in relation to this Bill. I was approached to invest in a pubco REIT well before this Bill was even announced by the Government, and the reasons why it did not take off were leverage and risks associated with our operating model. The same issues will exist today when it happens. Ironically, I think we have more certainty now with the provisions of the Bill, but I do not think that this is a brand new scenario where the risks are so huge.
I shall speak to Amendment 33AZ because we are happy to accept Clause 71, which provides the Secretary of State with the power to make regulations enabling exemptions from the Pubs Code and that the specified descriptions of those exempted will be determined by secondary legislation. Our amendment seeks to apply the affirmative procedure to this to ensure that we can debate these matters properly and sensibly and allow the sort of discussion that we have had today.
We were concerned that the Government had described the notion of a genuine franchise as something they would be willing to consider within that context. The discussions have gone by. Our concern is not that there should not be such consideration, but we are not clear that there is a real definition which applies to that and we are yet to be convinced that there is a case for any particular exemption.
Generally, franchises are long-established arrangements. Many erudite books have been written on this subject, some of which bear my surname, but I have absolutely none of the credit for having written any part of them. These are arrangements where one party, the franchiser, grants another party, the franchisee, the right to use its trade mark, trade name or certain business systems or processes to produce or market goods or services according to certain specifications. Franchisees usually pay a one-time franchise fee plus a percentage of sales revenue as a royalty and gain name recognition, tried and-tested products, standard building design and décor, detailed techniques in running and promoting the business, training of employees and ongoing help—a range of things that will help the franchiser to gain the rapid expansion of the business and earnings at minimal capital outlay, and where the franchisee is able to develop businesses that they are comfortable about being able to establish.
Essentially, once you have an integrated business where there is a property element owned by someone else, we are yet to be persuaded that any of the mechanisms is anything other than rent by another name. There are ways in which the contracting arrangements can be very different, but in effect it comes down to the same essential relationship, despite the method of payment, be it royalties, profit share, cost deductions, rent plus or minimum guarantees. We are yet to be convinced that there is an operable definition that can work. I look forward to hearing the Minister’s comments. We are very keen to support the Government’s position that there should not be such an exclusion. We are very happy to return to this if the Government wish, but we support their position as it stands.
Baroness Neville-Rolfe
My Lords, I thank my noble friend Lord Hodgson for championing the industry. I agree about the importance of investment. There has been some investment in the industry, and I hope there will be more if we get these important reforms right. I also agree about the importance of franchising as a new potential avenue of prosperity for the sector. I thank the noble Lord, Lord Mendelsohn, for his amendment, which I will come to.
Amendment 33Y seeks to provide that the market rent-only option does not apply to franchise agreements. My noble friend defines them as,
“agreements whereby no rent is paid by the”,
tenant,
“and their share of the profit is unaffected by the price paid for tied products”.
The Government recognise that there are turnover-based pub agreements on the market where the tenant’s interests are arguably more aligned with the pub company because both rely on a fixed proportion of turnover. The tenant does not face the combination of wet and dry rent, as with traditional agreements. The benefits of a franchise are that you are buying a proven business concept that has been tested by the franchiser. That should mean that your risk as a franchisee is reduced. Alongside the turnover share element, this would seem an important part of what constitutes a genuine franchise.
However, pub franchises also retain some characteristics of a traditional tied agreement that mean the tenant is still at risk. For example, the tenant is locked into the agreement for at least five years with no means to change the terms. The pub company remains in a stronger negotiating position, as we understand that the relative turnover share figure is fixed and generally non-negotiable, and a franchisee is unable to shop around for a better deal on some or all of his products and services.
However, after much consideration, I am pleased to confirm to my noble friend that the Government have listened to concerns expressed and agree that genuine franchises should be exempted from the MRO provisions. Given the differences between traditional tied pubs and genuine franchise agreements, we consider this a reasonable exemption, but we are clear that the remaining code protections should still apply.
We will exempt only genuine franchise agreements, and I shall make a few comments about our thoughts here. My noble friend put forward in his amendment two sensible criteria that are fundamental to defining a genuine franchise, but there are likely to be others. Therefore, it would be wise to consult further before we specify exactly what we mean by a pub franchise, and to take this forward in secondary legislation. It is our intention to provide for the exemption using the existing Clause 71.
In relation to Harry Ramsden’s, the code will regulate the alcohol tie in pubs. Harry Ramsden’s fish and chip shop clearly is not a pub, and Clause 71 enables the Government to exempt Harry Ramsden’s from the regime. Similar examples will be considered on a case-by-case basis. We will look at the points made today about Harry Ramsden’s and Starbucks in developing the code.
My noble friend Lord Hodgson was concerned about potential unintended consequences and asked for more to be done in the Bill. This is a difficult one. The best way to reduce the risks of unintended consequences is to allow for flexibility through secondary legislation because it is then possible to tweak arrangements should unintended consequences arise. If we fix these matters in primary legislation, any unintended consequences would be much harder to remedy.
On Amendment 33AZ from the noble Lord, Lord Mendelsohn, I am pleased to reassure him that the regulations we will make under Clause 71 will be subject to affirmative procedure, so we will be able to have a proper debate. However, we believe that subordinate legislation is the right way ahead. I am making it clear in Hansard that that is the Government’s intention, and my Bill team will be working away on franchise and other aspects of the subordinate legislation as soon as the Bill receives Royal Assent.
I hope that my noble friend will feel reassured by my response and will agree to withdraw the amendment.
Lord Hodgson of Astley Abbotts
My Lords, I thought for one wonderful moment that my noble friend was going to agree to put something in the Bill, but it will be secondary legislation again, with all the disadvantages and uncertainties that that implies.
Of course the noble Lord, Lord Mendelsohn, has a family familiarity with franchising, in the sense that his uncle was the moving spirit of the British Franchise Association, which of course would help set the standards that would decide what a pub franchise looks like, because it has a lot of experience in that area—so this will come back to haunt him yet.
My concern about the Minister’s reply is that we find ourselves unable to move the structure of the pub trade forward. We need to find new and better models. There will always be concerns that any new corporate structure we invent carries the risk of it being used for a loophole. That is not the case, because the amendment brings every single aspect of the franchise within the Pubs Code and the Pubs Code Adjudicator’s power except the single issue that you cannot ask for a market rent option because you are not paying any rent.
I accept my noble friend’s assurances that the Government intend to make sure that this is properly dealt with in consultation, but they are making a mistake because there is a danger of slip ’twixt cup and lip. My concern is that the trade finds itself locked into a structure with which neither side is entirely satisfied, and that we may therefore perpetuate enmity, suspicion and difficulty. I had hoped to find a way out of that by getting something in the Bill. I am sorry that the Government will not do that, but I see no point in taking it any further on this occasion. I therefore beg leave to withdraw the amendment.
Baroness Neville-Rolfe
“(ab) specify a reasonable period (“the negotiation period”) during which the pub-owning business and the tied pub tenant may seek to agree the rent to be payable in respect of the tied pub tenant’s occupation of the premises concerned under the proposed MRO-compliant tenancy or licence;”
“( ) require that the market rent must be determined by the independent assessor within a specified reasonable period;”
Baroness Neville-Rolfe
Baroness Neville-Rolfe
Baroness Neville-Rolfe
Baroness Neville-Rolfe
Lord Whitty
Lord Whitty
My Lords, the two amendments in this group deal with the issue of the threshold. I will be as brief as I can.
The discussion earlier today and in Committee has shown that there is an awful lot of movement within the pub world: there is buying and selling of pubs between large pubcos, breweries and other companies, and there is a lot of change in the status of pubs between being managed and tenanted and between different forms of tenancy, such as from tenancy to franchise and vice versa.
The definition of the threshold here is rather static in that it relates only to tied pubs. The Minister has made it clear that the definition of tied pubs includes franchised pubs, and I hope that she will repeat that assurance here today. I had also hoped that she would be slightly more favourable to the earlier amendment in the name of the noble Lord, Lord Stoneham, which related to pubs that are tied other than by beer and cider provision, because there are other forms of tie than the purely alcohol tie. Because pubs move from one status to another, and indeed from one company to another, it is surely a lot easier to define the threshold by the total number of pubs. Otherwise, there could be some gaming to avoid the threshold, or indeed changes in the structure of the industry that alter the way in which the code and the MRO option would apply.
The Government have said that if we did that we would run the risk of completely inappropriate pub owners falling within the area of the Bill. First, as of now, it makes a difference of one company, so it is not a comprehensive reassessment; it is just an easier way that will stand the test of time for longer. In any case, as was referred to in the debate on the previous amendment, if any company is caught inappropriately by this provision, either because of the threshold or for any other reason, the Government have the power under Clause 71 to exempt that company or companies.
It would therefore be a lot easier were the Government to accept the rationale of what I am saying. It would make the operation of the code a lot easier and clearer. It would not make a lot of immediate difference, but it would, as I say, stand the test of time, given the volatility of the patterns of ownership with the buying, selling and changing of status within this sector. I beg to move.
Lord Hodgson of Astley Abbotts
My Lords, it will not surprise the noble Lord, Lord Whitty, that I urge the Government not to accept the amendment. The issue of the change in the MRO and its introduction is about tenants: that is to say, self-employed business men and women and the imbalance of bargaining power between the individual tenant and the brewery, in particular because of the issue of the rent charged and the charge for products and services supplied. That is the heart of the problem.
Managed pubs—the other big category—are run by people who are employed by the brewery, who run it like a branch office. The noble Lord, Lord Snape, referred earlier to how Wetherspoon runs its pubs. It has managers in every pub who are employees. They are paid a salary and a bonus, with all the other aspects that go with corporate existence. To include those in a Pubs Code would be wrong, first because there is no rent to pay and no question of any aspect of the Pubs Code applying to pubs like that. These are completely different vehicles and corporate structures, and the application of the Pubs Code can have focus and effect only where you are dealing with independent businessmen, whether they are tied, franchised, or whatever.
Baroness Neville-Rolfe
My Lords, I thank the noble Lord, Lord Whitty, for his amendment, and for his engagement on these provisions in advance of Report. As the noble Lord explained, these amendments would change the definition of a pub-owning business for the purposes of the Pubs Code to one with 500 or more pubs of any kind rather than 500 or more tied pubs.
The noble Lord asked about franchises. They will indeed be included for the purposes of the 500, as I think my noble friend Lord Hodgson helpfully explained when we were discussing it earlier. The definition focuses on the alcohol tie, because that is where we have evidence of problems, as colourfully explained in four Business Select Committee reports, all of which focused on the tie.
I understand the noble Lord’s view that companies with more than 500 pubs of any kind are companies of sufficient size that they can cope with complying with the code. However, the amendments would lead to some striking anomalies. A pub-owning company with 499 pubs, all of which are tied, would not be covered by the code, but a pub-owning company with 500 managed or free-of-tie pubs and just one tied pub would be covered for that one tied pub.
Lord Whitty
I thank the Minister for that response, and particularly for her reassurance on the record on the inclusion of franchisees in the definition of the 500. The point here is that this is all about the balance of power, as she said herself: the power of very large companies that have pubs of different status to shift them from being tenanted and tied to tenanted and not tied, and vice versa, and from tenanted to managed, which applies as a result of their size. The code, of course, will relate only to their relationship with tenants of tied premises. So, in a sense, the noble Lord, Lord Hodgson, and to some extent the Minister, miss the point—it is defining who by size and influence on the market would be most likely to present a problem for their tenants in this respect.
I do not think that I will get anywhere with the Minister tonight. I hope that the Government will bear this in mind, but at the moment clearly it makes very little difference—the difference of only one company. I hope that the Minister will not get the lawyers on to her for having named that company. Nevertheless, it is important that the vast majority of tied pubs are covered, and her definition of the threshold would ensure that. But down the line, again, there may be a problem with pub codes if large breweries began to change their status on a large scale of the pubs under their control. But for the moment, I beg leave to withdraw the amendment.
Baroness Neville-Rolfe
“(2A) A person not falling within subsection (1) and who is the landlord of a tied pub occupied by a tied pub tenant who has extended protection in relation to that tied pub is also a pub-owning business for the purposes of this Part in relation to that occupation.
(2B) A tied pub tenant has “extended protection in relation to a tied pub” if—
(a) the tenant occupies the tied pub under a tenancy or licence at a time when the landlord is a person who is a pub-owning business by virtue of subsection (1), and(b) before the end of that tenancy or licence the landlord is no longer such a person (whether because of a transfer of title or because the landlord ceases to fall within subsection (1)).(2C) But a tied pub tenant ceases to have “extended protection in relation to a tied pub” on the earlier of—
(a) the end of the tenancy or licence concerned, and(b) the conclusion of the first rent assessment or assessment of money payable in lieu of rent to be provided after the landlord is no longer a person who is a pub-owning business by virtue of subsection (1).(2D) The Secretary of State may for the purposes of subsections (2B) and (2C) by regulations specify—
(a) when a tenancy or licence ends;(b) when a rent assessment or assessment of money payable in lieu of rent is concluded.(2E) Nothing in sections 43 to 45 and sections 53 to 59 has effect in relation to a person who is a pub-owning business by virtue of subsection (2A).”
