House of Commons
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Oral Answers to Questions
(9 years ago)
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Greg Mulholland (Leeds North West) (LD)
1. What steps he is taking to support small businesses through public procurement.
Mr William Bain (Glasgow North East) (Lab)
7. What steps he is taking to improve access to Government procurement by small and medium-sized enterprises.
The Minister for Civil Society (Mr Rob Wilson)
Over the past five years, we have implemented a wide range of measures to open up the way we do business to make sure that small companies are in the best possible position to compete for contracts. These measures include increasing transparency, making opportunities more accessible, removing unnecessary bureaucracy, improving payment terms and clamping down on poor practice.
Greg Mulholland
I thank the Minister for that answer. He will be aware of the report of the Public Administration Committee that showed that at the time not enough was being done. Does he accept that there still needs to be a real culture change in the civil service to open up Government procurement to small and medium-sized enterprises?
Mr Wilson
We have obviously made a lot of progress and there is more to do, but we intend to extend and embed the reforms that we have made over the past five years. I would just remind my hon. Friend that at the last general election, only 6.5% of direct central Government procurement spend was with smaller businesses, and we had no idea how much was spent in the supply chain, so we have made huge progress.
Mr Bain
The Minister omitted to say in his answer that nine out of 17 Departments spent less with SMEs in 2013-14 than they did in 2012-13. With just 10% of Government contracts going to small businesses, why have this Government been so poor when it comes to procurement from our SME sector?
Mr Wilson
In 2010, the Government set an aspiration that by 2015 25% of Government procurement spend by value should go to SMEs directly and into the supply chain. In fact, we have exceeded our target, and a record 26.1% is now being spent with SMEs. That is a record to be proud of, and a tribute to my right hon. Friend the Minister for the Cabinet Office and Paymaster General.
David Morris (Morecambe and Lunesdale) (Con)
May I congratulate my hon. Friend on all the measures that he and his colleagues have taken on this subject? I know that four businesses in my constituency are currently benefiting from their measures.
Mr Wilson
I know my hon. Friend is a great champion of small businesses in his constituency. One of the wider benefits of this programme of commercial reform is that it enabled the Government to make the huge saving of £15 billion in the years 2010 to 2014. As I say, that is a lasting tribute to my right hon. Friend.
Helen Goodman (Bishop Auckland) (Lab)
The Minister might confess that it would help if he bought enough desks for civil servants. In answer to 11 parliamentary questions, Whitehall Departments have told me that they have more civil servants than desks. In the Department for Transport, there are 6,600 officials and 1,500 desks. This sounds more like musical chairs than hot desking. Is it the cause of all the chaos and confusion in this Government?
Mr David Anderson (Blaydon) (Lab)
2. If he will expedite the review of papers held on people convicted in 1973 in relation to alleged incidents during the national building workers’ strike at building sites in the Shrewsbury area so that the review is completed as soon as possible.
Mr Anderson
I am very grateful for that answer, and I wish I believed it. Sadly, it was confirmed in a debate yesterday afternoon that despite this House overwhelmingly agreeing on 23 January last year that the papers would be released—and that Ministers would assist in getting the papers released—they have not been. The campaign has consistently met blockages. I am calling on the Minister to bring forward the release of these papers as quickly as possible and to stop the 43-year cover-up, which will see innocent men going to their graves as convicted criminals to protect the Tory Ministers of 40 years ago. It is a disgrace.
Mr Letwin
I am afraid that the hon. Gentleman is unaware of the actual situation. The review of which he speaks is under way at present, but the papers—and the particular parts of those papers that were kept back on security grounds—have all been given to the Criminal Cases Review Commission, which has looked at them and is using them in the course of its review. There is no question of any injustice of the kind he describes occurring as a result of the lack of those papers being present. I, however, assure the hon. Gentleman that if I find myself in my current post after the election, I shall seek to expedite the review.
Sir Bob Russell (Colchester) (LD)
The hon. Member for Blaydon (Mr Anderson) asked a serious question. This was an establishment stitch-up 42 years ago, and for 42 years it has been an establishment cover-up. Does the Minister not realise that there cannot possibly be any state security reasons why the records of an industrial dispute should not be made public?
Mr Letwin
My hon. Friend is also suffering from a misconception. The bulk of the papers involved were released. The bits that were not released relate to security and make specific references to the security services and their activities. Those are being reviewed, and a decision will be made. He is absolutely right that the crucial point is that the people involved deserve justice, so the CCRC needs to see the unexpurgated version, and it has. It has been given full sight of all the papers.
Lisa Nandy (Wigan) (Lab)
It is increasingly clear that there is simply no justification for the delay in the review or for the refusal to release the full papers about the case. The Minister may refuse to act, but a Labour Government will act. We will release those papers with the urgency that the situation demands. Justice delayed is justice denied. Why is he so determined to ignore the will of Parliament, ignore the public and ignore the urgency of the situation, and why will he not release the papers now?
Mr Letwin
I am sorry that the shadow Minister wrote that question before she heard my previous answers. If, as I hope she will not, she finds herself a Minister after the election and has to make this decision—[Hon. Members: “Hear, hear.”] If she finds herself in that position, I hope that she will discover the truth, which I have already told the House—that the CCRC has already seen the papers, so there is no question of justice being either delayed or denied.
Stephen Mosley (City of Chester) (Con)
3. What assessment he has made of the effectiveness of the work of the Government Digital Service in implementing the digital-by-default programme.
The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)
The Government Digital Service has created the award-winning, world-leading gov.uk, the single web domain for Government information and services, and 25 major services have been redesigned to make them simpler, clearer and faster to use. That will not only provide savings to the taxpayer but improve delivery for the public, so that it is focused on user need, not Government convenience. In the next Parliament, we will deliver government as a platform, building common services such as a once-for-all payments platform.
Stephen Mosley
The Government Digital Service has been one of the current Government’s unsung success stories, improving the efficiency and effectiveness of public services and saving the taxpayer money. Will my right hon. Friend, on the occasion of his final Cabinet Office questions, accept my congratulations on the fantastic revolution in public services that he has led over the past five years?
Mr Maude
I am grateful to my hon. Friend for those kind words. There has been a great success with the Government Digital Service, which the Washington Post has hailed, stating that the UK has set
“the gold standard of digital government”.
The Obama Administration and the Australian Government have created their own analogous organisations, explicitly modelled on what we have done.
Duncan Hames (Chippenham) (LD)
I do not know what the Minister is eating for breakfast this week, but you do not seem to be able to keep him down, Mr Speaker —I half expect him to announce a U-turn on his intended retirement before the week is out.
Is not the secret success of the Government Digital Service the confidence that it has given Departments to develop solutions in-house with an agility that was simply impossible in the days of lengthy contractual negotiations with large IT companies?
Mr Maude
My hon. Friend is completely right. From a time when British government was synonymous with failed IT projects, we have moved to being the world leader in digital government. There is still a huge amount more to do, but I am grateful to him for his support for our work.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
4. What savings have accrued to the public purse from the Government's reforms to trade union facility time.
The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)
At the time of the last general election, there was no proper monitoring of trade union facility time in government. We now have controls in place that have saved the taxpayer some £26 million in the past year, and we have reduced the number of taxpayer-funded full-time union officials from 200 in May 2010 to just eight today.
Stephen Metcalfe
While I generally support the principle of the union movement—[Interruption.] Why is that surprising? I generally support the principle, but it is not for the taxpayer to fund. What was the cost of giving trade union representatives in the civil service taxpayer-funded time off when this Government came to power?
Mr Maude
Part of the problem was that it was not monitored, but the information we put together showed that the cost was £36 million, which we have cut to less than £10 million. There is a perfectly proper role for union officials to be embedded in the workplace, as they can resolve disputes and grievances quickly, but the situation was completely out of control and we have brought it under control.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
Will the right hon. Gentleman take this opportunity to thank those civil servants—mainly trade unionists—who have had to implement Government policies, particularly in the Department for Work and Pensions, such as referring people to food banks? Perhaps against their own judgment, they have had to implement austerity, which has done great damage to the people of this country.
Mr Maude
I point out to the right hon. Gentleman, for whom I have great respect, that the need for austerity was caused by the huge budget deficit that we inherited from the Government of which he was a part. We would rather have not had to do that, but I give credit to civil servants across the country who have done a huge amount. The civil service is smaller than at any time since the second world war, but it is doing more than it was before and productivity has improved dramatically.
Jonathan Ashworth (Leicester South) (Lab)
The Paymaster General has spent the last five years attacking civil servants’ facility time and check-off. We now learn, a week before Dissolution, that he is inserting a gagging clause into the civil service code. Why is it so necessary and urgent to change the civil service code now?
Mr Maude
The change to which the hon. Gentleman refers simply makes clear what was already the case. There will be considerable concern about whistleblowing, and we will do whatever is needed to ensure that we continue to be much more open about things that have gone wrong. Things are much less suppressed than they were when the Labour party was in power.
Ann McKechin (Glasgow North) (Lab)
5. What progress he has made on promoting digital inclusion.
The Minister for Civil Society (Mr Rob Wilson)
This is a devolved matter but in England and Wales more than 70 public, private and voluntary sector organisations now support activity under the digital inclusion charter, working together to help individuals, small businesses and charities to realise the benefits of being online. Later today the Government will launch the Digital Friends initiative that will call on civil servants to go out into their communities and teach digital skills to friends, family, neighbours, or colleagues who are offline.
Ann McKechin
The Minister will be aware that, unfortunately, Glasgow has one of the highest levels of population who are offline. The Government have recently run a series of adverts on Glasgow radio stations about encouraging people to switch their electricity and gas suppliers, but they are asking people only to use the online route. What assessment has he made about how we can encourage digital inclusion and the appropriate way to target Government adverts?
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
6. What assessment he has made of the effect on local economies of the reduction of jobs in the civil service.
The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)
Although the civil service is now at its smallest size since the second world war, officials have helped to deliver efficiency and reform savings of £11 billion in this financial year to January against a 2009-10 baseline. I pay tribute to the hard work and dedication of hundreds of thousands of civil servants up and down the country.
Mr Donohoe
Can the right hon. Gentleman explain why he shut an office in my constituency that I fought long and hard to maintain, given that people have more than met the targets they have been given on every occasion in every year? Will he personally—he has not got long to go—have a wee look at that and perhaps write to tell me why he shut that office?
Michael Fabricant (Lichfield) (Con)
With the news this morning that HSBC is choosing Birmingham over Singapore or Hong Kong, and that Jaguar Land Rover is opening a new plant in the Birmingham area, will my right hon. Friend pay tribute to the civil servants who enabled that to happen in a new, clean, civil service that is lean and effective?
Mr Maude
I pay warm tribute to what my hon. Friend has done to support the bringing of employment to the west midlands. He is a hugely energetic local Member of Parliament. Yes, the civil service does these things extremely well. It is a smaller civil service, but it is more effective than it was. I think its leadership would agree that there is still much more to do.
Chris Ruane (Vale of Clwyd) (Lab)
My hon. Friend the Member for Central Ayrshire (Mr Donohoe) raised the issue of the Government closing down the Her Majesty’s Revenue and Customs office in his constituency. Why is the Minister closing down the HMRC office in my constituency, the Army recruitment centre in my constituency and the Crown courts in my constituency?
Mr Maude
As I said to the hon. Member for Central Ayrshire, every Department in Government has to look to its efficiency, make sure it can live within its means and do the job on behalf of the public. The civil service does not exist to provide employment; it exists to serve the public. We found that that can be done more efficiently and effectively, doing more and better for less. At the same time as employment in the public sector has fallen, it has risen in the private sector by 2.3 million.
Mr Gregory Campbell (East Londonderry) (DUP)
Does the Minister agree that in the parts of the United Kingdom where there has been an over-dependence on the public sector and large numbers of jobs in the civil service, such as in Northern Ireland where the Executive are trying to reduce the dependence on the public sector, central Government should support inward investment through the private sector?
Neil Carmichael (Stroud) (Con)
8. What steps he has taken to increase the accountability to Parliament and the public of senior civil servants.
The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)
The Prime Minister can now exercise choice in making permanent secretary appointments. We have introduced fixed tenure for permanent secretaries. We publish their performance objectives, as well as improved management information, to allow them to be held to account. We have revised the Osmotherly rules to ensure that senior responsible owners are directly accountable to Parliament for project implementation and to allow former accounting officers to be called to Select Committees.
Neil Carmichael
Will the Paymaster General update the House on the role that Ministers might have in the performance review of permanent secretaries?
Mr Maude
We have now instituted a formal process where formal input must be provided by Ministers to the Cabinet Secretary and head of the civil service on the performance of their permanent secretaries. That input has to be taken into account as part of the end of year appraisal undertaken by the head of the civil service.
Mr Speaker
Order. There are so many noisy private conversations taking place it is quite difficult to hear the Minister’s answer. Let us have a bit of order for the Chair of the Public Administration Select Committee of the House of Commons.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
At what may well be my right hon. Friend’s last appearance in the House of Commons at the Dispatch Box, may I remark that his five-year term as Minister for the Cabinet Office in charge of civil service policy for the Government will have truly left its mark not just on the civil service but on this House? His tenacity, commitment and sincerity are of great credit to him.
Mr Maude
I am extremely grateful to my hon. Friend for his kind remarks. I pay tribute to him for the way in which he and his Committee have held us to account for what we do. He has done that consistently and persistently. It has not always been comfortable, but that is what the House of Commons is for.
Henry Smith (Crawley) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)
My responsibilities are for efficiency and reform, civil service issues, public sector industrial relations strategy, government transparency, civil contingencies, civil society and cyber-security.
Henry Smith
I would like sincerely to thank my right hon. Friend and neighbouring Member of Parliament for all his assistance and advice over many years., Can he estimate the amount of taxpayers’ money that has been saved through efficiencies in his five years in the Cabinet Office?
Mr Maude
In the course of this Parliament we have saved more than £50 billion through efficiency and reform savings. I am extremely grateful to my hon. Friend for the support he has given throughout the process. He is a completely brilliant local MP, and I am confident he will be back here after the election.
Lucy Powell (Manchester Central) (Lab/Co-op)
With your permission, Mr Speaker, I would like to pay tribute to the right hon. Gentleman, given that this is likely to be his last appearance in this place. He has a long record of public service, which he has always pursued with principle, dignity and drive. Even when it has not served his own career, he has never been afraid to speak out, and I have always respected him for having a clear agenda. He is a moderniser and impatient for reform, and despite our disagreements, I am sure that Members on both sides of the House will want to pay tribute to his distinguished career.
Looking to his future, I wonder whether he wants to follow in the footsteps of his friend Michael Portillo. If so, I am happy to arrange some practice sessions for him cosying up on the sofa with my hon. Friend the Member for Hackney North and Stoke Newington (Ms Abbott). I wish him well with his future plans, albeit with me taking his place in the Cabinet Office, and I wondered whether he wanted to take this opportunity to tell us some of his fondest memories of this place.
Mr Maude
I am extremely grateful to the hon. Lady for her kind and warm words; they are hugely appreciated. We have pursued a difficult and often controversial agenda of reform, but one of things that has given it strength has been the robust support from her and her predecessors. Whatever the result of the election—I hope it will not be the one she foresees—this programme of reform must continue and be followed through.
Mr Christopher Chope (Christchurch) (Con)
T2. In joining the tributes to my right hon. Friend for his sterling public service, may I ask what else he could have achieved in the past five years had he been a member of a real Conservative Government?
Mr Maude
That is a tempting question, but actually we have achieved a huge amount. I pay tribute to my right hon. Friend the Chief Secretary to the Treasury, who has worked closely with me and my officials on driving through this programme. It is hard to see how we could have done much more in that context.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
T4. Does the Minister agree that one of the great failures of this Government has been their inability to check the quality of private companies engaged to deliver our people’s public services? Has that not been one of the fatal policy weaknesses of this Government?
Mr Maude
We have improved the quality of the commercial directors and teams across Government so that we can monitor much better what is done than was the case under the hon. Gentleman’s Government, and I announced yesterday some principles for transparency that will take this process yet further. It is much better than it was, but there is still a lot to do.
Rehman Chishti (Gillingham and Rainham) (Con)
T3. My right hon. Friend has been an outstanding Minister on cyber-security. He recently visited Pakistan and met the chief of general staff in the Pakistan army. Did they discuss greater co-operation between our two countries on cyber-security and sharing the good practice he has developed in this area?
Mr Graham Allen (Nottingham North) (Lab)
T5. What assistance is the Minister for Civil Society giving to the National Citizen Service to maximise the number of students from disadvantaged backgrounds who participate in it so that they can play their full part in a programme that would benefit them more than those from more affluent areas?
The Minister for Civil Society (Mr Rob Wilson)
The hon. Gentleman’s interest in the NCS is welcome and I know is reflected in his constituency, where demand for the programme is high among pupils at Bulwell academy and Bluecoat Beechdale academy. I am delighted that the latest independent evaluation found that in 2013 16% of NCS participants were in receipt of free school meals, compared with about 7% of 16 and 17-year-olds in the general population.
Richard Graham (Gloucester) (Con)
T6. The Cabinet Office has been relentless in reducing waste from public services. However, does my right hon. Friend share my concern that the hidden cost to the taxpayer, as well as the lack of local accountability, from doing away with the shire fire and rescue services and trying to create a national fire service as Labour proposes would be considerable?
Ann McKechin (Glasgow North) (Lab)
Q1. If he will list his official engagements for Wednesday 25 March.
The Prime Minister (Mr David Cameron)
I know the whole House will wish to join me in offering our deepest condolences to the families and friends of all those killed in yesterday’s Airbus crash in France. It is heartbreaking to hear about the schoolchildren, the babies and the families whose lives have been brought to an end. As the Foreign Secretary has said, it is very likely that some British nationals were involved. At this stage, three British nationals have been identified as having been on the flight. The Foreign Office is working urgently to establish whether any further British nationals were among those on board. We are providing consular assistance and will give further information as it becomes available. Our ambassador to France is at the crash site today. I spoke to Chancellor Merkel and Prime Minister Rajoy last night and made it clear that the UK is ready to offer any assistance we can. I expect to speak to President Hollande later today.
This morning, I had meetings with ministerial colleagues and others, and in addition to my duties in this House, I shall have further such meetings later today.
Ann McKechin
May I join the Prime Minister in expressing sympathies to all the families affected by yesterday’s tragedy?
In 2014, the number of people working on zero-hours contracts increased by 19%, unsecured borrowing rose by 9%, and the percentage living in relative poverty was at the highest level since 2001. Does the Prime Minister agree that on his watch the future of our young people is only getting darker?
The Prime Minister
What has happened on my watch is that 174,000 more people are employed in Scotland. Zero-hours contracts account for one in 50 jobs, and it is this Government who have outlawed exclusivity in zero-hours contracts—after the 13 years of inaction from the Labour party. In the hon. Lady’s own constituency, the claimant count has fallen by 32% since the election. That is evidence that our economic plan is working in Scotland, as it is throughout the rest of the United Kingdom.
Rory Stewart (Penrith and The Border) (Con)
One of the most disturbing scandals has been the infection of thousands of people across the nation with HIV and hepatitis C through contaminated blood. Today Lord Penrose publishes a report that follows nearly 25 years of campaigning by Members on both sides of this House to address the scandal. Will the Prime Minister, as the last act of his Government, ensure that there is a full apology, transparent publication and, above all, proper compensation for the families terribly affected by this scandal?
The Prime Minister
My hon. Friend is absolutely right to raise this, with the Penrose report being published today. I can do all of the three things he asks for. I know that many Members on all sides of this House have raised the question of infected blood, and I have spoken about how constituents have been to my surgeries. While it will be for the next Government to take account of these findings, it is right that we use this moment to recognise the pain and the suffering experienced by people as a result of this tragedy. It is difficult to imagine the feelings of unfairness that people must feel at being infected with something like hepatitis C or HIV as a result of a totally unrelated treatment within the NHS. To each and every one of those people, I would like to say sorry on behalf of the Government for something that should not have happened.