The Deputy Speaker (Lord Colwyn) (Con)
Before the noble Lord comments on his amendment to the amendment, it may assist the House if I explain that there is a mistake in the Marshalled List. Amendment 33AY, the third of the noble Lord’s amendments to Amendment 33AV, should also be in the names of the noble Lords, Lord Mendelsohn and Lord Stevenson of Balmacara.
Amendment 33AW (to Amendment 33AV)
Lord Whitty
Lord Whitty
My Lords, I shall not move the amendment, but I want to say a quick word on Amendment 33AY. I was very disappointed when the Minister, who obviously thought that it was already chucking out time on the pubs section of the Bill, said in replying to my noble friend Lord Mendelsohn that she would not look again at the question raised by Amendment 33AY: in other words, that she was not prepared to look at what, from my perspective, is a disproportionate infringement of the rights of the tenant. While there is a change of owner, all other aspects of the code and of the lease will apply to terms and relations between them and the new owner, except the very one on which Parliament has insisted. I find that a bizarre position and one that may be politically difficult for the Government.
I urge the Minister, even at this late stage—and the noble Lord, Lord Popat, is looking at it very assiduously just now—to say that she will have another look at this before Third Reading and come forward with her own proposition, or at least have some further consultation on the matter before Third Reading. If they do not do so, as this was central to the concerns of the House of Commons, I fear that they will find themselves in some difficulty when the matter goes back there. Given that we all want to get this Bill finished with, although it is not very evident that we do today, there is a possibility of the Government running into trouble if they do not have another look at what is covered by Amendment 33AY. I ask the noble Lord, Lord Popat, to reflect on that on behalf of the Minister.
Lord Popat
Lord Popat
Lord Popat (Con)
My Lords, Amendment 34 is a minor and technical amendment to Clause 75. It will remove subsection (5) of the clause, which made provision for a consequential amendment relating to independent school standards. This subsection is now no longer necessary, due to the repeal in England of Section 157(2)(b) of the Education Act 2002 by paragraph 16 of Schedule 1 to the Education and Skills Act 2008. Therefore, it now makes sense to take this opportunity to remove this subsection. This will not affect the purpose, impact or effect of Clause 75; it is a simple housekeeping amendment. I beg to move.
Baroness Jones of Whitchurch (Lab)
My Lords, I am grateful to the noble Lord for giving that explanation. We concur that this is a minor technical amendment. We rehearsed the wider issues about the practicalities and appropriateness of very young children being cared for on school premises and the wider issues around exemption from registering as an early years provider in Committee and I do not intend to rehearse those arguments again at this stage. We are content that the amendment should go forward.
Lord Mendelsohn
“Register of people with significant control for property
(1) The Secretary of State shall by regulations made by statutory instrument establish a register of freehold estates and leases owned by or granted to people of significant control as outlined in Schedule 3.
(2) A statutory instrument containing regulations under subsection (1) 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 Mendelsohn
My Lords, we have tabled this amendment to add another property dimension to the register of persons with significant control. There are a variety of considerations as to the way we do that, consistent with the notions of transparency we are trying to bring in. We were minded to table the amendment to probe the Government on this issue largely as a result of Transparency International’s very interesting report on properties in London being bought through offshore corporate secrecy. We have tabled this amendment to try to deal with this issue in the context of the persons with significant control register, where they use a holding company to acquire these properties. The amendment would establish a register of persons with significant control for property.
Research that analysed data from the Land Registry and the Metropolitan Police Proceeds of Corruption Unit found that 75% of properties whose owners were under investigation for corruption made use of offshore corporate secrecy to hide their identities. Since 2004, more than £180 million-worth of property in the UK has been brought under criminal investigation as the suspected proceeds of corruption. However, this is believed to be only the tip of the iceberg as the scale of proceeds of corruption invested in UK property is understood to be considerably higher. Indeed, more than 75% of the properties under criminal investigation use offshore corporate secrecy. Some 36,342 London properties, totalling 2.25 square miles, are held by offshore haven companies, invariably through UK corporate entities. Of these, 38% are in the British Virgin Islands, 16% in Jersey, 9.5% in the Isle of Man and 9% in Guernsey. Almost one in 10 properties in the City of Westminster, 7.3% of properties in Kensington and Chelsea and almost 5% in the City of London are owned by companies registered in an offshore secrecy jurisdiction.
According to the latest figures, which cover October 2013 to September 2014, estate agents contributed to only 0.05% of all suspicious activity reports submitted. This figure does not match the risks posed by money launderers to the UK property market, the distortions created or the problems associated with the amount of money involved. It is important to understand that the overall value of these transactions in the report alone, which is only part of what can be easily identified, is, on rough calculations, between £100 billion and £250 billion.
Naturally, this amendment is insufficient by itself to tackle the problem and will not deal entirely with these sorts of issues and the distortions to the market that the corrupt money brings. A debate about how transparency should be established over who owns the companies that own so much property in the UK through making such transparency a Land Registry requirement is for another Bill at another time. However, this provision is useful as a result of the frequent structures that are developed to hide ownership, largely by establishing UK holding entities. This Bill provides an opportune moment to take our first step in addressing this. It will not address the problem but it is a step in the right direction. I beg to move.
Baroness Neville-Rolfe
My Lords, I thank the noble Lord for tabling the amendment and am grateful to him for providing the background to it. I think he suggested that it was a probing amendment but it may be helpful if I explain some of the concerns it may raise in its current form. We must also consider the potential costs and wider implications of such a measure and the actions that we are already taking in this space, so I will endeavour to do that.
If we attempted to register the beneficial owners of all properties, that would impact on the 24 million titles on the Land Register. I am glad that this amendment would add the Land Registry to the long list of government departments involved in helping with this Bill. Last year, the Land Registry processed more than 32 million applications, which underpinned property sales worth hundreds of billions of pounds. Depending on how it is defined, a register of this kind could impact on millions of home owners, the vast majority of whom will be entirely law-abiding, as I sure the noble Lord agrees. It could also potentially deter perfectly lawful inward investment in all our major towns and cities.
If we consider the problem of companies—particularly overseas companies—being used to obscure the identity of the true owners of high-value properties, the scale of the problem is comparatively small. Approximately 0.4% of all titles in England and Wales are registered to overseas companies. Implementing the proposed reform would require us either to create a brand new register or substantially to alter either the existing Land Register, the company register or both. We need to consider carefully the links and interactions between these registers. We would also need to consider new mechanisms for requiring individuals to provide beneficial ownership information in relation to property.
In short, the cost and wider implications of such a measure would be huge for both government and property owners. This seems perverse in a Bill that is designed to help small business. Furthermore, a property register is not required by any international standards or EU directive. It is not a commitment the UK or our G7 or G20 partners have made. On that basis, I urge noble Lords to consider this problem in the context of the regimes we already have in place and the reforms we are committed to make in this important Bill. For example, the Land Registry already records the legal owner of a property, both residential and commercial, whether that is an individual or a company, and regardless of whether that company has been registered in the UK. Where the registered owner is a company, the Land Registry will also record the Companies House registration number for UK companies, or the territory of incorporation for overseas companies. This is information that can be accessed by the public. Where allegations of corruption or fraud are raised, the Land Registry works across a variety of government agencies to assist their investigations.
Let me be clear: the UK does not turn a blind eye to corruption and money laundering. Noble Lords will no doubt be familiar with the case of James Ibori, a former Nigerian politician who is reported to have owned a number of UK properties. In 2012, he was sentenced by a UK court to 13 years’ imprisonment for money laundering.
In this Bill we are taking forward world-leading reforms to ensure transparency of UK company ownership and control. We will talk about the register of people with significant control in more detail shortly. However, that reform means that, subject to the will of Parliament, from 2016 all UK companies will have to register their beneficial owners at Companies House. So where a property is owned by a UK company, information on that company’s beneficial ownership will be immediately accessible, online and for free once submitted. However, the misuse of companies is a global problem, and we need a global solution. That is why the UK is working hard to encourage other jurisdictions to take equally ambitious steps. We are seeing progress. G7 and G20 countries have made firm commitments on company beneficial ownership. EU member states will be required to implement central registers accessible to those with a “legitimate interest” when the fourth money laundering directive is adopted shortly.
These commitments will all help ensure that UK authorities can quickly and easily access beneficial ownership information on non-UK companies. These reforms to company transparency form part of our commitment to protecting the integrity of our financial system and ensuring that the UK maintains a strong reputation as a clean and safe place to invest, and a hostile environment for corrupt funds.
We will of course continue to look at what more can be done to tackle company misuse and illicit financial flows. However, that action must be proportionate and targeted. For all the reasons that I have set out, I do not believe that a register of property beneficial ownership represents a sensible or proportionate step. I hope noble Lords have been reassured by my explanation and some of the information that I have given, and that the amendment will be withdrawn.
Lord Mendelsohn
My Lords, there is certain irony in a Government who used the company wrapper on the purchase of property as a means of enhancing taxation perhaps not having been alive to the considerable opportunities that the amendment may present in the long run to deal with a variety of other things.
Aside from that, I thank the Minister for her reply. Uppermost in our considerations, in this and other amendments that we will come to, is ensuring there is the right level of transparency to ensure the integrity of how this country’s financial system operates. That is a goal we share. Both parties feel that, over time, they have dealt with the issue, only to find that problems come up again. It will constantly be work in progress and there is no step that one can take that will be sufficient to give everyone confidence that these matters will be dealt with. It would be useful for the Government to examine this area further. It is not a question of size or numbers. The reason that this problem is manageable is that a smaller number is involved, as opposed to the large mass of homes, and there will be little impact on the larger, law-abiding mass of people.
I am encouraged by what the noble Baroness has said. It is encouraging that we are looking to amendments that produce further enhancements to make sure that the ambitions that she has set out are fulfilled. I hope that she is sympathetic to them. I beg leave to withdraw the amendment.
Baroness Neville-Rolfe
(i) if, in relation to that company, restrictions on using or disclosing any of the individual’s PSC particulars are in force under regulations under section 790ZF, that fact.”
Baroness Neville-Rolfe
My Lords, this group of amendments responds to recommendations of the Delegated Powers and Regulatory Reform Committee and to a number of issues raised in Committee. I thank the DPRRC for its diligent scrutiny of the Bill and am happy to accept all its recommendations relating to Parts 7 to 9 of the Bill.
Amendments 54 and 57 mean that regulations to provide for exceptions to the ban on corporate directors, and orders modifying Schedule 1 to the Company Directors Disqualification Act 1986, will be subject to the affirmative resolution procedure. Amendments 47 to 50 provide that the statutory guidance on the meaning of “significant influence and control” for the register of people with significant control will be subject to the negative resolution procedure, instead of merely being laid before Parliament.
I have also reflected on certain amendments tabled in Committee by the noble Lords, Lord Mitchell, Lord Watson of Invergowrie, Lord Phillips of Sudbury and Lord Stevenson of Balmacara, who is sitting opposite. The noble Lords called for information in the central register to be kept up to date. The Bill contains a power for the Secretary of State to increase the frequency with which PSC information is filed at Companies House. I can now confirm the Government’s intention to use that power to do this.
Having discussed the issue with Companies House, we intend to allow the central register to operate for around 12 months before using the power—in other words, in 2017. This will allow the system to bed in, thereby helping companies’ transition to the new requirements. In 2017, we will in any case need to increase the frequency with which PSC information is filed at Companies House. This is because proposals in the EU’s soon-to-be-adopted fourth money laundering directive will require all EU member states to have company beneficial ownership information in central registers that is “current”. This means that we could not rely on an annual update to the central register.
Some noble Lords were concerned that the requirement for a person accessing PSC information from the company’s own register to tell the company whether they would disclose information to any other person would be unduly restrictive. On reflection, I agree that requiring those wishing to inspect the register to say whether they would disclose that information to someone else and, if so, to whom, was unnecessarily burdensome. Amendment 42 therefore removes proposed Section 790O(4)(d) of new Part 21A of the Companies Act. However, I can reassure noble Lords that safeguards are still in place around inspection of the company’s own PSC register. The person wanting access must provide his name and address, and the purpose for which the information will be used. If the company suspects the information is not sought for a proper purpose, it may apply to the court to refuse access.
Individuals at serious risk of harm will be able to apply to the registrar to have their information protected from public disclosure. If granted, their information will not be disclosed on the register at Companies House or the company’s own PSC register. To ensure appropriate levels of transparency, noble Lords argued that the fact of a person’s information being protected from public disclosure should be stated on the company and central PSC register. I agree that this is important. It will ensure that users of PSC information know whether a company has PSCs, thereby preventing the company being unfairly accused of having failed to identify its PSCs because there is no information in its register. It will also act as a safeguard against erroneous disclosure of information by a company or Companies House. Amendments 35 and 45 provide for this.