No amount of money can ever fully make up for what did happen, but it is vital that we move as soon as possible to improve the way that payments are made to those infected by this blood. I can confirm today that the Government will provide up to £25 million in 2015-16 to support any transitional arrangements to a better payments system. I commit that, if I am Prime Minister in May, we will respond to the findings of this report as a matter of priority.
Finally, I know that Lord Penrose was unable to present the findings of his report today because of illness. I am sure the whole House would want to send him our very best wishes.
Edward Miliband (Doncaster North) (Lab)
Let me first say that I fully associate myself with the remarks that the Prime Minister has just made about the victims of infected blood. We undertake today to act on those recommendations as well. I also join the Prime Minister in offering my condolences to the families who lost loved ones in the devastating plane crash yesterday, especially remembering the three British victims. Our thoughts are with all the victims, their families and their friends.
On Monday, the Prime Minister announced his retirement plans. He said that it was because he believed in giving straight answers to straight questions. After five years of Prime Minister’s questions, that was music to my ears. So here is a straight question: will he now rule out a rise in VAT?
The Prime Minister
In 43 days’ time, I plan to arrange the right hon. Gentleman’s retirement. But he is right: straight questions deserve straight answers, and the answer is yes.
Edward Miliband
No one is going to believe it. No one is going to believe it because of the Prime Minister’s extreme spending plans, because his numbers do not add up, and because he promised it last time and he broke his promise. Now, if the Prime Minister is in the mood for straight answers, let us try him with another one. Can he confirm that a spending cut—[Interruption.]
Mr Speaker
Order. The Leader of the Opposition will be heard. If we overrun, so be it; it does not matter to me. The right hon. Gentleman will be heard, and the Prime Minister will be heard, and every other Member will be heard.
Edward Miliband
Can the Prime Minister confirm that the spending cuts that he plans in the next three years will be even greater than anything seen in the last five?
The Prime Minister
The right hon. Gentleman is wrong about that, but look: straight answer from me, straight question to him. I have ruled out VAT. Will he rule out national insurance contributions? Yes or no?
Edward Miliband
The Prime Minister will have plenty of time to ask questions after 7 May—and I am afraid to say that his own Office for Budget Responsibility has referred to
“a much sharper squeeze on real spending…than anything seen over the past five years”.
Next question, and this should be an easier one. Five years ago, the Prime Minister promised to cut net migration to tens of thousands. Straight answer to a straight question: is that a broken promise? Yes or no?
The Prime Minister
Let me give the right hon. Gentleman a second chance. I answered a very simple question about VAT. I ruled out an increase. Let me ask the right hon. Gentleman again: will he rule out an increase in national insurance contributions?
We all know that this is Labour’s jobs tax. This is Labour’s tax of choice. This is what Labour clobbers working people, families and enterprises with. So let me ask the right hon. Gentleman again—straight question, straight answer—will he rule it out?
Edward Miliband
There is only one person who is going to raise taxes on ordinary families, and that is the Prime Minister—and he is going to cut the national health service. Moreover, he did not answer the question. Let me now ask him a question about the NHS. Five years ago, he promised no top-down reorganisation of the NHS. Now, this is an easy one: can he confirm that that is a broken promise? Yes or no?
The Prime Minister
I will tell the right hon. Gentleman what is happening in the NHS. There are 9,000 more doctors, 7,000 more nurses, and 20,000 more bureaucrats. But we have heard it now: a clear promise on VAT from this side of the House, and no answer on national insurance from that side of the House. And it goes to a bigger point. The right hon. Gentleman has had five years to come up with an economic plan, he has had five years to work out some policies for the future of this country, he has had five years to demonstrate some leadership, and he has failed on every count.
Edward Miliband
Nobody believes the right hon. Gentleman’s promises on VAT and nobody believes his promises on the national health service because he has broken his promises in this Parliament. Now, let us try him on one more: three years ago he cut the top rate of income tax. Can he rule out, under a Tory Government, a further cut in the top rate of income tax?
The Prime Minister
The richest in this country are paying more tax under this Government than they paid under the last Government. We have set out our plans for tax cuts: if you are young and you work hard, you will get an apprenticeship; if you are a family, we will take you out of tax until you earn £12,500. I do not want to see middle-income families drawn into the top rate of tax. We have made our promises. Now, let the right hon. Gentleman make a promise: will he increase national insurance? Yes or no?
Edward Miliband
Nobody believes the right hon. Gentleman’s promises. He has had five years of failing working families, with worse to come—more spending cuts, more tax cuts for the richest, more betrayal. This has been a Government of the few for the few. It is time for a better plan. It is time for a Labour Government.
The Prime Minister
Well, we have seen it all: absolutely no ability to answer a question. This is a country where unemployment is falling; the economy is growing; the deficit is coming down; in our NHS, the operations are going up; there are more good school places for our children; living standards are rising; inflation is at zero; and there are record numbers in work—all of this could be put at risk by Labour. That is the choice in 43 days’ time: competence and a long-term plan that is delivering, instead of the chaos of economic crisis from Labour.
Simon Wright (Norwich South) (LD)
Q3. Thirteen months ago, my constituent Leigh Smith tragically lost her three-month-old baby Beatrice due to a rare heart condition. In an effort to help other families avoid the grief and despair of losing a child, Mrs Smith wants all schools to install defibrillators and to teach life-saving skills. Will the Prime Minister offer his support to this vital cause?
The Prime Minister
First, let me say to my hon. Friend and his constituent that there is nothing more heartbreaking than losing a child and we should do everything we can to help with this. The Chancellor announced in his Budget £1 million for defibrillators, including putting defibrillators into schools. I want to see a situation where community buildings, schools, pubs, village halls—all of them—have defibrillators, because we can save lives in this way, and particularly when we are saving such young lives, as in my hon. Friend’s constituent’s case, we must do better.
Simon Danczuk (Rochdale) (Lab)
Q4. May I start by expressing my condolences to the families of those who lost their lives in the tragic Germanwings air crash?There are not any in the Prime Minister’s constituency, there is just one in the Home Secretary’s seat, and yet there are 680 people seeking asylum in Rochdale, more than in the entire south-east of England. We are all proud of the assistance that this country offers to those in need, but public services in Rochdale are already stretched and this uneven dispersal of asylum seekers is not helping the situation. Does the Prime Minister accept that this is not fair on Rochdale, and what does he plan to do about it?
The Prime Minister
I think the hon. Gentleman is absolutely right to raise this issue, that what we inherited was completely unacceptable. The numbers of asylum seekers are down by a third from the peak they reached under Labour. We are fast-tracking more cases and we are resolving more cases more quickly, but I have to say to him that the legislation governing the distribution of asylum seekers was put in place under the last Labour Government.
I have been following what the hon. Gentleman has been saying. He has sent some very good dispatches from the front in terms of knocking on doors in Rochdale, and this is what he says:
“Any Labour politician that says to you they knock on a door and Ed Miliband is popular are telling lies.”
He says that about his own side. He says:
“You know, this north London elite view of the world just doesn’t play in Rochdale, Rotherham, Runcorn or anywhere else beginning with an ‘R’ outside the M25.”
I would like to encourage him to do more interviews, because he could add Reading, Redditch, Redruth, Reigate, Rochford, Romford, Romsey, Rossendale, Rushcliffe, Rutland, Rye—and probably Rosyth too the way they are going.
Heather Wheeler (South Derbyshire) (Con)
Q5. I don’t think so love. In May 2010, unemployment in South Derbyshire, an ex-mining area, stood at 1,540. Today it is almost a third of that, at 580. Does my right hon. Friend agree that the strong Conservative Government and a Conservative district council with a long-term economic plan are able to succeed in bringing jobs and growth where the Labour equivalent failed to do so?
The Prime Minister
My hon. Friend is absolutely right; in South Derbyshire, since the election, the claimant count—the number of people claiming unemployment benefit—is down by 68%. Those are the statistics, but every one of those people is someone with a job, with a livelihood and with a chance to provide for their family. That is what this election is going to be about: for young people who want jobs, we are offering apprenticeships; for young families who want homes, we have got homes with Help to Buy; and for pensioners who want security, we have got the pension and the pension benefits guarantee. That is what is on the ballot paper and that is what I think people will choose at the next election.
Mr Nigel Dodds (Belfast North) (DUP)
Following the publication of the Select Committee on Northern Ireland Affairs report on the disgraceful on-the-runs debacle yesterday, it has now been revealed that the man who went about distributing these letters to IRA fugitives, Gerry Kelly of Sinn Fein, has actually received the royal prerogative of mercy for certain crimes. Will the Prime Minister now list in the Library of the House all those other Sinn Fein members and leading republicans who have likewise received a royal pardon, so that republicans in Northern Ireland can know which of their great stalwart leaders have begged or asked for, or received, probably on bended knee, such a royal pardon and secondly, so that everybody in the country can know which Governments have been involved in such nefarious activities?
The Prime Minister
I will look very carefully at the question the right hon. Gentleman asks and what more we can do to be transparent, because this Government, not least by holding the on-the-runs review, have been transparent. What I would say to him is that Governments in the past have had to make difficult decisions with respect to Northern Ireland to try to bring parties together and produce the peaceful outcome that we have today. That has involved difficult compromises and things that he and probably I have found, at times, deeply distasteful. None the less, sometimes, in the pursuit of peace, some of these things have to be done.
Richard Drax (South Dorset) (Con)
Q6. May I congratulate my right hon. Friend and the Department for Transport on their securing a £50 million rail infrastructure improvement scheme in South West Trains, which feeds my constituency? However, we still need better infrastructure—additional track; flyovers and power supply—if we are to get longer trains and faster journey times to Weymouth and Portland. Will he meet me to discuss this further to see whether we can further boost the economy in South Dorset?