Amendments 44 and 46 are technical. They make clear that a company must not make available for public inspection PSC residential address information, or information protected from public disclosure because the individual is at serious risk of harm.
I turn finally to Amendments 51 and 52. These enable investors in certain non-UK arrangements to be treated in the same way as limited partners in English limited partnerships—an issue raised by my noble friends Lord Flight and Lord Leigh of Hurley in Committee. I agree that we must ensure that investors in foreign limited partnerships that operate in broadly the same way as English limited partnerships are treated in the same way. At the same time, we must ensure that this does not open up a convenient loophole for criminals to exploit. I am satisfied that setting out the characteristics of such arrangements in secondary legislation is the best way to avoid this risk.
It may be helpful if I explain to noble Lords why we have not made equivalent provision for other UK and non-UK structures used for investment purposes. In cases where an individual holds, in the words of the Bill, a “majority stake”—that is, more than 50%—in a fund, and where that fund owns more than 25% of a UK company, we would expect that individual to be disclosed on the register. However, we do not expect companies to look through every investor in a fund to check whether there is a PSC. Nor do we expect investors continually to monitor their holdings in UK companies. I intend to ensure that this point is made clear in guidance and hope that my noble friends are reassured by this explanation. I beg to move.
Lord Watson of Invergowrie (Lab)
My Lords, I offer my support to the Government on Amendments 35 and 42; I very much welcome both. I accept that individuals may have their details protected from being published in the PSC register in exceptional circumstances, and I have been reassured by Ministers’ comments in your Lordships’ House and another place stating that exemptions will be given only in such circumstances. I am sure that that will remain the case. In this respect, the Government have strengthened the Bill during its passage through both Houses. In another place, the Government accepted an amendment from the Member of Parliament for Hartlepool, whereby proposals for classes of companies to be exempted from the register should be subject to the affirmative procedure, which will allow greater scrutiny and debate.
I am also pleased that the Government have introduced Amendment 35 today, which will highlight in the register where a protection exists. This is a real step forward for transparency and accountability.
I have argued at previous stages of the Bill that the public interest test must always be available to challenge an exemption when new evidence comes to light. I ask the Minister whether she will undertake to keep this matter under consideration and to do likewise with regard to publishing a list of broad categories under which exemptions can be given.
Turning to Amendment 42, the requirements associated with proposed new Section 790O(4)(d) to the Companies Act really were quite prohibitive and ran counter to the spirit of the introduction of a register. Removing that proposed new section will have a significant effect. It will allow organisations and members of the public to view businesses’ registers and publish the information where they deem it necessary.
I tabled a similar amendment to this in Committee, and I appreciate the Minister listening and acting on it. I also want to record my thanks to noble Lords from across the House who spoke in favour of that amendment in Committee.
Lord Stevenson of Balmacara (Lab)
My Lords, I simply want to add a little to the comments of my noble friend Lord Watson. In his typically modest way, he did not take enough credit for himself for raising some of the issues. I think he touched on them at the end of his remarks, but without his probing in Committee we perhaps would not have got as far as we have. With the additional help of the DPRRC’s recommendations, which were very firm in a number of areas relating in particular to the change to the affirmative procedure but also to matters related to foreign limited partnerships and directors’ responsibilities, we have now got to a much better place. We are very grateful to the Minister for listening so well and for bringing forward these amendments.
Baroness Neville-Rolfe
I thank noble Lords. I am especially grateful to the noble Lord, Lord Watson, for his support today and for the work that he put into what has become the government amendments. If I may, I will write to him on the public interest test.
“(i) where the control is exercised through a chain of legal entities (as described in Schedule 1A), details of name, service address and jurisdiction of registration of all legal entities in the chain”
Lord Watson of Invergowrie
My Lords, I begin by again stressing my strong support for the introduction of a register of people with significant control, and the enthusiastic welcome for it from the All-Party Group on Anti-Corruption, of which I am a member. Indeed, I believe that the PSC register should be overwhelmingly welcomed—I would even go so far as saying to the extent that we should be somewhat suspicious of the motives of those who oppose it in principle.
The introduction of the register is a step forward, and a big one at that, because it will frustrate people who hide or seek to hide criminal activities behind shell companies—a big and increasing problem that stretches across different parts of the world. For example, the UN has reported that Ukrainian arms licences are being given to UK shell companies involved in supplying helicopter parts to Assad in Syria, military kits to Gaddafi’s Libya and nuclear technology to Lithuania, all of which I believe should give noble Lords genuine cause for concern.
The legislation we are considering represents a significant step forward because the PSC register will record the ultimate beneficial owners of our companies and the public will be able to examine it. That said, the Bill leaves what I believe is an important gap: where the chain of ownership extends to foreign companies, not all of the links in the chain will be recorded. This will allow corruption to remain hidden away, out of sight of the UK authorities. These amendments aim to close this gap. Their implementation would involve a minimal burden for a small percentage of the most complex businesses. I very much hope that we can make some progress on this issue today.
Amendments 36, 37 and 38 seek to ensure that, where control of a UK company involves intermediaries in a chain, all the links in the chain should be revealed and exposed to scrutiny, because knowing and understanding the chain of ownership is, I believe, necessary to enable information on the register to be checked. I also believe that the importance of that has been acknowledged by the Government, because the Bill already requires that the method of control be declared, accepting that how control is exercised is important. These amendments seek to make sure that that will be made clear in the small number of cases where there is a chain of entities as part of the method of control. It would make a big difference. For example, developing countries require such information to bring legal action against a person of significant control—something they have often been unable to do in the past, often at great cost to their fragile economies.
When speaking about the register on 31 October 2013, the Prime Minister stressed that it would be publicly accessible and went on to say the following:
“It’s better for businesses here, who’ll be better able to identify who really owns the companies they’re trading with. It’s better for developing countries, who’ll have easy access to all this data without having to submit endless requests for each line of inquiry. And it’s better for us all to have an open system which everyone has access to, because the more eyes that look at this information the more accurate it will be”.
Needless to say, I thoroughly agree with the Prime Minister, but without placing on record the chain of ownership there will not be sufficient information available on the register to enable third parties to verify it properly. I believe that it is self-evident that the success of the register will rest on how accurate it is. To ensure that it is as accurate as possible, there is a need to maximise opportunities to ensure a higher level of accuracy from day one. That is what these amendments are designed to achieve.
The noble Lord, Lord Phillips, and I tabled similar amendments in Committee. The Minister said then that our amendments would be costly. Yet those amendments would have amounted to a minimal burden for a small number of companies—the most complexly structured companies at that. We estimate that only about 2% of UK businesses would need to provide only a very small amount of additional information when submitting their annual reports. The company should already have collected this information in confirming its person of significant control. The only extra demand would involve including this information in its annual report. This is such a minor requirement that I do not believe that it even merits being categorised as a “burden”, but it is a requirement that would fall exactly on the type of company that is most likely to be of concern. For that reason, I believe that it is proportionate.
In Committee, the Minister said that this would be confusing. On the contrary: surely the chain of ownership would be presented more clearly in the register, reducing the likelihood of confusion. The Minister also said in Committee that this would be seen as gold-plating. I agree with her, but is that not to be welcomed? I contend that it is not so much gold-plating as the rather more prosaic—and certainly cheaper—copper-bottoming: ensuring that the register achieves what it is designed to achieve. We are the first country in the world to introduce a public register. I believe that we should be proud of that and I also believe that we should get it right first time.
These three amendments would make a significant difference to developing countries at minimal cost to a small number of UK companies. Having listened to the Minister in Committee, the noble Lord, Lord Phillips, and I have scaled them back from the amendments that we tabled then. I very much hope that they will now find favour with the Minister. If they do not, I look forward from hearing from her how the Government intend to address this issue, perhaps in secondary legislation, so that the register can be established on the firmest possible foundations.
I turn briefly to Amendment 53. The intention of this amendment is to make a very simple point that the noble Lord, Lord Phillips, and I feel has not been properly addressed yet during the Bill’s consideration: that it should be the Secretary of State who is responsible for the operation of the PSC register, rather than Companies House. We suggest an annual report to Parliament from the Secretary of State to highlight this point, allowing parliamentarians to hold the Secretary of State to account on the operation of the register. Since this will be the world’s first public register of beneficial ownership, I believe that it is really important that we get it right.
The Secretary of State must ensure that information in the register is properly verified and that it is kept as up to date as possible. I welcome the comments that the Minister made just a few minutes ago in respect of another amendment about increasing the number of times that it is updated. Throughout the various stages of the Bill, MPs, noble Lords, interested organisations and, indeed, to a significant extent, members of the public have made the point that the public register should be updated more than annually. As things stand, it would be out of date almost as soon as it is published, so again, the Minister’s remarks are to be welcomed.
I hope that the Minister will accept what I think is a relatively straightforward and simple amendment, which will clarify ministerial responsibility for the register and increase parliamentary scrutiny of it. If not, I hope that she will outline how she or the successors of the Secretary of State would ensure that the public register is kept as accurate as possible and that the information contained within it is properly verified. I beg to move.
Lord Phillips of Sudbury (LD)
My Lords, my name stands with that of my noble friend Lord Watson of Invergowrie on these amendments. He has introduced them with great panache, and I do not have a great deal more to say but I think that the issues are so important that a few more points are necessary and worth while.
First, I shall give the House some of the facts that point to the scale of the problem of fraud and tax avoidance, which I do not think many of our fellow country people understand. My noble friend Lord Watson and I have been hugely helped by the Anti-Corruption APPG of this House, which, in turn, has been supported by Global Witness and Christian Aid, and a wonderful job they have done. One of the statistics they have produced for us—I think that Transparency International has had some part in this as well—is that the best estimate is that $21 trillion to $32 trillion of private financial assets rest in tax havens, and that 20% to 30% of that huge corpus of assets is corruptly diverted. Of that, they reckon that $120 billion to $180 billion per annum, which is far more than the entire global aid budget, is diverted unlawfully from developing countries. This is a rather poignant day on which to say that, as the Bill concerning the 0.7% contribution to aid has just been passed.
Another fact which I find rather depressing because it affects the UK is that it is reckoned that the Crown dependencies and overseas territories are host to one-third of all the world’s shell companies. On top of that, more than 36,000 properties, which are mainly in the most expensive parts of this wonderful city, are owned by overseas owners but are placed in shell companies in tax havens, 38% of them in the British Virgin Islands, 16% in Jersey, 9.5% in the Isle of Man and 9% in Guernsey. In addition, the World Bank’s review of the 200-plus biggest corporation corruption cases shows that 70% use shell companies as their vehicles of fraud. Therefore, the background to this amendment could not be more important and striking.
At this point, I have to own up to something from my dim and distant legal past. In the mid-1960s I was what was then called a tax mitigation lawyer. I notice a groan from behind me.
Lord Phillips of Sudbury
Yes, another lawyer. However, it is very striking because that was in the mid-1960s. In fact, the last case I did was just after the first Rossminster scheme was launched on the British public. Some of your Lordships may remember those schemes. They were the first of the hyperartificial—I would say hyperludicrous—schemes. I remember putting this to the best tax chambers in London at the time. I asked them, “Would you kindly advise my client via me? Is this scheme a runner?”. Back came the answer, “These chambers will not handle any cases relating to the Rossminster scheme because we view it as anti-social”. It is extraordinary to think of barristers saying that and I am not sure that they did not use the word “immoral”. But my goodness, the world we now inhabit is very different. The demoralisation—that is a useful word to use—of this country and indeed the entire world is really depressing because it has given rise, gives rise and will continue to give rise to an ever increasing number of really shameful frauds conducted by some of the biggest and best companies and banks in this country and everywhere else in the globe. It is very sobering to recollect that we are still a good deal less corrupt in our financial dealings here than virtually every other financial centre in the world.
Lord Forsyth of Drumlean (Con)
My Lords, I am most grateful to my noble friend for giving way. I confess that I have not followed these proceedings at earlier stages of the Bill and perhaps he can help me out. He is describing a very undesirable situation. However, as these provisions apply only to companies which are registered at Companies House, why will the criminals and bad guys not operate in other jurisdictions, and how is adding so much cost and burden to honest small businesses justified in that context?
Lord Phillips of Sudbury
I think that we need a short debate to answer the question that my noble friend poses. However, I think that the general feeling is that small companies will not be hurt by these provisions. It is these extraordinarily obtuse long chains of shell companies, sometimes in as many as 13, 14 or 15 tax havens, that are the object of this exercise.
Lord Naseby
Can my noble friend honestly say that it will not affect small businesses? “Small business” is in the title. Every single small business in this country—not the micros but almost every other small business—is going to have to register, and that is going to cost it a considerable amount of time, money and resources. So how can he possibly say, “Well, it’s not going to affect any of them. It’s only going to be the great big national companies and other big companies that are manoeuvring things internationally”? He is talking rubbish, is he not?