The Prime Minister
I am always happy to meet my hon. Friend and discuss these issues. I believe this Government have done right by the south-west, not least with the announcement the Transport Secretary has made of an additional 57,000 seats on South West Trains every week from December and 1,400 extra car parking spaces at train stations across the region. We can have this strong transport investment, not just in the south-west, but right across our country, only because we have a long-term economic plan that is delivering the growth this country needs.
Yvonne Fovargue (Makerfield) (Lab)
Has the Prime Minister not put himself on a fixed-term contract? Is he not now concerned that it will be a zero-hours contract after 8 May?
The Prime Minister
It is very simple what I have said. I answered a very clear question, and perhaps the Leader of the Opposition will have to answer some clear questions. It is very simple: two terms, 10 years and one kitchen.
Pauline Latham (Mid Derbyshire) (Con)
Q7. Is my right hon. Friend as alarmed as I am— Order. The hon. Lady must be heard. Is my right hon. Friend as alarmed as I am that Alex Salmond is planning to impose a series of demands on the UK Government? Will my right hon. Friend confirm that he will have nothing to do with such demands?
The Prime Minister
My hon. Friend makes a very important point. As far as I can see, Alex Salmond has taken the entire Labour party hostage, and today we have got the ransom note. The ransom note is very clear. It says, “Higher borrowing, uncontrolled immigration, unfettered welfare, higher taxes and weaker defence.” That is what is being demanded, and the British people have only one way of saying no to this appalling hostage situation, which is to vote Conservative on 7 May.
Jim Dowd (Lewisham West and Penge) (Lab)
May I ask the Prime Minister about the continually dire position at London Bridge station, which is a cause of major concern? Is he aware of the abysmal service and the chaotic scenes that have accompanied Network Rail’s latest stage of development? Will he instruct the Secretary of State for Transport personally to take responsibility for resolving the debacle and for bringing forward an early straightforward compensation scheme for the many tens of thousands of commuters who have had their lives so seriously disrupted?
The Prime Minister
The hon. Gentleman is right to raise that matter. Anyone who has seen the pictures of what has happened some mornings at London Bridge station knows that the pressures are immense. What we need to do is ensure that Transport for London and the Department for Transport are working together—as they are—to bring about the best possible solution. People cannot criticise this Government for failing to invest in London’s transport infrastructure. The Crossrail scheme, which I visited again a couple of weeks ago—[Interruption.] Labour Members say, “We did that”. They did not. They left an enormous bill, but it was this Government who put in the money and got it built. It is one thing to promise something, but another to put the diggers in the ground and to get it done, which is what we have done.
Simon Kirby (Brighton, Kemptown) (Con)
It is very easy to say the words, “long-term economic plan”, but in Brighton, Kemptown, the past five years have seen sharply falling unemployment, huge increases in business start-ups, and a massive £480 million investment in the new hospital. Does the Prime Minister think that the sun will continue to shine on Brighton?
The Prime Minister
First, let me pay tribute to my hon. Friend who has been a real champion for Brighton. He has campaigned so hard for the extra investment and the rebuilding of the hospital, and I am glad that the redevelopment of the Royal Sussex county hospital will take place. I also note that, in his constituency, the claimant count has gone down by 52% and the long-term youth claimant count by 50% since the last election. On that basis, I think that we can say that the sun will continue to shine on Brighton.
Caroline Lucas (Brighton, Pavilion) (Green)
Q9. I agree with the Prime Minister that the sun shines on Brighton; it shines bright green on Brighton Pavilion. The Brighton Argus recently revealed that, in the space of a single month, nearly 1,700 trains between Brighton and London Victoria ran late, but, to add insult to injury, unfair train company rules meant that passengers could claim compensation on just 59 of those 1,700 journeys. Will he join me in backing The Argus newspaper campaign for a fairer compensation system that puts money back into passengers’ pockets?
The Prime Minister
I should have said in my previous answer that the only place in Brighton where the sun does not shine very brightly is where the local Green council is incapable of emptying people’s dustbins. We need a Tory gain there as well. But the hon. Lady is right to raise the case of rail compensation. We are looking closely at The Argus campaign and at what can be done to make the compensation scheme simpler and easier to deliver for people.
Andrew Percy (Brigg and Goole) (Con)
Q10. Thanks to funding from this Government, thousands of constituents in the East Riding of Yorkshire and North Lincolnshire now enjoy access to superfast broadband. That is helping to bridge the digital divide between rural and urban areas. It is also helping small businesses in rural areas to benefit from our “long-term economic plan”—I had to say it once. However, getting broadband rolled out for the remaining properties in East Riding will be particularly difficult. Will my right hon. Friend meet me and other East Riding MPs to ensure that we can get the delivery out as quickly as possible?
The Prime Minister
I am always happy to meet my hon. Friend who is a real champion for his constituents. He is right to put this issue of rural broadband front and centre in his campaign. As he knows, we are investing around £780 million to get superfast broadband to 95% of UK premises by 2017. That programme is going well. Every day, our roll-out reaches another 5,000 homes and businesses. [Interruption.] The Labour party complains, but broadband roll-out has doubled under this Government. That is what has happened because of the work that we have put in. We are investing extra money to ensure that we can get to the most hard-to-reach premises, and that will include subsidising the cost of installing superfast satellite services, which will give access to those in the hardest-to-reach areas who currently have the slowest speeds.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
Q11. A young couple in my constituency—[Interruption.]
Mr Speaker
Order—on both sides of the Chamber. It is a gross discourtesy to the hon. Gentleman and to his constituents. The hon. Gentleman’s question will be heard.
Michael Connarty
A young couple in my constituency were persuaded by Mr Steven Macsporran of the Advice Centre for Mortgages to put a legacy they had into a flat to rent in Turkey. He was an agent for ROPUK. They got no flat and lost £47,000. The Financial Ombudsman Service said that it could not give any advice because it was unregulated advice. Does the Prime Minister agree that that company, and companies like it, should not be allowed to advertise themselves as being regulated by the Financial Conduct Authority if they give such advice, and is it not time we dealt with this rip-off Britain problem?
The Prime Minister
First, I pay tribute to the hon. Gentleman, who is standing down at the election. He has been a Member of Parliament for—[Interruption.] He is not?
The Prime Minister
I am sorry. Let me rephrase that. [Interruption.] I want to defend my team, because this is my 146th appearance at the Dispatch Box for Prime Minister’s questions, and they normally get these things right. Let me pay tribute to the hon. Gentleman anyway and wish him luck in the current battle he has in his constituency.
We have all heard such cases in our constituency surgeries, from people who put their money into timeshare schemes with companies that subsequently turned out to be disreputable. We have all then had the challenge of getting those companies properly uncovered and regulated. I will look into the specific case and write to him, either in his capacity as an MP or whatever it is after the election.
Charlotte Leslie (Bristol North West) (Con)
Q12. The Prime Minister knows that I have often been unhelpful to the Government in the Health Committee, but as a member of that Committee it is my duty to be impartial. Does he share my concern that the objective scrutiny role of the Select Committee system has been fundamentally undermined by Labour’s refusal even to discuss a draft report, having heard evidence of decreased administrative costs since the health reforms, privatisation slowing since 2005, the Transatlantic Trade and Investment Partnership not posing a threat to the NHS, no charges or top-ups introduced, and no plans to do so, and does he agree—[Interruption.]
Mr Speaker
Order. The remainder of the question—I know that it is finishing very soon—must be heard.
Charlotte Leslie
Thank you, Mr Speaker. The Committee heard evidence of no charges or top-ups being introduced, and no plans to do so, and does the Prime Minister agree that refusing even to discuss that flies in the face of our public—[Interruption.]
The Prime Minister
My hon. Friend makes a very important point. That Select Committee report has been held back because Labour Members of Parliament do not want to tell the truth about our national health service; they are only interested in trying to weaponise it. The fact is that there are more doctors and more nurses and more operations are being carried out. That is the truth, and it is disgraceful that Labour is trying to cover it up, just as it did in office.
Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)
No SNP gain here. This is, in fact, my last Prime Minister’s questions after 23 years in this place, but I hope that my very good friend the former Member for Banff and Buchan will be rejoining this place in May. Can the Prime Minister please tell us which causes him more anguish: his imminent return or my imminent departure?
The Prime Minister
I was quite looking forward to missing you both, but obviously that is not going to be—[Interruption.] I have sat in this House for 14 years, and all the time that the right hon. Gentleman has been a Member of Parliament, I remember some very passionate speeches, not least on the Iraq war. I remember some very passionate speeches about civil liberties in our country and making sure that we respond in the right way to terror. He has always stood up for his constituents, he cares passionately about Wales, he cares passionately about rugby, and he will be missed by everyone.
Glyn Davies (Montgomeryshire) (Con)
Q13. On the very last day before the 2010 general election, the Prime Minister, then Leader of the Opposition, visited Montgomeryshire. It was a joyous occasion which led to my presence in the House today. Will the Prime Minister make another visit to see for himself the dramatic improvement in business confidence and the dramatic falls in unemployment that have taken place in Montgomeryshire as a result of the Government’s long-term economic plan?
The Prime Minister
It was a huge pleasure to go and visit my hon. Friend just before the last election. I thought it was a bit of a long shot, but none the less he made it here and he has been a fantastic Member of Parliament, standing up for his constituents. In Wales since the election we have 22,000 more small businesses, employment in Wales going up by 52,000, unemployment coming down and private sector growth. We see a real recovery in Wales and it needs my hon. Friend back here, standing up for his constituents and for Wales in the House of Commons.
Sir Hugh Bayley (York Central) (Lab)
I have here a cutting from The Press in York on 24 April 2010, which says:
“David Cameron last night dismissed claims the Tories would put up VAT if they win the election”.
That was at the last election. Why should the public believe promises that he makes at the coming election?
The Prime Minister
I have given the straightest possible answer, and this time in government we know what needs to be done—we know the changes, and both sides of this House have voted for a £30 billion adjustment. Those on the Labour Front Bench voted for it too. We have set out what needs to happen with departmental spending, welfare and tax avoidance. The Labour party has said that half of the £30 billion must be raised in taxes, so we know it: there is a tax bombshell coming from Labour, and it is going to be, we learned today, a jobs tax bombshell. They wanted to do it before the last election, and they want to do it after the next election. It would wreck our economy and put up taxes for working people, and there is only one group of people who can stop it.