Lord Phillips of Sudbury
I did not say that it would not affect them at all; I said that it would affect very few of them to a significant degree, and I stick by that. I have been a small and medium-business lawyer for most of my life, and I can say that these companies will not be significantly inhibited by these provisions or be faced with significant costs.
Lord Naseby
I am sorry to interrupt my noble friend again. He may have been a lawyer periodically dealing with a few small businesses; nevertheless, the chambers of commerce and others say exactly the opposite to what he is saying. Surely they know better than some lawyer working part time on small businesses.
Lord Phillips of Sudbury
I would not deny for a minute that they know better than the description the noble Lord gave of me. I just repeat that I do not think it will seriously inhibit the small or medium-sized company that operates in a straightforward fashion in this country. I am confident of that.
Lord Flight (Con)
My Lords, we touched on this previously. Four million small companies are going to be affected, and if any of them does not obey the law, it will be committing a criminal offence. How is a small entrepreneur with a plumbing business up in Norfolk going to even know that this law exists and that he needs to comply with it?
Lord Phillips of Sudbury
I have a huge amount of sympathy with the noble Lord pointing out the hypercomplexity of this. I can only say to him—I must also put it in the context of having worked in this field for more than 50 years and having been a non-executive director of more than 15 SME companies—that I do not think there is any real prospect of an innocent SME going about its business falling foul, let alone criminally foul, of this law. However, I accept that the whole Bill is of near barbaric complexity and I do not know how we get round that. I am afraid that the price for the scandalous intentional misbehaviour of large and some small entities is invariably paid by the innocent.
Perhaps I may try to return to my story. As I said, there is a real demoralisation particularly of the business world but also of our whole society which we need to take intense notice of. We are at a tipping point in terms of the common good. The publicity of some of these awful cases is universal now, so that more and more of the richest people and companies, in terms of the money they have, are seen to be getting away with murder—as the man in the street would call it—in terms of paying tax. That is totally antipathetic to the good and fair society that we seek to create and help in this House. It is a total denial of fairness and duty.
These provisions are very modest but will enable the authorities, in particular the tax and fraud authorities, to grapple with some of these very expensively advised entities and the chains that they establish around the tax havens of the world, without one arm being tied behind their back. We all know that the authorities are ludicrously understaffed in comparison with the private sector—I am talking about the irresponsible part of the private sector—although that is another issue which has to be dealt with another day. I hope that my noble friend will be able to reassure the House that this will not be yet another statute that lies gathering dust on the shelves of Whitehall, but that there will be a practical and rigorous enforcement of the provisions inserted here.
Finally, without the limited transparency that is afforded by Amendments 36, 37 and 38, the authorities will not be able to get at the malefactors any more than they have thus far. I think I am right in saying that not a single bank director has been prosecuted since the collapse of 2008, during which period tens of thousands of our fellow countrymen and women have been prosecuted before magistrates’ courts. We must stop that, as it is profoundly demoralising for this country. We must give the authorities the tools to do their hugely difficult job. The fact that we are the first country to introduce a PSC register is something that the Government should be congratulated on. I commend the Prime Minister, because it is not easy in his party to say some of the things that he has said. The noble Lord, Lord Watson of Invergowrie, mentioned one of those things, but I particularly like what he said to the G8 in 2013. The point he made and the language he made it in were absolutely right. The Prime Minister said that,
“companies should know who really owns them, and tax collectors and law enforcers should be able to obtain this information easily”—
for example, through central registries—
“so people can’t avoid taxes by using complicated and fake structures”.
Bang on. All this series of amendments does is lend a few practical teeth to that sentiment. I hope that this commends itself to the House and the Government.
Lord Forsyth of Drumlean
My Lords, I will speak briefly against this amendment. Of course, no one could dispute the intention behind it. If the intention is to stop criminal activities and tax evasion—and I make a distinction between tax avoidance and tax evasion; when we are talking about criminal activities, we are talking about tax evasion—no one could dispute it. However, it rather seems like a sledgehammer to crack a nut, or perhaps a sledgehammer aimed in the wrong places. The impact assessment undertaken by the Department for Business, Innovation and Skills of the proposals as they already stand says that almost £1 billion will be added to the costs of small businesses, which the noble Lord, Lord Phillips, tells us is not really significant. I wager to suggest—
Lord Phillips of Sudbury
I am grateful to the noble Lord for giving way. I do not think that he will find in that impact assessment any attempt to assess the cost of the amendments that we are talking about in this group. I will leave it at that.
Lord Forsyth of Drumlean
The noble Lord is absolutely right, because this is not the Government’s proposal—which is why I am against his amendment. He said in his speech that it would not be very much extra without actually telling us how much extra it would be. We already have £1 billion being added to the costs of small and medium-sized businesses at a time of great stress in our economy and when we are desperate for them to grow and create wealth. Yet here we are asking people running small businesses to fill in forms, and if they fill them in inaccurately, they will find themselves committing a criminal office.
Lord Phillips of Sudbury
I am most grateful to the noble Lord for giving way a second time, and I promise not to intervene again—but that is not so. He should take account of the fact that if we were to recover even 20% more of the tax that currently is not paid but should be, many billions of pounds will redound to the benefit of SMEs as well as of everyone else.
Lord Forsyth of Drumlean
I am not sure which bit the noble Lord was saying was not so. He may very well be right in his assertion—although I doubt it—that the Government will collect more money, but that does not help the small business man who is faced with these additional costs, for whom there is no benefit whatever. They already struggle to fill in their VAT forms and their surveys on this, that and the other while trying to run their businesses. This would add a very significant burden.
Lord Popat
My Lords, this is Report and we prefer not to take further interventions.
Lord Forsyth of Drumlean
I believe that interventions seeking information are allowed once on Report, so I will give way to my noble friend.
Lord Naseby
My noble friend might mention the cost of business rates, which are a huge burden to every business in this country. Business rates are going up by 2%—and what is the rate of inflation? Under 1%.
Lord Forsyth of Drumlean
Indeed, but my noble friend must not tempt me to get away from the amendment and from this Bill. When it comes to compliance costs, the Government are going to have to find £109,000 just for,
“the IT development of the registry and communication to industry”.
My experience of government IT programmes is that they usually cost considerably more than estimated. Then we have £220,000 for ongoing maintenance. In addition, it is stated:
“Costs to businesses are estimated to be £417.4m set up cost, and £77.7m pa”.
This is a country that is not able to meet its expenses and these are businesses which, certainly outside London, are under severe stress.
My noble friend and the noble Lord argue that we need to add further to the burden put on these businesses to deal with the problem of international tax evasion by large companies around the world. I intervened to ask him how—even assuming that everything that he claims for his system works once it is up and running in Britain and we have spent the £1 billion—it would help prevent the crooks and people who wish to behave in this way operating out of a different jurisdiction. Surely, the only way this Utopian view of how to tackle the issue will be achieved is if every country does this, but I do not see any evidence of other countries rushing to implement this legislation. As far as I am aware, there is no great programme to do this among the other countries that were at the G8, so all we would be doing is hobbling honest, hard-working small businesses in this country to deal with a problem that needs—
Lord Watson of Invergowrie
I am grateful to the noble Lord for giving way. I always listen to the noble Lord, Lord Forsyth, carefully. He always makes very considered contributions to the House, although I may not agree with him very often. This is one of those occasions. I regret that he seems to be making a speech that should have been made three months or so ago at Second Reading, because he is not arguing specifically against the amendments that I have put down; he is arguing against this section of the Bill in its entirety. I accept that he is perfectly entitled to do that, but these arguments have already been given a considerable airing.
I just would draw his attention to the amendments, which say, “where the control”—that is, the control of a company—
“is exercised through a chain of legal entities”.
That will not impact on many small and medium-sized enterprises. This is for large, complex organisations, which is why I mentioned the figure of some 2% that it has been estimated would be affected. The other companies will have to say who their person of significant control is anyway, whatever the size of the company. In most cases, it will be the chief executive. This part of the Bill will not be a burden to any significant extent on smaller companies. The bigger companies, which have an international dimension and therefore will have a complex structure, are those that we are trying to catch with these amendments. It is not in any sense about companies based in the UK that have no ownership outside the UK.
Lord Forsyth of Drumlean
My response to that is that it is a fair cop. He is absolutely right that I should have made this speech three months ago. I had no idea, along with, I suspect, 99.99% of the country, that this measure was included in this Bill. I had not read about a desire to set up a register, adding £1 billion to the cost, in any newspaper or seen any great debate about it. Perhaps I have been a little remiss. It is perfectly true that the occasion of this amendment has given me an opportunity to draw attention to the considerable cost involved, which I appreciate was argued at an earlier stage of the Bill.
However, in his speech, the noble Lord argued that the Minister had argued at an earlier stage of the proceedings that she could not accept his amendment because it would add to the costs on small business. I support my noble friend in arguing that we should not add to the costs on small businesses. Therefore, I think I am in order in arguing against this amendment because, as the noble Lord said, it was an issue at an earlier stage.
I apologise to the House that I was not involved at an earlier stage but when one of my noble friends pointed out to me what was in the Bill, I could not believe it. I looked up the Government’s assessment of compliance costs. Certainly, when I was in government, as the noble Lord will remember, impact assessments invariably turned out to be less than what they were. Even at this late stage, I hope that, in rejecting these amendments, my noble friend will think very carefully about introducing this measure at this time of great stress.
I could understand it if all the other G8 countries had their legislation in place; then I could see how it could work. The noble Lord is not addressing my main point; namely, that if we are concerned about people setting up shell companies to hide where their interests lie, passing this legislation will not deal with that problem because people will operate outside other countries. I made a speech the other day which upset Amazon and I received a letter from its public affairs person. I said that Amazon did not pay business rates and corporation tax in the same way as ordinary retail outlets. She pointed out that Amazon pays business rates on its distribution centres. I wrote back and said, “But you haven’t dealt with the point about corporation tax”. We understand that one of the reasons that Luxembourg will meet the quota on overseas aid is because it is based on gross national income, which includes revenues that really should have been in other countries. Therefore, although the amount that it is spending on overseas aid is tiny, it appears to meet the target because of the number of companies that use Luxembourg in that way. If the Government wish to recover the tax that my noble friend is concerned about, the answer is to pass the necessary legislation in the Finance Bill. It is not to ask hard-working people up and down this country to burn the midnight oil filling in registers of the kind proposed, nor to complicate the statute book.
I cannot believe this Bill, which is dealing with small business. It is pages and pages of stuff. The Explanatory Notes would take a whole evening to read. It seems to me that this amendment and the provisions in the Bill relating to the register drive a coach and horses through the Government’s declared policy of reducing the burdens on business and allowing it to concentrate on wealth creation.
Baroness Neville-Rolfe
I am grateful to the noble Lord, Lord Watson, and my noble friend Lord Phillips for these amendments. I thank my noble friends Lord Forsyth and Lord Naseby for reminding us of the needs of small business, many of which will of course be caught by the Bill at a substantial cost, but it will be over 10 years. It has been properly costed in an impact assessment, which has been available for some months. Of course, businesses would have to deal with any additional requirements, as my noble friend has made clear, if we were to impose them. I should equally say that the benefits of the register have the potential to be substantial, whether as a result of improved efficacy of investigations and outcomes where companies are being used to facilitate serious criminal activity, or to businesses as a result of their operation in a more open and trusted environment. As my noble friend Lord Phillips said, this is a cause in favour of transparency and against corruption that the Prime Minister has led.
However, the group of amendments raises important questions about the information in the register of people with significant control and the integrity and accuracy of those data. I turn first to Amendments 36, 37 and 38, which would require details of every company in the ownership chain to be entered in the PSC register. The PSC register is a ground-breaking change and the UK is leading by example. The register will contain information on the individuals who ultimately control UK companies, including how that control is held. I do not think my noble friend was in the House earlier when I ran through some of the international efforts that have been going on and reported on the progress of the money laundering directive. However, I did not deal with the overseas territories and Crown dependencies, which were raised by my noble friend Lord Phillips. We are working closely with the overseas territories and Crown dependencies and are keeping them informed as the UK policy on corporate transparency develops. This will help to feed into their thinking. We believe that they have made significant progress on tax transparency and they have publicly committed to transparency of company ownership. Arguably, more has been achieved in the past year than over the past 10 years.
Some noble Lords and business groups feel that we have gone too far, in particular by making the register publicly available when this is not currently a global requirement. They fear that reform will impose unnecessary costs on business and have an adverse impact on UK competitiveness. These amendments seek to go further. They would require information not only on those individuals but on every legal entity in the ownership chain. The question we have to ask is whether this goes too far. Such an approach is not required by international standards, by the likely EU requirements shortly to be adopted in the fourth money laundering directive or by our G7 or G20 commitments. Nor is it something—this is significant—that the law enforcement community, including HMRC, has called for.