Nigel Mills (Amber Valley) (Con)
Q14. Many hundreds of households in Amber Valley still suffer from noise from the A38 through my constituency. Does my right hon. Friend agree that measures to reduce the noise should be brought forward, and that where development takes place which uses the advantages of being near the A38, the developers should use their profits from those sites to fund noise reduction measures?
The Prime Minister
Today is a good day to discuss noise pollution. It is probably appropriate that we quieten down and think about the subject for a minute. My hon. Friend has consistently campaigned on this issue. He is quite right to do so—it is a big concern to his constituents. We are providing £75 million for noise mitigation on our national road network. We are resurfacing 80% of that network with low noise surfacing. That can make a real difference, and I will look carefully at what we can do for my hon. Friend’s constituency.
Stephen Pound (Ealing North) (Lab)
Last week some of the rougher elements of the House chose to refer to the Prime Minister as “chicken”. I hope we have moved on. However, does the Prime Minister agree that it is entirely fair now to refer to him as a lame duck?
The Prime Minister
I will tell the hon. Gentleman what is a lame duck—trying to get into Downing street on the back of Alex Salmond’s coat tails. The Opposition now know that they cannot win the election on their own, so they are preparing to answer the ransom note. Higher taxes, more borrowing, weaker defence, breaking up our Union—that is what we have to stop. Never mind talk of ducks; I am looking at Alex Salmond’s poodle.
Chris Skidmore (Kingswood) (Con)
Q15. On Friday, together with local businesses and the local enterprise partnership, I will be launching a new campaign, Gateway to Growth, calling for a link road from the M4 to the Avon ring road that will help to deliver millions of pounds of extra investment and new jobs to the Bristol region, and provide the Kingswood area with the access to the motorway it needs. As part of his long-term economic plan, will the Prime Minister look closely at the campaign and the case for an M4 link? First of all, let me pay tribute to my hon. Friend for his very hard work for people in Kingswood and in Bristol more generally. He is absolutely right that we do need to see better transit schemes in Bristol, and I know that the Transport Secretary will be happy to look at the campaign and the case he makes. It is also of note—and I am sure that, as a great historian and, indeed, someone who has written about Richard III, my hon. Friend would want me to say it—that we should not let this day pass without noting that of course Richard III will be buried tomorrow. That is worth remembering. It is the last time that someone did in one of their relatives to get the top job and the country ended up in chaos.
Bill Presented
Protection of Children (Removal of Police Discretion)
Presentation and First Reading (Standing Order No. 57)
Mr Barry Sheerman, supported by Sarah Champion, Mr Elfyn Llwyd, Meg Munn and Liz McInnes, presented a Bill to require the Secretary of State to remove the discretionary decision-making power afforded to police officers in charging individuals with rape in cases relating to acts of sexual intercourse involving persons aged under 16; and for connected purposes.
Bill read the First time; to be read a Second time on Friday 27 March 2015, and to be printed (Bill 195).
Radiotherapy facility at Lister Hospital, Stevenage
Mr Peter Lilley (Hitchin and Harpenden) (Con)
I would like to present a petition from my constituents in Hitchin and Harpenden, who are concerned about the tiring and lengthy journey to London that many cancer patients requiring radiotherapy have to make, sometimes daily. They call for a satellite radiotherapy centre to be established at the Lister hospital. The petition is similar to one presented by my hon. Friend the Member for Stevenage (Stephen McPartland) and my hon. and learned Friend the Member for North East Hertfordshire (Sir Oliver Heald) and has 1,602 signatures.
The petition states:
The Petitioners therefore request that the House of Commons urges the Government to encourage NHS England to provide a radiotherapy facility at Lister Hospital in Stevenage in order to make the journey for radiotherapy treatment much easier for patients who live in the Hitchin and Harpenden constituency.
Following is the full text of the petition:
[The Petition of residents of the constituency of Hitchin and Harpenden,
Declares that patients who are residents of Hitchin, Harpenden, Redbourn, Sandridge, Wheathampstead and the surrounding villages have to travel to Mount Vernon Hospital in Hillingdon to receive radiotherapy treatment and that this journey is long and exacting and often has to be made on consecutive days.
The Petitioners therefore request that the House of Commons urges the Government to encourage NHS England to provide a radiotherapy facility at Lister Hospital in Stevenage in order to make the journey for radiotherapy treatment much easier for patients who live in the Hitchin and Harpenden constituency.
And the Petitioners remain, etc.]
[P001491]
Remediation of contaminated land in Coedpoeth and Brymbo
Susan Elan Jones (Clwyd South) (Lab)
My petition concerns the remediation of contaminated land in Coedpoeth and Brymbo.
The petition states:
The Petition of residents of the UK,
Declares that land in Coedpoeth and Brymbo is contaminated as a result of pollution from lead smelting on the site over 200 years ago...further that residents of Coedpoeth and Brymbo are calling for the Government to step in in the same way that they did in Blanefield, Scotland where part of the cost of removing lead and arsenic contamination was met by the Government; and further that a petition from residents of Coedpoeth and Brymbo has been signed by 1555 individuals.
The Petitioners therefore request that the House of Commons urges the Chief Secretary to the Treasury to provide funding for the remediation of contaminated land in Coedpoeth and Brymbo.
Following is the full text of the petition:
[The Petition of residents of the UK,
Declares that land in Coedpoeth and Brymbo is contaminated as a result of pollution from lead smelting on the site over 200 years ago; further that the local council has informed residents that they must pay a proportion of the remediation which, in some cases, could cost up to £10,000; further that residents of Coedpoeth and Brymbo are calling for the Government to step in in the same way that they did in Blanefield, Scotland where part of the cost of removing lead and arsenic contamination was met by the Government; and further that a petition from residents of Coedpoeth and Brymbo has been signed by 1555 individuals.
The Petitioners therefore request that the House of Commons urges the Chief Secretary to the Treasury to provide funding for the remediation of contaminated land in Coedpoeth and Brymbo.
And the Petitioners remain, etc.]
[P001483]
Heavy Goods Vehicles on the A519 (Staffordshire)
Sir William Cash (Stone) (Con)
The petition is from many hundreds of residents in my constituency.
The petition states:
The Petition of residents of the constituency of Stone in Staffordshire,
Declares that residents of Eccleshall and Woodseaves object to the use of the A519 (running through Eccleshall and Woodseaves) by HGVs; further that the Petitioners object to the application for a new access road to serve the Raleigh Hall Industrial Estate, which would increase HGV use of the A519; further that the new access point would be more dangerous because large HGVs would be turning to join a 60mph road; further that the number of these vehicles using the A519 route has become completely unacceptable, with hundreds passing through a day; further that the increased HGV traffic poses a serious danger to pedestrians; further that the risk of a crash is high, and could cause considerable damage to property and loss of life; further that the subsequent volume of HGVs using Stafford Street and Castle Street in Eccleshall means they are damaging the road surface; further that this situation has led to problems in Eccleshall because HGVs have difficulty passing each other on the Stafford Road outside the Claremont Garage, putting pedestrians at risk; further that the pavements in Woodseaves are very narrow, and HGVs are mounting them to pass one another; further that the A519 is not a primary route and there is no intention of it becoming a primary route and that Satellite Navigation companies should be advised of this matter; further that planning permission has been provided for haulage companies to set up in the Eccleshall area with a focus on the A519; further that Woodseaves residents in particular have been forced to abandon their front gardens because of noise and pollution, they are unable to sleep at night because of the noise, and their homes are being damaged by the weight of HGV traffic on the road; and further that approximately 3 HGVs pass through Woodseaves per minute.
The Petitioners therefore request that the House of Commons urges the Department of Transport to impose a speed restriction and weight limit on HGVs using the A519, to object to the proposed application for a new access road off the A519 that will serve the Raleigh Hall Industrial Estate and to advise Satellite Navigation companies that the A519 is not a primary route.
And the Petitioners remain, etc.
[P001482]
Parking outside Fairmore Medical Practice in Nelson
Andrew Stephenson (Pendle) (Con)
The petition states:
The Petition of residents of Nelson,
Declares that the Petitioners believe patients of Fairmore Medical Practice of 211-213 Leeds Road, Nelson are having difficulty finding suitable parking places near the practice, and that the Petitioners believe there is a vacant site on Leeds Road, Nelson near the practice that could be used as a car park facility.
The Petitioners therefore request that the House of Commons urges the Government to support the Fairmore Medical Practice Patient Participation Group in securing additional parking spaces and to encourage NHS England to reconsider their funding request to support extending car parking facilities at Leeds Road.
And the Petitioners remain, etc.
[P001485]
Urgent care centre at Chippenham Hospital
Duncan Hames (Chippenham) (LD)
I wish to present a petition on behalf of my constituents calling on the Government to fund an urgent care centre at Chippenham community hospital. The proposals come from Chippenham’s doctors. The town’s three GP practices came together to draw up the plans, which would bring urgent services together in one place—accessible 24 hours a day, seven days a week—relieving pressure on accident and emergency departments at nearby hospitals in Bath and Swindon. The petition is signed by several hundred local residents on paper and online.
The petition states:
The Petition of residents of the Chippenham constituency,
Declares that an urgent care centre at Chippenham Hospital is needed to improve access to urgent health services and to relieve pressure on nearby Accident and Emergency departments.
The Petitioners therefore request that the House of Commons urges the Government to fund an Urgent care centre at Chippenham Hospital as proposed by Chippenham’s GPs.
And the Petitioners remain, etc.
[P001486]
Housing development on Midmar Paddock, Edinburgh
Ian Murray (Edinburgh South) (Lab)
I wish to present a petition on behalf of my constituents to prevent housing development on Midmar Paddock in Edinburgh.