The amendments would add to the already substantial compliance costs. Companies must update their own registers as changes occur. Companies keeping their own registers would have even more information to obtain and keep up to date, plus the compliance cost of notifying every change in every layer of a chain. Companies owning other companies would have to work out if and when they need to report information. These amendments could also adversely impact the utility of the register. More data do not necessarily lead to more transparency. If the amendment were adopted, the very information we want to reveal may be buried under a mass of less relevant data. What matters is who ultimately exercises control, which, subject to the will of Parliament, from next year will be on the public record and not just available to law enforcement agencies. However, I recognise that this is an issue that some noble Lords feel strongly about.
Clause 82 already requires us to undertake a statutory review of the PSC within three years of the requirements coming into force. That review will provide an opportunity to look at the range of issues raised by noble Lords on all sides of the House. I am prepared expressly to consider looking at the question of the ownership chain in the context of that review.
I now turn to Amendment 53. Let me start by making clear that I am absolutely committed to ensuring the integrity and accuracy of information on the public register. I am satisfied that our current approach achieves this. It is based on a combination of pre- and post-registration checks, criminal penalties and public scrutiny. We are looking at what more we can do and have started with the creation of a new register integrity team at Companies House. The team undertakes compliance activities to help companies, ensuring that they are fulfilling their filing responsibilities, and data analysis to identify where specific activities can improve the integrity of the register. The Government already have powers of investigation that allow them, for example, to require the production of documents. Moreover, as the register will be public, transparency will be a driver of accuracy.
Amendment 53 calls for the Secretary of State to lay an annual report before Parliament on measures taken to ensure that PSC data are verified and accurate. A clear requirement on the register to verify every piece of PSC information would not be proportionate. However, I know that this is not what my noble friends have in mind. They want assurance that our proactive approach to ensuring data accuracy will continue. The Government fully support that objective. I do not, however, think that an additional bespoke report is the way to achieve that. The Bill requires the Secretary of State to review whether the register’s objectives have been achieved within three years of its implementation. The accuracy of the information will be a key part of the review as well as all other relevant issues, such as whether additional information on the ownership chain should be recorded.
I can also commit today to ensuring that, in future, Companies House will make explicit reference to activities undertaken to ensure the integrity and accuracy of information on the register in its annual report, which is, of course, presented to Parliament every year.
Lord Forsyth of Drumlean
Given the size and scope of the register, can my noble friend say how exactly Companies House will do that, how many people they will need to employ to achieve that objective and what the likely cost will be?
Baroness Neville-Rolfe
My Lords, the point I was making about reporting is that we would extend the annual report, in any event, so that it covered this new function, which is sensible, and in that context we would obviously look at data and other relevant issues.
The noble Lord asked about the scale of staffing required. I may be able to give him a response if I can make a bit of progress. My normal port of call would be the compliance cost assessment. The answer is that we are going to do this within the existing budget but in co-operation with other enforcement agencies. I have been to see Companies House during the course of swotting up for the Bill and I am impressed by it. It is bringing a more modern approach to the way in which it does things. It has been aware for some time that it is going to be given this new burden and it is ready and willing to pursue it.
Lord Naseby
As I understand my noble friend’s argument, she is saying that her department and other departments are in a similar mode. Their staff will cope with these changes and this huge register at nil cost other than what is already budgeted for the implementation of this Bill. Is that correct?
Baroness Neville-Rolfe
My Lords, agencies such as Companies House have long-term plans to look at the duties coming down the line which they will have to fulfil. They have been aware for some time that this duty will fall on them. Obviously it follows the Prime Minister’s initiative at Lough Erne in 2013 and the money-laundering directive discussions that have been going on in Brussels for a long time. We will be bringing in this register. I will pass on the points that have been made to Companies House but it is ready to tackle this task. Of course, the reason the compliance costs are large is because it is a small amount of work by a large number of companies. It is because the multiplier is so big that you get the compliance costs that you do. That might be of some comfort to my noble friend.
The issue of timing was raised by the noble Lord, Lord Phillips. We intend to require companies to maintain their own PSC registers from January 2016 and to file information at Companies House from April 2016. We publicly set out these intentions in January this year.
On complexity, it will be straightforward for the majority of companies to identify their PSCs. We are thinking carefully about the guidance and communications to companies so that we can get the message across about how they might do it simply and what is required. We have a working group set up to develop guidance which contains representatives from all interested parties including, everyone will be pleased to hear, small business. Our enforcement user group is co-chaired with the National Crime Agency and will look specifically at how to make best use of the PSC data so that, in making this big change, we are using it to good effect and that the benefits I have described come through.
I have set out these points at some length. I hope noble Lords have been reassured by what I have said about the forward plans for the register and its review and will be willing not to press their amendments.
Lord Watson of Invergowrie
My Lords, this has been a longer and more vigorous debate than had been anticipated. I feel like a guest at my own party such is the distance we have travelled from the narrow effects of the amendments.
The noble Lord, Lord Forsyth, made an important point: a number of companies will be involved in the register and there will be some costs. I fully accept that. However, it is a central part of the Bill. It has come a considerable way down the road now and has been broadly accepted. The noble Lord said that he was not aware of any disquiet about it. That suggests to me that not many companies are making a great deal of noise about it. Yes, there are costs, but they have realised that benefits will follow the introduction of the register.
I disagree with the noble Lord when he says that we are the only country doing this. Yes, the UK is taking a lead—that is commendable—but someone has to start. There is considerable opposition to this within the EU, never mind beyond it, but we have to start somewhere. If we do not, it will never happen. From that point of view I give the Government credit for grasping the issue and taking it forward. Where it goes from here we do not know. Indeed, in doing research for this evening I noticed that since the Committee stage in January four Crown dependencies have come forward and said, “We have looked at the idea of a public register but, frankly, we do not think it is a good idea and we are not going to do it”. Also since the Committee stage the leader of the Opposition has said that, should he be in a position to do so after 7 May, he will make it a requirement on the overseas territories and the Crown dependencies that they have such a public register. I accept that there is opposition to a register but the UK is due credit for leading the way in this.
As to what the amendments seek to do, I was surprised that the Minister said she was concerned that if too much information came forward it might obscure the situation rather than clarify it. That is similar to the argument that there is no point in having a 50 pence tax rate because people will not pay it; that you will get more tax if it is only 40p or 45p. If you set laws in any civilised country you expect people to obey them and for those laws to have the effect intended. If information is sought, it has to produce the clarity that is the intention of the amendments.
I repeat that it is anticipated that about 2% of all UK companies would be caught by these amendments should they be accepted and added to the Bill—not small companies and the small and medium-sized enterprises, because they do not have a complex international structure in which to hide aspects of their business, even if they wanted to.
I am disappointed that the Minister is not prepared to accept the amendment. It is a narrow point and would not add a great deal to what the Bill is trying to achieve. I accept that she will not change her position and I respect that. I also respect the fact that she said there will be a review within three years and that will give the opportunity to look at the situation again.
During the debate on these provisions I have noticed that in fact three new sections in the Bill would allow secondary legislation to address the question of foreign companies and ownership issues. I just highlight new Section 790K(5), new Section 790L and new Section 790M(7). I agree with the noble Lord, Lord Forsyth, that it is indeed a beast of a Bill, although recently I was involved with the Deregulation Bill, which is every bit as complex and fat a document. There are opportunities, should the Minister feel that they are worth pursuing, but obviously it would be better if this was included in primary legislation. However, I accept what she has said and I look forward to the review of the legislation. There will be a lot of valuable impact as regards this part of the Bill. With those remarks, I beg leave to withdraw the amendment.
Lord Flight
Lord Flight (Con)
My Lords, I suggest that measures like this and other anti money-laundering measures are much more effective to the extent that they are common preferably among the G20 countries, but at least among the G8 and other more advanced parts of the world. There is less scope to pick and choose jurisdictions if the same rules broadly apply across all the important areas. In that context, I have made the point previously that it is not achieving much to say, “The UK is in the lead here”. The question, in introducing measures like this, is whether they are going to be followed internationally and will be similar in order for them to be effective. Although I am no great lover of the EU, the forthcoming fourth anti-money laundering directive is extremely important. It is expected that it will require a central register of company-beneficial information, which data will need to be accessible to those with a legitimate interest; that is, law enforcement agencies and regulated entities. The word “legitimate” has not as yet been defined and I do not know whether it is going to be, but the supposition is that it would cover the proper investigative bodies for anti-money laundering, tax evasion and security matters.
The amendments in my name in this group hang together as a package and reflect the fourth EU anti-money laundering directive. Amendments 41, 43, 55 and 56 seek to mirror the expected terms of the directive: to limit access to proper and legitimate purposes as they are generally understood. The second important point, which is picked up in Amendments 39 and 40, is that the EU directive also requires the implementation of central registers of beneficial ownership. The amendments seek effectively to remove the option of individual companies keeping their own PSC registers at their registered offices and would permit the Government to require either that Companies House should keep a register, or if the Department for Business, Innovation and Skills wants to do it, it could do so. But it would clearly be messy to leave the option for companies to keep their registers and for there to be a central register as well. Surely it is better to have one or the other, but not either/or, which would further add to costs and complexity.
I thank the Minister for her helpful reply to my letter of 6 March. From her letter I detect some movement towards implementation, at least in practice, of what would be a more common EU approach to PSCs. The noble Baroness made the point in her letter that, although government Amendment 42 serves to remove the requirement for a person requesting access to a company’s PSC to state whether the information will be disclosed to any other person, a person seeking such access must provide their name, address and the purpose for which the information is to be used. The company will retain the right to apply to the court to refuse access if it suspects that the person is not requesting the information for a proper purpose. It will also be a criminal offence for a person to disclose information to another person if they know or suspect that such other person will use the information for an improper purpose. This is the language I have been arguing for—proper and improper purposes. My main objection to these measures has been that they would allow improper use to be made of the information about private companies, in particular writing about people’s private wealth in a potentially salacious way or stirring up hostilities. It seems that the UK is creeping towards mirroring the language of my amendments about proper purpose and refusing access to PSCs for what are not proper purposes. It would seem that the legislation, or its implementation in the UK, is shifting somewhat in the sensible direction, as I have argued throughout.
What matters is that the appropriate authorities—the tax and security authorities—can have access to information for proper purposes. Indeed, that is what the Prime Minister was saying at the G8 meeting, not that any old media individual can look up people’s personal affairs. I would ask this of the Minister. In the references she has made more recently to proper and improper purposes, it would seem that the legislation now provides much more protection against improper use than was the case before. If that is correct, it may be that my amendments are not necessary. Surely the right drift of things is that the measures across the EU should be pretty similar, led by this country but not with this country out of line and overgold-plated. I beg to move.
Lord Borwick (Con)
My Lords, there is a very significant difference between privacy and secrecy. There could be lots of reasons for privacy, but not only involving an entrepreneur. Take Tony Blair’s tax return, for instance. That is his private matter, but this Bill will open up private matters to anyone for any proper purpose. Blair and others can support their own cases, but who will speak up for the entrepreneurs? It is indeed a great power of the state to inquire about something, but that power should not be given to all its citizens. The state has its own secrets too, which is as it should be. Transparency is not always a merit. These proposals presume that anything which is not transparent is bad, and that anyone who is involved in anything secret is guilty of something. That is clearly not the case. There are nearly 3.5 million businesses in the UK. The vast majority of them are law-abiding and simply trying to make products that people want to buy or provide services that they need. In any case, there is unlikely to be reliable ownership information on criminals, who can be expected to conceal their interests. If this is intended to root out a few bad cases, then it really is using a sledgehammer to crack a nut.
Tony Blair mentioned in his memoirs that he regrets the freedom of information legislation. I can see why, as life has got more complex since then, with real threats affecting Britain. It is not impossible that extremist threats could be made against alcohol producers or other producers of goods not approved by IS sympathisers, or scientists and research facilities by violent animal welfare groups. Debbie Vincent was sentenced to six years in prison after attempting to blackmail an animal testing company. The campaign she was involved in used the threat of improvised explosive devices and the desecration of graves. Cases like that must be taken into consideration when we decide what information to make available. But it is not just extremist threats. Freedom of information has unquestionably changed people’s behaviour. This is mainly to avoid things being written down, which can make simple tasks all the more difficult to carry out. Not writing things down has the perverse effect of encouraging more secretive behaviour.
I took a look at the impact assessment of the policy, which was mentioned by my noble friend. I found it staggering. The cost is estimated to be £1.08 billion and the value zero—no benefits apart from a woolly promise to “lead the way” on transparency. Can our coalition partners or the Labour Party really not think of anything better to do with a billion pounds than make companies waste it on lawyers? There may well be Members of this House who believe that there could be nothing wrong with spending a billion pounds on professional fees, but they are in the minority and I believe they are proven lawyers. With these new rules, a private company raising money to employ more people and expand will have to go through extra hurdles to get a new shareholder. It is hard enough to get a new shareholder when a company really needs it, so any extra burdens will make that important task much more difficult.