The petitioners declare that Midmar Paddock in Edinburgh is used by hundreds of people every week for open-air exercise with children, families and dogs, as a green lung in the city; further that it is green-belt land, a special landscape area, designated open space and a local nature reserve, where planning developments have been resisted for decades; further that it is under imminent threat following its sale with development potential for housing development, and a planning application is expected shortly; and further that a local petition on this matter was signed by 330 individuals in the local area, supported by the wonderful Friends of the Hermitage of Braid, and the Morningside community council, especially Mr Goff Cantley.
The Petitioners therefore request that the House of Commons urges the Secretary of State for Scotland to encourage the Scottish Government and the City of Edinburgh council to intervene to stop housing development on Midmar Paddock.
Following is the full text of the petition:
[The Petition of residents of the UK,
Declares that Midmar Paddock in Edinburgh is used by hundreds of people every week for open air exercise with children and dogs; further that it is green belt land, a special landscape area, designated open space and a local nature conservation site; further that it is under imminent threat of housing development and a planning application is expected shortly; and further that a local Petition on this matter was signed by 330 individuals.
The Petitioners therefore request that the House of Commons urges the Secretary of State for Scotland to encourage the Scottish Government to intervene to stop housing development on Midmar Paddock.
And the Petitioners remain, etc.]
[P001487]
Changes to Budgets for GPs
Mary Creagh (Wakefield) (Lab)
I should like to present a petition on behalf of my constituents about the Government’s proposed changes to GP budgets in Wakefield. It is supported by many of our local GPs, local councillors such as Councillor Rory Bickerton, and Ryan Case, who is a local resident.
The petition states:
The Petition of residents of the Wakefield constituency,
Declares that the Petitioners are concerned about the proposed £3.8 million cuts from budgets for GPs; further that these cuts could result in small practices closing, 38 full time doctors or 95 full time nurses being lost and patients waiting longer to be seen by a GP; and further that a local petition on this matter has been signed by 850 individuals.
The Petitioners therefore request that the House of Commons urges the Government to reconsider the proposal to make cuts to budgets for GPs in the Wakefield area.
And the Petitioners remain, etc.
[P001489]
Tax Transparency and International Development
Fiona O’Donnell (East Lothian) (Lab)
I beg to move,
That leave be given to bring in a Bill to require country by country public reporting for all multinational companies; to strengthen controlled foreign company rules and overseas bond rules; to establish a public register of beneficial ownership, including in the Crown Dependencies and Overseas Territories; to introduce a penalty regime for the General Anti-Abuse Rule; to measure the impact of tax regimes on developing countries; to establish a commitment to use the international aid budget to strengthen tax systems in developing countries; and for connected purposes.
It has been a great privilege over the past three years to serve as a member of the International Development Committee and to see with my own eyes the difference that UK aid is making in the poorest countries around the world. That is something that we should be all be proud to champion during the general election campaign. Not only is eradicating poverty a worthwhile ambition in itself, it is also the best route to reducing conflict in an unstable world.
When I joined the Committee, it was considering its report on tax in developing countries. The introduction to the report begins with the following words:
“Tax is an issue of fundamental importance for development. If developing countries are to escape from aid dependency, and from poverty more broadly, it is imperative that their revenue authorities are able to collect taxes effectively. Tax revenues represent a more predictable and sustainable source of revenue than aid flows ever can.”
This Bill seeks to empower developing countries at a time when they are vulnerable to companies seeking to exploit their natural resources and economic development potential. The citizens of these countries should benefit from those resources and that economic growth so that they can shape the future of their own nation and of generations to come who can grow up free from poverty if we act to ensure fairness and transparency and to prevent this wealth from flowing to nameless beneficiaries.
This is not just an issue that exercises people in this place. Tax avoidance has become a hot topic. A ComRes survey last year found that 85% of the public believe that corporate tax avoidance is morally wrong even when legal. Outside Parliament, a collective of international development charities and many of my constituents have called on the UK Government to introduce an anti-tax dodging Bill early in the next Parliament. The charities say that such a Bill could raise an additional £3.6 billion for the Treasury, as well as help developing countries to improve their revenue collection and national income. They say that developing countries currently lose $160 billion a year in potential revenue owing to corporate tax dodging, which is more than the amount given annually in overseas aid by all rich countries. I should like to put on record my thanks to those charities for their work, especially Christian Aid and ActionAid.
Not only does tax dodging remove revenue from developing countries that could help them to create infrastructure and growth, but it takes money from public services and undermines the social contract between citizens and the state. The current Government have not done enough to tackle tax avoidance. The amount of uncollected tax has risen year on year, increasing to £34 billion in 2012-13. I am proud that my party—the Labour party—has committed to tackling tax avoidance in its first Finance Bill if it wins, or rather when it wins, the general election.
The Tax Transparency and International Development Bill seeks, by closing loopholes and imposing penalties, to ensure that multinational companies do not receive unjustified tax breaks, and that our tax rules do not incentivise companies to avoid tax in developing countries. It also seeks to make our tax system more transparent.
While leading the G8 at Lough Erne in 2013, the Prime Minister said that the agenda for the world’s most powerful nations should focus on trade, tax and transparency, and made it clear that that should be to the benefit of developing countries, and yet, reporting to the House in autumn last year following the G20 meeting in Brisbane, he did not mention developing countries once. He mentioned tax avoidance in his statement—he reported that an additional $37 billion had been taken from big companies as a result of steps taken by the G20—but when I asked him how much of that revenue had benefited developing countries, he did not know the answer.
Tackling avoidance is key to tackling global poverty and inequality and it cannot therefore be an afterthought. That is why the Bill is crucial. With that in mind, let me describe the specifics of the Bill. The Government introduced the general anti-abuse rule, which aims to catch those who set up abusive schemes, but there is currently no penalty scheme, so the rule lacks teeth.
The Bill calls for tough penalties to ensure that companies cannot avoid paying their fair share. I welcome the fact that the Government have committed to introducing a diverted profits tax, commonly known as a Google tax, from April 2015, which aims to impose a 25% tax rate on profits that companies have diverted out of the UK. That policy is flawed because it does not apply to loan arrangements, which allow multinationals to give loans to their subsidiaries in higher tax countries, the interest on which is deductible against tax, giving the subsidiaries a tax break while the interest payments end up overseas in a tax haven. Closing that loan loophole for exemptions could mean that by 2017-18 we will raise even more than the £350 million that is estimated in the Budget Red Book.
Similarly, in the 1980s, the controlled foreign companies rules were introduced to deter British companies from shifting profits to tax havens by stipulating that profits could still be taxed at their full UK rate. CFCs not only helped us to maintain our tax base, but they helped other countries, including developing countries, to raise decent taxes. In 2013, the Government altered the rules so that they applied only to profits shifted out of the UK, and not to profits shifted out of other countries. In effect, the coalition gave a green light to avoidance by multinationals based in the UK. In contrast, the Bill would reverse the revisions and strengthen the rules, which the Treasury has said cost UK taxpayers £900 million a year.
The altered controlled foreign companies rules highlight the need for the UK Government to carry out spillover analysis. However, we need to go further by assessing whether there are any adverse consequences on the ability of developing countries to collect tax. The Netherlands and Ireland have already done so. Given that the UK has led on so many aspects of development policy, we should not allow ourselves to lag behind on that.
While the UK Government are beginning to work on strengthening tax systems, we need to ensure that more is done, and that aid is targeted on it. Prosecution is only one deterrent against avoidance; public pressure is another. That is why we need to ensure that we know how money is being raised and spent, and we must push for country-by-country reporting for all multinationals.
Although the G20, OECD and the UK Government support country-by-country reporting—with the Government stating in their Budget Red Book that reporting will bring in £10 million of additional tax by 2018-19—they have not agreed to make the information public. That means that people in developing countries will not be able to access the information. The work of the Public Accounts Committee on corporate tax avoidance illustrates the importance of public engagement with these issues.
In line with the 2013 G8 declaration, which stated:
“Companies should know who really owns them and tax collectors and law enforcers should be able to obtain this information easily”,
the UK has introduced the first register of beneficial ownership in not only the UK, but the world. We should be proud of that, but we need to do more to make sure that the overseas territories and Crown dependencies have public registers, too. To date, none of those countries has committed to a public register.
Following the Prime Minister’s statement to the House on the G7 meeting in Brussels last June, I asked him what progress had been made. He replied that
“we should commend them for the work that they have done to bring their arrangements up to date. I had this conversation with them almost exactly this time...They have made huge steps forward, and we should commend them for that and encourage them to go further.”—[Official Report, 11 June 2014; Vol. 582, c. 555.]
However, that is simply not the case. When I raised the issue with the Business Secretary, he confirmed that we have not used our influence effectively.
We must continue to push this issue, and that is why it is central to this Bill. Despite the Government’s warm words, four of the overseas territories and Crown dependencies have so far ruled out a public register and none has committed to one. We must do more to deliver on the Lough Erne leaders’ communiqué signed off by our Prime Minister.
This Bill will ensure that multinational companies do not receive unjustified tax breaks, by closing loopholes and imposing penalties. It will give a fairer deal, do more to tackle poverty and give transparency to our tax system. The developing countries of this world deserve no less. I commend this Bill to the House.
Question put and agreed to.
Ordered,
That Fiona O’Donnell, Dame Anne McGuire, Anas Sarwar, Steve Rotheram, Ann McKechin, Jeremy Lefroy, Sheila Gilmore, Valerie Vaz and Fabian Hamilton present the Bill.
Fiona O’Donnell accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 27 March, and to be printed (Bill 196).
Development on Greenbelt Land in Edinburgh
Ian Murray (Edinburgh South) (Lab)
I wish to present a petition on development on green-belt land in Edinburgh.
The petition states:
The Petition of residents of the UK,
Declares that the Local Development Plan 2015–2020 has proposed a number of sites on the south side of Edinburgh for development; further that local residents want the sites at Broomhills, Old Station Road, Burdiehouse, The Drum, Ellen’s Glen and Moredun to be exempt from the new plan; further that local residents, community groups and the local community councils—
especially the Gilmerton Inch community council and the Liberton and District community council—
are concerned by the likely impact on local amenities if these plans are approved; further that the Petitioners call for the plan to be scrapped and a proper process to be put in place to determine the future development of the city which works in conjunction with local communities and not against them; and further that a local petition on this matter was signed by 130 individuals.
It was also signed by the Liberton and District community council and the Gilmerton Inch community council.
The Petitioners therefore request that the House of Commons urges the Secretary of State for Scotland to encourage the Scottish Government to remove the sites on the south side of Edinburgh (Broomhills, Old Station Road, Burdiehouse, The Drum, Ellen’s Glen and Moredun) from the Local Development Plan’s proposals for development and to put a process in place to determine future development of Edinburgh which works in conjunction with local communities.
And the Petitioners remain, etc.
[P001488]
Rehman Chishti (Gillingham and Rainham) (Con)
On a point of order, Madam Deputy Speaker. I had intended to present a petition to the House tomorrow in relation to my constituents wanting three ships—HMS Cressy, HMS Hogue and HMS Aboukir—to be protected under the Protection of Military Remains Act 1986. However, I have been advised that as tomorrow is the last sitting day, there will be no Adjournment debate, and on that basis no Member can present a petition to the House. Can you advise me? If I bag the petition today will it still be regarded as having been formally presented to the House?
Madam Deputy Speaker (Mrs Eleanor Laing)
The hon. Gentleman asks a good question, and he has done well in drawing to the attention of the House, Members on the Treasury Bench and undoubtedly the relevant Minister the point that he quite rightly wishes to make on behalf of his constituents. I can assure him that if he produces the petition today, it may go in the bag, and it will be treated as a presented petition. The House has heard what he has had to say.
Finance (No. 2) Bill
(9 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Financial Secretary to the Treasury (Mr David Gauke)
I beg to move, That the Bill be now read a Second time.
Finance Bill 2015 takes another step forward in this Government’s long-term economic plan. As my right hon. Friend the Chancellor set out in last Wednesday’s Budget statement, we have grown faster than any other major advanced economy in the world; more people have jobs in Britain than ever before; and the standard of living is rising and set to rise further. We are cleaning up the economic mess we inherited in 2010 and delivering a fairer economy for all.
This Bill will build on that success. It will help British businesses to invest and create jobs, help British households to work and save, and help ensure everyone in Britain pays their fair share of tax.
Mr Andrew Love (Edmonton) (Lab/Co-op)
That will also have the effect of increasing complexity in the taxation system. Whatever happened to the tax simplification project?
Mr Gauke
We have established the Office of Tax Simplification and put in place a large number of its recommendations. I could spend some time talking Members through some of them. It is also worth pointing out that just last week the Chancellor of the Exchequer announced plans to take very large numbers of people out of having to pay income tax on their savings, reducing the need for them to be in the self-assessment system. Indeed, we have set out longer-term plans to simplify the operation of the tax system through a more digitised system with online tax accounts, which will make a substantial difference to many people. I should also point out that from April of this year we will have one rate of corporation tax, which means that we no longer need a marginal rate with some 50,000 businesses having to calculate what to pay in a more complicated way. The Government have taken a number of steps on tax simplification.
We are committed to all the tax measures that the Chancellor set out last Wednesday, but appreciating the constraints on the timetable we have deliberately held a number of measures back and published a shorter Bill than would otherwise have been the case. Unlike under previous Governments, legislation for Finance Bills since 2011 has been published in draft three months ahead of the final publication of the Bill. Under this new approach, we published more than 250 pages of draft legislation in December for technical consultation, again meeting our commitment to expose legislation in draft.
We are proceeding today on the basis of consent. The Opposition required us to remove five clauses from the Bill following discussions last week. The clauses concern a new tax exemption for the travel expenses of members of local authorities; a new statutory exemption from income tax for trivial benefits in kind, implementing a recommendation of the Office of Tax Simplification’s review of employee benefits and expenses; simplifying link company requirements for consortium claims under corporation tax; a separate rate of excise duty for aqua methanol; and changes to scheme rules for the enterprise investment scheme and venture capital trusts. The Government would look to legislate on all five of those clauses at the earliest opportunity at the start of the new Parliament.
I will happily take further interventions this afternoon, but let me first set out the order in which I intend to discuss the measures in the Bill. I will begin by talking about those that will boost growth and enterprise. Next, I will cover those that tackle avoidance and aggressive tax planning and then I will cover those that help families and savers do more with the money they earn. Finally, I will talk about how the Bill, like previous Finance Acts in this Parliament, will help to deliver a simpler tax system.
Let me begin with the measures designed to boost growth and encourage enterprise. Hon. Members will be aware that our long-term economic plan is working and confidence is returning to businesses and our markets, but that growth would not have been possible without the hard work of businesses up and down the country. During our five years in office, we have created the right environment to help businesses start, grow and succeed. When we came to office, Britain had one of the least competitive business tax regimes in Europe. Now it is the most competitive. Next week, corporation tax will be cut to 20%, one of the lowest rates of any major economy in the world. By 2016, that will mean £9.5 billion savings for businesses across the UK every year. That is why more and more businesses are moving operations here, starting up here or growing here.
The Bill will also bolster support for research and development and the creative sector. We are increasing the research and development tax credit for small and medium-sized enterprises from 225% to 230%, increasing the rate of film tax relief to 25% for all expenditure and introducing a new children’s television tax relief. I am sure those are industries that Members on both sides of the House will support.
The Government will not sit back and let hundreds of thousands of jobs be put at risk thanks to falling oil prices. The Bill recognises the importance of the future of the North sea oil and gas industry, our largest industrial sector. With effect from the start of next month, the Bill introduces a single, simple and generous tax allowance to stimulate investment at all stages of the industry, giving investors early certainty for their long-term investment decisions. We are also cutting petroleum revenue tax from 50% to 35% to encourage continued production in older fields. Backdated to the beginning of January this year, as announced by my right hon. Friend the Chancellor last week, the Bill also cuts the supplementary charge from 32% to 20%.
Alok Sharma (Reading West) (Con)
My hon. Friend talks about the policies that are being put in place by the Government to help businesses. Does he share my view that the freezing of fuel duty has helped not just businesses but individuals, and will he tell us how much of a saving businesses and individuals make every time they fill up their vehicle?
Mr Gauke
My hon. Friend is absolutely right. Very often, the debate in this House is about the impact on individuals of the freeze on fuel duty, which has considerably reduced how much fuel costs. As a consequence of our measures, £10 is saved per tank full of petrol. He is also right to mention the impact on businesses, because many of them, particularly smaller ones, pay this tax. We can sometimes forget that in that debate. Fuel duty is now 16p per litre lower than it would have been under the previous Government’s plans.
Let me return to the provisions on oil and gas. The new cluster area allowance will support the development of one of the biggest fields in the UK continental shelf, which is expected to generate about 3,500 jobs and more than £3 billion in capital investment. As hon. Members can see, the Bill tackles some of the challenges facing our business community and our economy.
Now that I have set out such competitive tax rates, designed specifically to support our businesses, let me say that we expect those taxes to be paid. The Bill continues the Government’s firm action against the small minority who seek out unacceptable ways to reduce or delay paying the taxes they owe. Under the Bill, we will legislate to create a fairer tax system by clamping down on tax avoidance and ensuring that banks contribute their fair share. Taking effect from the start of next month, the Bill will introduce a new diverted profits tax of 25%, aimed at large multinationals that artificially shift their profits offshore to avoid paying UK tax. As part of the project, I can confirm that we are working with five other tax authorities to investigate and challenge how digital multinationals shift their profits to tax havens. For the first time, we are gathering a full global picture of the tax risks those companies pose that is invaluable in helping us take decisive action.
The Bill will also increase the bank levy to 0.21% and introduce new rules for banks on carried forward losses, to ensure that banking companies can use them only to relieve up to 50% of company profits. Combined, those measures will raise nearly £8 billion over the next five years. We have always been clear that banks should make an additional contribution that reflects the risks they pose to the UK economy, and now that banks are strengthening their balance sheets and returning to profitability, they should make a greater contribution to the economic recovery.
Ian Swales (Redcar) (LD)
I welcome the increase in the bank levy. Does the Minister agree that it is extremely difficult for a bank to avoid the levy, whereas the tax on bonuses, for example, would be very easy to avoid?
Mr Gauke
My hon. Friend makes a very good point. Indeed, that is why the previous Chancellor of the Exchequer, the right hon. Member for Edinburgh South West (Mr Darling), made it clear that the bank bonus levy could only really be effective for one year. It is important that we have something sustainable that can exist for much longer.
Alok Sharma
My hon. Friend is being generous in giving way. I welcome the diverted profits tax and I think that my constituents will very much welcome that measure. Will he confirm that it comes on top of all the work the Government are leading at the OECD and that, in September or later this year, we will therefore see further rules coming in to clamp down on base erosion?
Mr Gauke
My hon. Friend again makes a very good point. This Government have led the way in the establishment of the OECD’s base erosion and profit shifting project. We are already implementing some of its conclusions, including in this Bill, but there is more work to be done. The diverted profits tax is consistent with the direction that we want the BEPS project to go in, which is to align economic activity more closely with taxing rights. That is the direction in which the international tax system needs to move, and the diverted profits tax is consistent with that approach.
The Bill legislates for corporation tax loss refresh prevention, which will stop companies obtaining a tax advantage by entering highly contrived arrangements to turn old tax losses into new, more versatile losses. We will close loopholes to make sure that entrepreneurs relief is available only to those selling genuine stakes in businesses. We are strengthening civil sanctions targeting individuals with hidden income, gains or assets overseas to ensure that taxpayers who do not pay their fair share are penalised. We are tackling avoidance by large businesses and wealthy individuals, and we are tackling tax evaders.
Alok Sharma
My hon. Friend is talking about fairness in the tax system, which we all want. Will he confirm that under this Government the top 1% of taxpayers will pay more in tax than they ever did under the previous Government?
Mr Gauke
My hon. Friend makes another excellent point. This year, the proportion of income tax paid by the highest earning 1% will be above 27%, higher than for any year under the previous Government. I dare say that we will debate that in a little more detail later this afternoon. On this Government’s record in ensuring that those with the broadest shoulders make the biggest contribution, the facts are very clear: they are doing so under us. A whole host of measures that we have taken, not least in areas of tax avoidance, have ensured that we are getting in that money.