Lord Naseby
My Lords, I, too, pay tribute to my noble friend on the Front Bench. I thank her for arranging the briefing session last week that I took part in, which helped me understand this in greater depth. It did not assuage many of my worries but at least I understood more clearly where Her Majesty’s Government were coming from. I think that the House should be indebted to my noble friends Lord Flight and Lord Borwick, who have taken a detailed interest in the Bill. Both have raised issues that have always been there. I listened to my noble friend Lord Flight and, indeed, corresponded with him at an earlier stage.
Since the Bill was conceived several things have happened. First, we should be aware that the United States proposes to take no action at all. The President of the United States maintains that he is there as a central body, and that he is not permitted by law and statute in the United States to take any similar action because it is a state matter. As far as the states of Delaware, Wyoming and at least two others are concerned, they are going to carry on business as usual and, in fact, probably benefit from any Bill that we start off as a wonderful, transparent initiative.
The other dimension that has been clarified is that the OECD has indicated that if the United States is not going to comply, it sees no reason why it should. That is a second block. The G20 and the G8 have already been referred to; there does not seem to be much movement there other than what is likely to come out of the EU. That seems to be a very strong case for waiting to see exactly what comes out of the EU in preference to going forward on our own. At least then there would be a significant number of countries that would have come to a conclusion about what can be done and what is proper and ideal in terms of helping the law enforcement agencies. That to me is absolutely crucial.
Perhaps I could raise a point about timing. I listened to what my noble friend on the Front Bench said about timing. I do not know how closely she knows the timings of the implementation of the pensions Bill, but small businesses are currently having to register—as far as I know, by 1 April. It all has to be done online—it is not an easy thing for anybody to do; it is not the most user-friendly process—but those small businesses are registering for a policy to be implemented in 2017. Obviously, that department, in a fairly complicated area, has decided that it needs a couple of years to get the whole thing up and running properly. But my noble friend on the Front Bench seems to be saying that, although we are starting later with this Bill—it has not even had Royal Assent yet—the whole thing is going to be up and running by 2016. I just wonder how realistic that timescale is.
I know that Her Majesty’s Government want to do everything online but, frankly, the software that has been produced in a number of areas leaves much to be desired. Can my noble friend reassure me that the software that is associated with this is almost ready to be set forward for the market to use, or is it still being produced somewhere? Has it been trialled yet? I do not know but I am asking my noble friend to have a close look at timing. Finally, I repeat that for small business to have to face a charge of over £1 billion when this is supposed to be an enterprise country is, frankly, absolutely ridiculous.
Lord Watson of Invergowrie
My Lords, I oppose the amendments in the name of the noble Lord, Lord Flight. Frankly, they are quite in contradiction to the whole thrust of the Bill, which is to increase transparency. They would have the opposite effect and I very much regret that. I am not going to rehearse the arguments that we traded in Committee a couple of months ago but I would just like to point out that he has brought up a new point about proper purpose. I dare say we could be here till this time next week before getting any sort of consensus on what a proper purpose was—in fact, we might not have succeeded even by then. I really think that that would be a backward step.
Surely the basic premise of the legislation is that public scrutiny will root out corruption more effectively, and indeed quickly, than the legal authorities themselves could do. I cannot understand noble Lords being opposed to that. To a certain extent, as far as companies are concerned, there is a case of, “If you have nothing to hide, you have nothing to fear”—but, equally, what do companies have to fear from transparency? The analogy with the former Prime Minister Tony Blair was not particularly apt in this situation. Personal privacy is one thing but companies have to be prepared to be open about the way in which they operate. Commercial confidentiality is one thing, but it has its limits.
My final point is about removing the requirement for a business to make its register publicly available. That is an essential element of this part of the Bill. I find it strange that the noble Lord, Lord Borwick—
Lord Flight
My suggestion was that we fell in with the new arrangements, which are not complete but which use the language of a public register while stating very correctly that it should not be available to any old Tom, Dick and Harry but should be available for legitimate purposes. That seems to me to be the essence of what we are here to do.
Lord Watson of Invergowrie
Yes, but defining what is a proper purpose is simply not achievable. People will ask for information. If they use that information in a way that is against the law, they leave themselves open to action. That is a protection.
The noble Lord, Lord Borwick, said that he did not understand why the Liberal Democrats or the Labour Party were supporting this legislation. I have to remind him that it is a government Bill, and it is a government Bill with different aspects to it. It did not emanate from his coalition partners or from the Opposition. However, this is one aspect of the Bill which all parts of the House should get behind, because it seeks to achieve transparency. In terms of the way in which British business operates, surely that has to be a positive development.
Baroness Neville-Rolfe
My Lords, I am grateful to the noble Lords, Lord Flight and Lord Borwick, for their amendments. I thank them and the noble Lord, Lord Naseby, for the many points that they have made at a series of meetings and in correspondence, and express the hope that they will encourage business representatives with an eye for simplicity to help with the implementation process so that it is as business- friendly as possible.
We are reasonably confident about our 2016 timeline. We have clear plans in place at Companies House which are already being implemented. All being well, we are on track to meet our 2016 deadline. I know that there can be problems with software, but that is the plan.
Amendments 39 and 40 would allow a company’s own PSC register to be held solely at Companies House. I agree that flexibility is important. That is why the Bill gives private companies the option of holding their company registers solely at Companies House. However, it is important that companies can continue to hold their own register at their registered office, service provider’s office or other suitable location should they wish to do so.
Amendments 41 and 43 would restrict access to a company’s own PSC register to law enforcement and tax authorities. Amendments 55 and 56 would do likewise in respect of PSC information held centrally at Companies House. As I explained during our Committee debates, reducing the level of access to PSC information runs entirely counter to our public commitments on this reform.
Company transparency matters, and it is not just about tackling criminals. The Prime Minister set out the rationale for this back in October 2013. He said that transparency of company control allows businesses better to identify who really owns the companies they are trading with, that it gives developing countries easy access to data without having to submit endless requests for information, and that a public register allows public scrutiny and therefore supports data accuracy.
I know that there are concerns about the impact on privacy of this reform. We are satisfied with the balance that we have struck. We will not, for example, place residential addresses in the public domain, and we will put in place a protection regime that allows individuals at serious risk of harm to apply for their information not to be disclosed.
Of most practical importance, in the coming months the EU will adopt the fourth anti-money laundering directive, which will require member states to implement semi-public central registers of company beneficial ownership. This will ensure that all with a “legitimate interest” can access the register. My noble friend Lord Flight asked what “legitimate” meant. We believe that a legitimate interest would include civil society organisations and journalists in the context of their money-laundering investigations. He also asked what “proper purpose” means. The term is intended to have a wide interpretation and application. We are satisfied that there is no need to define it in the Bill. This is in line with the approach taken for the inspection regime for the register of members. I was reassured to know that if a company suspected that a person wanted access to a company’s PSC register for the purpose only of carrying out identity theft or fraud or using junk mail, that would not be a proper purpose.
Lord Forsyth of Drumlean
I apologise for being somewhat behind the curve, but I was trying to think of an example of what a legitimate purpose is. If, for example, a person wanted to get this information in order to compile the Sunday Times rich list, that would be legitimate if it was made clear that that was why they were seeking the information, but if they asked for the information for another reason and then used it or passed it on to a journalist, they could be sent to prison for two years. Is that what the Minister was saying?
Baroness Neville-Rolfe
My Lords, on the face of it, the first part of the noble Lord’s presumption is correct, but I think that I will take the time to reflect on it further and write to him, because I certainly would not want to mislead the House on such an important point. There are safeguards, but it is also a public register.
I should perhaps answer the question asked by my noble friend Lord Borwick, about the number of threats that individuals receive in the context of the review. I hope that it will reassure him when I say that I intend to look widely at those issues, as I have already said. As he probably knows, threat levels are not directly within my department’s remit, but I certainly intend that the review should consider the impact and efficacy of the protection regime as a whole.
I hope that, in view of the various reassurances that I have given, my noble friend Lord Flight will feel able to withdraw his amendment.
Lord Naseby
My Lords, before my noble friend sits down, will she clarify the point about the impending EU law? What happens if it goes through in, say, nine months, six months or 12 months? It is presumably the intention of Her Majesty’s Government to sign the law and then, if necessary, amend the Bill. Or will they wait another two years, or two and one-quarter years, and then amend it? If we are to sign up in Brussels to a law, it ought to be the law that applies in the United Kingdom, not one that is half Europe and half something else.
Baroness Neville-Rolfe
My Lords, we hope that the directive will be agreed in Brussels in the next few months. It is a directive, so there will be a two-year commencement, as normal. In the mean time we will bring in—and, I hope, road test and make a great success of—the register that we plan. If the detail of the directive requires some change either to the Bill—or, more likely, I suspect, from my experience of European directives, to regulations made under Section 122—that will be laid before the House in the usual way. I take comfort from the fact that that important bit of transparency legislation is going through in Brussels, and one would hope to see it on the statute book as soon as possible. That is the situation.
Lord Flight
My Lords, I suggest that what will happen is that the EU directive will come forth and we will be heavily gold-plated on its requirement. It is pretty clear that its requirement is for a register, but one available only for legitimate purposes.
I know that I have no chance of persuading the Government at this stage to fall in line with the EU and honour the privacy of private companies. What right is there for a snooping journalist to go around finding out what wealth someone has through the introduction of the register and looking up information about their private affairs? I find it quite unacceptable that that should be done, just like that, when it adds absolutely nothing to the task of unearthing fiscal and terrorist crime.
I have tried throughout to persuade the Government that it would be more sensible to limit access essentially to those tasked with finding crime, so there is little point in pushing the amendment further. I beg leave to withdraw the amendment.
Baroness Neville-Rolfe
Baroness Neville-Rolfe
“790SA Protected information
(1) Section 790N and subsections (1) and (2) of section 790O are subject to—
(a) section 790ZE (protection of information as to usual residential address), and(b) any provision of regulations made under section 790ZF (protection of material).(2) Subsection (1) is not to be taken to affect the generality of the power conferred by virtue of section 790ZF(3)(ea).”
“(ea) the operation of sections 790N to 790S in cases where an application is made, and”
“(3A) Before issuing guidance under this paragraph the Secretary of State must lay a draft of it before Parliament.
(3B) If, within the 40-day period, either House of Parliament resolves not to approve the draft guidance, the Secretary of State must take no further steps in relation to it.
(3C) If no such resolution is made within that period, the Secretary of State must issue and publish the guidance in the form of the draft.
(3D) Sub-paragraph (3B) does not prevent a new draft of proposed guidance from being laid before Parliament.
(3E) In this section “the 40-day period”, in relation to draft guidance, means the period of 40 days beginning with the day on which the draft is laid before Parliament (or, if it is not laid before each House on the same day, the later of the days on which it is laid).
(3F) In calculating the 40-day period, no account is to be taken of any period during which—
(a) Parliament is dissolved or prorogued, or(b) both Houses are adjourned for more than 4 days.(3G) The Secretary of State may revise guidance issued under this paragraph, and a reference in this paragraph to guidance includes a reference to revised guidance.”
( ) ”
( ) a foreign limited partner.(5) In this paragraph “foreign limited partner” means an individual who—
(a) participates in arrangements established under the law of a country or territory outside the United Kingdom, and(b) has the characteristics prescribed by regulations made by the Secretary of State.(6) Regulations under this paragraph may, in particular, prescribe characteristics by reference to—
(a) the nature of arrangements; (b) the nature of an individual’s participation in the arrangements.(7) Regulations under this paragraph are subject to affirmative resolution procedure.”
Baroness Neville-Rolfe
Lord Mendelsohn
“Director’s duties: takeovers and mergers
(1) This section applies to directors of companies involved in any or all of the following—
(a) takeover bids;(b) merger transactions; and(c) transactions (not falling within paragraph (a) or (b) that have or may have, directly or indirectly, an effect on the ownership or control of companies of which they are a director.(2) Directors of companies affected by transactions outlined in subsection (1) must set out clearly in a public statement when making recommendations to shareholders how they have discharged their duties as directors, as outlined in section 172 of the Companies Act 2006 (duty to promote the success of the company).”
Lord Mendelsohn
My Lords, I draw attention to my entry in the register of interests, which shows that I have a professional capacity in the corporate finance sector. Amendment 56A concerns directors’ duties in mergers and takeovers. It is a modest measure, and I shall speak to it briefly and swiftly.
On Second Reading in the other place, the Secretary of State raised concerns about whether in mergers and takeovers there are the correct provisions in the code under which companies act. Indeed, public concern about the takeover of Cadburys by Kraft and the AstraZeneca/Pfizer situation led the Secretary of State at that time to say that the Bill would address those matters.
We have an excellent Takeover Panel, which is to be complimented. Since then, the panel has been hard at work introducing measures relating to matters that arose in Kraft/Cadbury, which have led to: a reduction in the time to make offers; long-term considerations to be given greater attention and the determining decision to be made not just on price; greater disclosure of bidders’ plans, fees and the financing of such offers; and the recognition of employees’ interests in takeovers. More recently, AstraZeneca/Pfizer raised other concerns about whether companies can really be trusted to honour the commitments that they made during a takeover bid. The Takeover Panel amended the code to allow companies voluntarily to make a new form of commitment, with a post-offer undertaking with which they would be required to comply, subject to expressly stated qualifications or conditions, which will strengthen the panel’s ability to monitor compliance with such undertakings by enabling the appointment of an independent supervisor, requiring written reports and suchlike.
However, all those issues centre on takeovers and do not deal with mergers, or even non-listed company mergers. Our amendment would enshrine the obligation for the directors of the company affected by all transactions to set out in a public statement when making recommendations how they have discharged their duties as shareholders. All those duties are laid out in the Companies Acts, and we want through the amendment to bring them to the forefront of directors’ thinking.
We are encouraged that after consultation during Committee, many in business and the City see that as a useful complement to the current work, role and position of the Takeover Panel. We are sure that that would fulfil the Secretary of State’s commitment during Second Reading and would also deliver for many practitioners a more dynamic and modern framework and approach. On a number of occasions, there have been transactions where a fulsome explanation was provided for the offeree directors’ recommendation where wider issues and considerations were fully taken into account.
I urge the Government to examine the letters issued by the chairman of Manchester United in May 2005, of Beale plc in January 2015, of Dixons Retail in June 2014 and the offer rejection letter of the AstraZeneca board in May 2014. Our amendment would make that practice, which is fully consistent with the Takeover Panel’s approach, mandatory. I beg to move.
Baroness Neville-Rolfe
My Lords, I thank the noble Lord. As I outlined in Committee, the Government have overseen a number of changes to the takeover code that have made the takeover regime stronger and more robust. Amendment 56A deals with the disclosure of compliance with directors’ duties. As I set out during that debate, Section 172 of the Companies Act 2006 makes it clear that directors have a general duty to promote the success of the company. Directors must comply with their duties at all times. That includes actively considering how they comply with their duties during takeovers, mergers and any other transactions that affect the ownership or control of the company of which they are a director. The question before us is how best to ensure that they do so.
The takeover code already requires offeree companies to provide the board’s opinion on the offer’s effect on,
“all the company’s interests, including, specifically, employment”.
If a company is listed on the London Stock Exchange, the listing rules will also require the company to make an announcement or send an appropriate circular to shareholders and obtain their prior approval for the most significant class 1 transactions.
As I know from personal experience, that covers a considerable amount of the ground suggested by the amendment. As I am sure the noble Lord will agree, significant policy changes need to be underpinned by clear evidence and supporting analysis. Requiring all companies to make disclosures in the broad way proposed would place a heavy burden on business and stifle innovation and entrepreneurship. This is partly because we believe that this amendment could be read as covering not only transactions for publicly traded companies, such as those regulated by the takeover code, but all purchases and sales of private companies. There are 3.3 million private companies in the UK, so the potential for business burden is substantial.
Lord Mendelsohn
I thank the Minister for that reply. I was busily writing notes and wondering how I might be able to salvage a position, while feeling that today we have not really made as much progress as we would have liked. However, I must say that on this amendment I am exceedingly grateful for what she has said. We will take those assurances and look forward to hearing the progress with the letters. With many thanks, I beg leave to withdraw the amendment.
Baroness Neville-Rolfe
“(9) An order under this section may not be made unless a draft of the instrument containing it has been laid before, and approved by a resolution of, each”
NHS: Antiphospholipid Syndrome (APS)
(9 years, 2 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Drake
To ask Her Majesty’s Government what actions they are taking to raise awareness of the autoimmune condition Antiphospholipid Syndrome (APS) amongst general practitioners and throughout the National Health Service.
Baroness Drake (Lab)
My Lords, I am keen to understand what the Government are doing to raise awareness of the autoimmune condition antiphospholipid syndrome—APS—among GPs and throughout the NHS, and to promote greater doctor recognition of the symptoms and earlier diagnosis.
APS, also referred to as Hughes syndrome, is an acquired autoimmune condition. The clinical features include thrombosis—venous, arterial and microvascular —and/or pregnancy complications and failure. It is important to recognise APS in the context of these problems and the need for appropriate treatment to reduce the risk of recurrence. In APS, the immune system produces abnormal antiphospholipid antibodies that target proteins attached to fat molecules called phospholipids, which makes the blood more likely to clot. There is currently no cure for APS but, if diagnosed, the risk of developing blood clots can be greatly reduced.
APS can affect people of all ages but it most usually affects adults aged 20 to 50, and affects more women than men. The exact prevalence of APS in the population is not known, but it is estimated that APS is present in around one in six of patients who have thrombosis or pregnancy loss, and present in 13.5% of strokes, 11% of heart attacks and 9.5% of DVTs. There is a need for a high-quality study of how common diagnosed APS is in the UK. Simple blood tests that identify APS, available in every district general hospital in the country, can often explain the underlying causes of strokes, heart attacks, pulmonary embolism and recurrent miscarriages. However, the condition is still poorly recognised in the UK. These simple blood tests can achieve earlier diagnosis and treatment for many patients, but there is an issue not only with testing, as some clinicians do not think of the diagnosis in the first place.
It is essential to raise awareness of APS among GPs and throughout the NHS. In my personal experience GPs and dentists, even if aware, are often not confident of treating patients who have it. This resonates with the findings of the charity the Hughes Syndrome Foundation, which ran a poll on the HealthUnlocked website. It found that 40% of GPs were aware of the condition but hardly any were confident in diagnosing or treating it. When the issue of making doctors more aware of APS was raised previously with the Department of Health, the response was that there are hundreds of different medical conditions and there is no particular reason why more attention should be drawn to this one—an opinion that I believe needs to be challenged.
There has been a significant increase in the level of research into APS, expanding the evidence base which continues to confirm that APS contributes significantly to the incidence of strokes, heart attacks, recurrent miscarriages and DVT. This is increasing awareness of the syndrome and the need for long-term treatment but, notwithstanding the growing body of evidence, while there are NICE guidelines for prevention and treatment of venous thrombosis there is none for APS.
The world of obstetrics has been one of the first to pick up on the syndrome. There are guidelines published by the Royal College of Obstetricians and Gynaecologists on the investigation of recurrent miscarriage, one of which is that women who have three consecutive miscarriages before the 10th week of gestation should be tested for APS. As a woman, one inevitably asks why it is necessary to suffer the deep distress of three failed pregnancies before blood tests are undertaken. Why can it not be done sooner? There are many other causes of miscarriage but that is not an argument against early testing of APS as, if its presence is confirmed, it is often treatable. The recognition and treatment of APL-positive pregnancies has undoubtedly delivered an improvement in pregnancy figures, but some hospitals do not include APL in their pregnancy screening. Yet APL-positive pregnancies increase the odds of stillbirth by between threefold and fivefold.
Guidelines on the Investigation and Management of Antiphospholipid Syndrome, published by the British Committee for Standards in Haematology, recommends that anyone under the age of 50 who has a stroke should be tested for APS. However, empirical research, again carried out by the Hughes Syndrome Foundation, found that not all the tests which look for APS are included in thrombophilia screens around the UK. The UK’s National Screening Committee’s guide to such screens states that the typical test includes lupus anticoagulant, but there is no mention of anticardiolipin or anti-beta-2 glycoprotein 1 tests. The Hughes foundation research reveals that not every hospital even tested for the lupus anticoagulant. If someone under 50 has a stroke, it is not certain that guidance will be followed or key tests carried out.
As clinical recognition has increased, so has the spectrum of signs and symptoms of APS to include features such as balance problems and gastrointestinal pains—symptoms which, when looked at holistically, can be indicative of APS. By not achieving greater awareness, pulmonary embolisms, strokes, heart attacks and miscarriages which are due to APS and often preventable will continue to occur, exposing individuals to risk and the NHS to much greater costs.
What action are the Government taking to raise awareness of antiphospholipid syndrome among general practitioners and throughout the NHS? What are they doing to promote greater doctor recognition and diagnosis of APS? What action are they taking to promote earlier and more routine blood testing to identify the condition? Will the Government promote APL testing in pregnancy screening throughout the NHS and review the policy whereby women have to have the distress of several miscarriages before they are tested for APS?
People with undiagnosed and untreated APS face being unwell over long periods, often for the want of simple blood tests. They can despair of ever finding a confirmed diagnosis or course of treatment, yet the treatment of APS can be life-changing. I conclude with a real-life clinical case study. Over a 30-year period Mrs A, now 50, suffered two DVTs, one pulmonary embolism, angina, transient ischaemic attacks, three miscarriages and, finally, a slight stroke. Eventually she was diagnosed with APS. I had my own journey, but eventually I met the wonderful doctors at Guy’s and St Thomas’ Hospital.
Baroness Morris of Yardley (Lab)
My Lords, I am delighted to be able to contribute to this short debate on getting greater awareness of antiphospholipid syndrome in the NHS, particularly among GPs. I declare an interest: I am chairman of the Hughes Syndrome Foundation, and I am very pleased to be so. I test positive for antiphospholipid but have had no more than minor symptoms. Where I am unusual is that I had a GP who spotted the signs early on, for which I am grateful. We need to get to a position where that story of early identification, and therefore no great illness other than minor inconvenience and minor treatment, becomes the norm, rather than stories such as the one that my noble friend Lady Drake finished her speech with.
The first point to make is that this is not a rare condition; few people have heard of it—it has a very complicated title, which does not help—but it is not rare. One in six miscarriages and instances of thrombosis, and probably most heart attacks, DVTs and strokes in people under 50, can be put down to antiphospholipid syndrome. Converting that percentage into cases, if you say that 10% of DVT clots can be attributed to APS, gives a figure of 3,000 events in the UK a year. So although this has only relatively recently been identified, it is not a rare condition. I bet I can say that almost all of us know someone who is APS-positive but we do not know it. The problem is that they will not know it either.
APS is essentially a success story. It was identified in 1983, and since then remarkable progress has been made in clinical and scientific research. PubMed is an international directory of worldwide scientific research. When we at the foundation looked at the publications in 2006, relatively recently, there were 20 published research papers. By 2014, that had grown to 602 published research papers each year. There are international collaborations under the banner of APS research, and recently at UCL here in London the UK Antiphospholipid Syndrome Society was formed, bringing together haematologists and rheumatologists—APS specialists are usually found in those departments—to collaborate and continue with research.
About 18 months ago we at the Hughes Syndrome Foundation realised that one of the things our patients were saying was that they did not know where the consultants were. We put together a directory of consultants in the UK and found that there are 100 consultants in hospitals in this country. So there is a growing body of evidence about antiphospholipid syndrome, and it has worldwide recognition.
It is not just that we know more about APS; the treatment is successful as well, as my noble friend Lady Drake indicated. There is no cure, but it is treated with anticoagulant medicines. The effect of that on women who have had previous miscarriages is that the success rate of 20% before 1990 among people with APS is now over 80% today. I think noble Lords can imagine what that means to women who have had three or more miscarriages, are treated and then have over an 80% chance of delivering safely.
Given this success story—success in identifying and researching the condition, relative success in being able to treat it—it is incomprehensible that there is such poor awareness of the condition elsewhere in the National Health Service and among GPs. Quite frankly, it is a lottery as to whether a diagnosis is ever made. Good-quality international work on this shows that on average patients wait three years for a diagnosis. We at the foundation put out a questionnaire to our members and found that a third had waited over five years for a diagnosis, and if you read their stories of going from consultant to consultant and from doctor to doctor, with no one recognising that this might be the cause, it is easy to see how early identification would make a real difference to them.
It matters that there is early identification, not only because treatment can be preventive—it might not cure the condition but it can prevent the worst effects of antiphospholipid syndrome being experienced by patients—but because once it was identified, more appropriate treatment could also be given. This is part of the problem: GPs or experts sometimes say, “Ah well, we’ll spot the thrombosis anyway. We don’t need to test for APS. Once the thrombosis happens, we’ll treat it as well as we can”. The point is that the treatment for thrombosis, for example, is different for those who have APS and those who do not. If you have thrombosis, you are likely to be put on warfarin for a period of three to six months. If you have thrombosis and APS, you need much longer-term treatment than that and will probably be on an anticoagulant for the rest of your life. Identifying APS as a cause of other conditions matters because it is the right thing to do, but also because it might determine the type of treatment that is given.
I suspect that the Minister’s experience in debates such as this is that people come forward and say that they want to bring the benefits of research and clinical progress to as many people as possible, and the debate then centres on the cost of drugs or the availability of specialised equipment. We all understand the difficulty that the National Health Service experiences in trying to afford bringing all the advances in medicine to patients who need them, but that is not the issue that we bring to this debate today. APS testing is relatively inexpensive: £25 for the two tests that are needed. As my noble friend Lady Drake said, the two simple blood tests can be requested by a GP. The barrier to testing is not a lack of resources or expensive equipment; the issue is that we have a disjuncture between what is happening at the clinical research level and how it is being acted on, particularly among GPs. I do not blame GPs for this. It is not surprising, given that there is so little planned structure for making GPs aware of the signs of the condition or its treatment. There is nothing in the NICE guidelines. It is not included in GP training, and even GPs who are aware of APS lack confidence in knowing how to treat it and to take it forward.
As a non-medical person, I think I understand how this has grown up over the years. APS affects all parts of the body, so every expert, every clinician, needs to be aware that APS might be a cause or a contributing factor, but because of this it has too often been seen as a second-order condition and has not been the first thing that specialists look at. Given the growing body of knowledge and evidence about APS and its treatment, it should now, 30 years after it was first identified, be seen as a condition in its own right. It needs to come in from the edge of medical awareness and be seen as part of mainstream diagnosis and treatment.
Some years ago, the Hughes Syndrome Foundation received a grant from the National Lottery and was able to send leaflets to GPs to try to raise awareness of the condition. It has just got a new leaflet and intends to do that again, but frankly that is not what should be happening. We are very happy to send out leaflet after leaflet, but we need a bit of help from the established part of the National Health Service that is meant to raise awareness among GPs. I therefore join my noble friend Lady Drake in her request to the Minister to say what else can be done to raise awareness among GPs.
I do not know what the Minister is about to say, but I suspect he will tell us about the things that already happen and that have been put in place to raise awareness about APS among GPs. All I can say is that it is not enough. It is not working. Too many people who have APS are still not having it identified as quickly and early as possible. They are not having the treatment that they need and the preventive treatment that can keep them well. All of us would want to overcome this problem with a £25 blood test. I am grateful to the Minister for his courtesy in asking us in advance about the issues that we wanted to raise, and I look forward to his response.
Lord Hunt of Kings Heath (Lab)
My Lords, I am very grateful to my noble friend Lady Drake for securing this debate and for her forceful speech. My noble friend Lady Morris also made a very powerful case, asking the Government to look at how they will support the improvements that have been spoken about so eloquently tonight.
I acknowledge the work of the Hughes Syndrome Foundation. Its fact sheets were excellent in getting across to me the scale of the issue that we face. I am very glad to hear that it will be circulating more leaflets to GPs in the near future.
We have heard that, if untreated, APS can lead to permanent disability, severe maternal or perinatal morbidity or even death; that symptoms can occur in virtually all organ systems; that venous thrombosis and stroke are the most common thrombotic manifestations; and that in pregnancy the syndrome is associated with adverse maternal and foetal outcomes. The problem is that the syndrome is underrecognised and underdiagnosed and can have, as we have heard, devastating consequences if untreated, mainly because of uncontrolled thrombosis.
Just to go over the ground already covered, these difficulties in diagnosis are compounded by a lack of standardisation of diagnostic tests. As we have heard, early recognition is crucial because treatment can reduce mortality or morbidity in relatively young people who often present with diseases such as stroke, myocardial infarction and deep-vein thrombosis. The example that my noble friend Lady Drake cited, of Mrs A, was very telling about some of the issues that can arise if there is not early diagnosis.
The first issue is, as my noble friend said, the need for a high-quality study of prevalence. My noble friend Lady Morris said that this is not a rare condition, but at the moment there is insufficient information to quantify just how common it is. It would be right for the Government to ensure that a robust study is now carried out to look at the prevalence of this disease.
I come to the simple blood test. What is so striking is that if it is simply left to individual hospitals or clinical commissioning groups—if they ever touch this area, which I doubt—we will not get consistency of approach and the uniform use of blood tests, which the evidence clearly points out that we need. If that is the case—if the noble Earl agrees with me—it is down to the Government or NHS England to start to signal to the NHS that we need to see a uniform policy on these tests.
I do not know whether the noble Earl read the piece in the Telegraph a couple of weeks ago in which there was an interview with Professor Hughes, the pioneering doctor who, with his team, found the evidence for Hughes syndrome many years ago. In that interview, he spoke about areas such as neurology and cardiovascular medicine, where there was less awareness among doctors of APS. He was quoted as saying:
“We know that it is present in one in five men aged under 45 who have a stroke, and one in five women aged under 35 who have a heart attack. Yet, it is simply not being picked up early enough to prevent these illnesses. Because the symptoms can be subtle, patients do get sent round the houses”.
The question therefore arises: given that the cost of the blood test would be a matter of a few pounds, why do we not ensure that those tests take place uniformly within the National Health Service?
We then come to general practitioners and the issue of training and raising awareness among them. In this Parliament, the noble Earl has debated many specific disease areas where issues have been raised about GPs recognising and diagnosing conditions that may not be rare but which they are not used to or do not recognise. One could approach that in a piecemeal way. However, given the pressure on GPs, and given that we know that the curriculum at medical school is very crowded, some other mechanism is needed to help general practitioners understand and recognise illnesses that are not common in the accepted sense of the term but which can have a major impact on many patients. The Government need to think very carefully with the profession, and in particular with GPs, about how we can improve their diagnosis success.
My noble friend said that there are no NICE guidelines and no national service framework. It would be very helpful if the noble Earl agreed that either his department or NHS England would set out what they consider to be the appropriate response of the NHS, as regards diagnosis of testing and treatment, so that we get a much more consistent approach. My noble friend Lady Morris said that investing in such a set of guidelines, including the testing, would be cost-effective. Of course, this syndrome was discovered in the UK by a fantastic British team. It would be ironic if this country, of all countries, was not then able to take advantage of the work that was developed in the UK. The noble Earl will know that, unfortunately, this is not unique in that respect. However, I hope he might be able to agree that something more needs to be done to get a cohesive national response.
The noble Earl has been very generous with his time, but perhaps he might be prepared to meet my noble friend, and perhaps the Hughes Syndrome Foundation, in the very short time remaining before we prorogue, to discuss whether the Government will be able to help in the way my noble friends have suggested.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)
My Lords, I begin by congratulating the noble Baroness, Lady Drake, on securing this debate about a condition that, it is fair to say, receives little parliamentary attention either in this House or the other place. I also thank the noble Baroness, Lady Morris, and the noble Lord, Lord Hunt, for their excellent and powerful contributions. I listened with care to all that they have said.
Many of us—other than perhaps the two noble Baronesses—will be unfamiliar with antiphospholipid syndrome, or APS, so at the risk of repeating the information so usefully set out by the noble Baroness, Lady Drake, it may be helpful if I begin by explaining a little more about the condition.
APS, also known by some as Hughes syndrome, is a disorder of the immune system which causes an increased risk of blood clots. APS can affect people of all ages, including children and babies. However, it usually affects adults aged 20 to 50, and affects three to five times as many women as men. It is not clear how many people in the UK have the condition, although some estimates say that it affects at least 1% of the population.
People with APS may experience myriad symptoms. These can include headaches and fatigue as well as problems with mobility, vision, speech and memory. People with APS are also at risk of developing potentially life-threatening conditions, such as deep vein thrombosis—a blood clot that usually develops in the leg—and arterial thrombosis, a clot in an artery, which can cause a stroke or heart attack. It is estimated that APS is responsible for one in every six cases of deep vein thrombosis, strokes and heart attacks in people under 50. As has been said, pregnant women with APS also have an increased risk of having a miscarriage, although the exact reasons for this are uncertain. Some women, sadly, suffer recurrent miscarriages, defined as three or more miscarriages, and APS is thought to be the cause of this in around one out of every six cases.
Diagnosing APS can be difficult as some of the symptoms are similar to those of multiple sclerosis. Therefore, blood tests designed to help identify the antibodies responsible for APS are essential in diagnosing the condition. When a blood test is done, APS is easily distinguishable from MS at that point. On the difficulty around diagnosis generally, certainly in terms of how easily it can be picked up by a GP, my advice from NHS England is that, if a patient went to see their GP complaining of some of the low-grade symptoms of headache and fatigue, it is unlikely that APS would be something that the GP would immediately suspect and test for.
There is currently no cure for APS, as has been pointed out. However, if it is correctly diagnosed, the risk of developing blood clots can be greatly reduced. Anticoagulant medicines such as warfarin, or an antiplatelet such as low-dose aspirin, are usually prescribed. Treatment with these medications can also help pregnant women improve their chances of having a successful pregnancy. With treatment, it is estimated that there is about an 80% chance of a woman with APS having a successful pregnancy.
I turn to the specific issue the noble Baroness has raised—ensuring that the medical profession is sufficiently aware of APS. As I am sure noble Lords know, the content of GP training is decided by the medical royal colleges and approved by the General Medical Council. The noble Baroness suggested that GPs are not confident enough to recognise APS. I do not doubt that there have been cases where diagnosis of APS has been too slow, but I hope that she will agree that it is not possible to generalise in this area about the number of doctors who are alert to the condition.
The noble Baroness, Lady Morris, said that APS is not included in GP curricula. I understand that the Royal College of General Practitioners curriculum covers thromboembolic disease, which would include the understanding of predisposing factors for autoimmune conditions such as APS, so GPs should be sufficiently informed about the condition. NHS England assures me that APS is also widely recognised in general medicine, neurology, haematology and obstetrics. I also understand that the British Society for Haematology, the Royal College of Physicians and the Royal College of Obstetricians, provide guidance on how to manage APS.
I think that it was the noble Baroness, Lady Drake, who asked about the absence of NICE guidance on APS. In fact, NICE’s guideline on hypertension in pregnancy covers APS. Its document on reducing hypertension in pregnancy, published in August 2010, advises clinicians that women at high risk of pre-eclampsia, including women with APS, should take 75 milligrams of aspirin daily from 12 weeks of pregnancy until the birth of the baby. When the NICE guidelines on acute stroke and transient ischaemic attacks were in development, the inclusion of a management of APS was considered, but it was not taken forward as no studies were found that could form the basis of recommendations at that time. However, the 2016 edition of the Intercollegiate Stroke Working Party guidelines are currently in development, and NHS England’s national clinical director for stroke will discuss with the relevant clinical leads whether APS can be included.
The noble Lord, Lord Hunt, suggested that this was a problem that was down to a commissioning issue and that it should be for NHS England to have a uniform policy on blood testing. I differ from him in that I do not see this as a commissioning issue. It relies above all on doctors treating patients following the guidance that they are given.
I know that there are calls for screening for APS. In fact, UK testing for thrombophilia is offered on a selective basis during early pregnancy based on clinical risk factors, including previous foetal loss, still-birth, a history of pre-eclampsia and severe intrauterine growth retardation. However, as noble Lords may know, the UK National Screening Committee advises Ministers and the NHS in all four countries about all aspects of screening policy and supports implementation. The UK NSC reviewed the evidence for antenatal, newborn and adult screening for thrombophilia, including APS, in March 2010 and recommended that population screening should not be offered. Also, the UK NSC did not recommend antenatal screening. However, the UK NSC is due to review its recommendations on antenatal, newborn and adult thrombophilia screening this year. A public consultation will be held on the review and any stakeholders or individuals who would like input into the consultation should contact the UK NSC for a copy of the review’s timetable.
I understand all that the noble Baronesses said about the need to support women with APS who suffer miscarriages. We know that pregnancy is a time of huge emotional significance. Sadly, some pregnancies end in miscarriages. Families who have to cope with the distressing event of miscarriage need sensitive support and care from services and the people around them. That is precisely why the Royal College of Obstetricians and Gynaecologists has set out clear standards for NHS service organisations and levels of care that should be provided to help patients who experience problems in early pregnancy, miscarriage, ectopic pregnancy and recurrent miscarriages.
We still need to understand more about how APS affects people and how best to treat it. I am pleased to say that there is some research under way to help do just that. The National Institute for Health Research Clinical Research Network recently hosted a trial comparing the anti-coagulant effects of rivaroxaban and warfarin in patients with thrombotic APS. The trial closed to recruitment in November last year and is now in follow-up. In addition, the network has a new study in set-up that will look at the impact of fatigue and physical inactivity in people with APS.
I close by assuring noble Lords that this Government are determined to ensure that people with long-term conditions such as APS receive the help and support they need. I understand that noble Lords feel that gaps exist which should be bridged. I would be very happy to talk to the noble Baronesses, Lady Drake and Lady Morris, and the noble Lord, Lord Hunt, if they would like to come and see me about this. It is for this reason that through the mandate we have asked NHS England to make measurable progress in supporting people with ongoing health problems to live healthily and independently, with much better control over the care they receive. NHS England is taking action to make sure progress is made. For example, its business plan Putting Patients First sets out key actions to improve services for people with long-term conditions over the next two years. It has also recently published three handbooks to provide practical support for good management of long-term conditions and guidance on population risk-stratification. The aim is to help commissioners identify those patients who will benefit most from a personalised care planning approach. This, to be sure, is generic but I hope that it indicates the stress that we are putting on the importance of supporting those with long-term conditions, particularly those with multiple conditions.
In tandem with this, the Five Year Forward View, developed by the partner organisations that deliver and oversee health and care services, sets out that long-term conditions are now a central task of the NHS. Once again, I thank the noble Baroness for tabling this debate, which will help raise the profile of APS in a helpful way.