Charlie Elphicke (Dover) (Con)
My hon. Friend is making a powerful case on the work that the Government have done to tackle tax avoidance. What is being done to throw the book at the promoters of tax avoidance schemes and people who continually try their luck by entering such schemes?
Mr Gauke
My hon. Friend—given his background, he is an expert in tax matters—has been a consistently strong advocate of taking tough action in this area. I can certainly reassure him that one of our very important strands of work has been to take on the promoters of tax avoidance schemes. Indeed, we are bringing in measures to place greater burdens on them to disclose the position they are in, as well as greater surveillance and supervision of them. During this Parliament, we have seen a dramatic fall in the number of tax avoidance schemes being promoted, which is very good news. There has been a real change in the climate, driven not least by the action that the Government have taken. I believe that we have a very proud record in dealing with tax avoidance and the causes of tax avoidance.
Mr Love
I thank the hon. Gentleman for being so generous with his time. The Chancellor has indicated that, if he is returned to government, he will look for £5 billion of savings from evasion and avoidance; yet in its Budget report, the Office for Budget Responsibility could find only just over £3 billion of savings among the Chancellor’s provisions, which leaves a gap. Will the Financial Secretary explain to the House how he intends to fill that gap during the next Parliament?
Mr Gauke
Given this Government’s record on the measures introduced in Finance Act after Finance Act, the support provided to Her Majesty’s Revenue and Customs in additional powers and resources for this area and the fact that yield has increased very substantially during this Parliament—from £17 billion in 2010 to £26 billion now—we are confident that further savings can be found. Through a combination of measures dealing with tax evasion, tax avoidance and aggressive tax planning, we believe that £5 billion can be found.
I now turn to how the Bill will help hard-working families. This Government have a proud record of reducing tax for the lowest-paid. Not only will the Bill deliver our commitment to raise the income tax personal allowance to £10,600 from the start of the new tax year, but it will legislate to raise it to £10,800 in 2016-17 and to £11,000 in 2017-18. By 2017, a standard rate taxpayer will be £900 better off than under the previous Government’s plans and an individual on the national minimum wage working up to 30 hours a week will not pay any income tax whatsoever. That is a tax cut for 27 million people, and it means that this Government have taken almost 4 million of the lowest-paid out of income tax altogether.
We are passing on the full gains of that policy, so for the first time in seven years, the threshold at which people pay the higher tax rate will rise not just in line with inflation, but above inflation. It will rise from £42,385 this year to £43,300 by 2017-18. Under the Bill, the rate of the new transferable tax allowance for married couples will rise to £1,100, providing help for more than 4 million couples. We are legislating to exempt children from air passenger duty so that, together with measures introduced in the Finance Act 2014, a family of four flying to Australia will now save £194. The Government have made clear their commitment to support households in the UK and to put more of their hard-earned money back in their pockets, where it belongs.
Finally and briefly, I turn to tax simplification, which was touched on earlier. Under this Government’s new approach to tax policy making, we published more than 250 pages of draft legislation in December for technical consultation. As such, the majority of measures contained in the Bill have been drawn up following lengthy consultation with interest groups and businesses. The Bill continues to build on the excellent work of Michael Jack and John Whiting at the Office of Tax Simplification, and it includes a package of measures that will help to simplify tax administration for businesses in several ways.
Mr Love
According to the Financial Times this morning, the Bill will add significantly to the complexity to the tax code. The number of pages in Tolley’s is going up and up. We are told that we now have the longest tax code in the world, having overtaken India some years ago, but the Financial Secretary is presenting this as if it were a simplification. This is contrary to the entire thrust of public debate on these issues. When will we get some tax simplification?
Mr Gauke
The hon. Gentleman may be interested to hear, or he may already be aware, that the Office of Tax Simplification has looked at what constitutes complexity within the tax system. One conclusion that it reached was that the number of pages in the tax code is not a particularly good barometer of complexity. For example, the rewriting of the tax code that occurred over many years lengthened it, but the intention was to make it simpler to understand.
I would make this challenge to the hon. Gentleman: which elements of the Bill would he not want? For example, there are 40 or so pages on oil and gas tax reform, which I believe all parties recognise is a necessary response to the current circumstances, but that will lengthen the tax code. A number of pages are being added to the tax code because of the diverted profits tax, but all parties recognise the need for such a tax to deal with artificially contrived arrangements. I appreciate his point and the spirit in which he makes it and I share the desire for greater tax simplification, but there are some challenges in that for a Government who also want to deal with avoidance and ensure that we have a competitive tax system for the oil and gas sector.
Nigel Mills (Amber Valley) (Con)
I do not wish to revisit old debates about simplification, but does my hon. Friend have a view about the future strategy on anti-abuse rules? I believe that when Graham Aaronson examined the general anti-abuse rule, he thought that after about five years we would be able to start to do away with individual anti-avoidance rules and rely on the GAAR. We could therefore remove some of the more complicated provisions and the loopholes that go with them. Does my hon. Friend think that could work, or does he think it should be ruled out and that we must have both the general and specific rules?
Mr Gauke
My hon. Friend does not want to revisit old debates, but I tempted to give a response that I suspect I have given him before. The general anti-abuse rule is a big step forward, and it was absolutely right that this Government introduced it. Other Governments had considered it but felt that it was not the right thing to do. However, it is there to complement the existing measures, and we will want to see how the GAAR works over time rather than rush to judgment. I do not believe that a future Conservative Government would want to risk opening up new loopholes because of uncertainty about exactly how the GAAR applies. It is of course an anti-abuse rule and sets a reasonably high bar for behaviour covered by it, and I suspect my hon. Friend agrees that that is right because of its broad nature. We will have to wait and see before I make any commitment to repealing various targeted anti-avoidance rules.
Charlie Elphicke
My hon. Friend is being extremely generous in giving way. May I turn to the provisions on oil taxation and the revenues from oil, given what has happened to the oil price? Does he have any idea of how big a black hole would be driven into the finances of an independent Scotland were there to be another referendum campaign fought by the losers from last time?
Mr Gauke
My hon. Friend is absolutely right. I believe that oil revenues are something like a 10th of what the Scottish National party predicted, but I will happily stand corrected if I am wrong. The fact is that a united kingdom is better able to absorb volatility in the oil price than an independent Scotland would ever be. Given what has happened to the oil price, it is clearly to the benefit of Scotland that those calling for independence were roundly defeated last year.
Ian Swales
I thank the Financial Secretary. I am sure that he would accept, having looked at the business case for the changes in oil taxation, that the economic effects of the oil industry are much wider than simply the winning of oil. In particular, the engineering and manufacturing industries in the north-east of England are pleased by the moves that have been made.
Mr Gauke
My hon. Friend makes a good point. Particularly in the north-east of England, a number of businesses are ancillary to the oil industry, so I am grateful for his remarks.
The Bill takes further steps to deliver long-term, sustainable economic growth. It puts in place a more competitive environment for business, takes more people out of income tax, continues our reforms of the tax system and supports the continued success of our industries. I commend it to the House.
Chris Leslie (Nottingham East) (Lab/Co-op)
It is a strange moment in the life of this five-year Parliament to be here debating the coalition’s last Finance Bill. Obviously I have great disagreements with the Financial Secretary and his colleagues in the Treasury team, but I want to extend a little hand of friendship across the Chamber. I know that this can be a difficult, even frenzied time, trying to draft legislation straight after a Budget and get things together at the last minute. However, we all aspire to be good parliamentarians, and it is incumbent on us to do our duty to scrutinise the Bill’s provisions properly and ensure that they are considered fully.
We are in the dying hours of this Parliament, but the Bill’s provisions—as my hon. Friend the Member for Edmonton (Mr Love) said, they will add to the tax code—are significant and will have a real impact on the economy and on many people’s tax and financial affairs. Ensuring that the Bill has proper scrutiny is therefore incredibly important. If we are honest, we have limped along in what has felt like a zombie Parliament in the past year in particular, with little going on. I am therefore a little surprised that there is a burst of energy all of a sudden, given that many of the Bill’s provisions could have been discussed, published and thought through at a more civilised pace. It is almost as though the Financial Secretary were doing one of those cycle races in a velodrome where it is all very slow until the last minute. There seems to be a bit of a panic in the Treasury.
The Bill contains 131 clauses of complex tax changes, affecting the energy generating sector, tax avoidance, pensioners and businesses, but we have been given only six hours to cover all of it. I accept that we have little choice about that because of how the Fixed-term Parliaments Act 2011 works—in the fifth and final year of the Parliament we can see that Parliament will prorogue at a given point. Nevertheless, I want to put on record our disappointment that we have not found a better way of improving the scrutiny of this year’s Finance Bill. Normally we would have a Public Bill Committee, in which we could spend fun-packed hours going through every provision. Sometimes I feel that such Committees go all too quickly.
Chris Leslie
I will; perhaps the Minister can say how we will compress that process into six hours.
Mr Gauke
I share the hon. Gentleman’s sense of loss that there is not the usual Committee stage upstairs this year. To be clear, it is necessary to pass a Finance Bill after Budget resolutions have been passed, and there is clearly a short period between those resolutions being passed and Prorogation. I am sure he recognises that there were discussions last week in the usual manner, and that clauses that the Opposition believed should be debated and dealt with in the next Parliament have been withdrawn. The clauses that remain are those that the Labour party accepted should be dealt with in the Bill.
Chris Leslie
I do accept that, and it is good that we have had discussions through the usual channels, treating the Finance Bill this year more in what is known as the “wash-up” procedure rather than our normal less-constrained procedures. Nevertheless, I think we should pause and dwell on the fact that in a fixed-term Parliament the date of the final Budget may have consequences downstream for the legislation that is spat out at the other end. Perhaps we should consider allowing a little more time between the final Budget and the end of the Parliament—obviously a Labour Government will be in power for the next five years, so this may be quoted back at me in five years’ time—so that we have a more considered approach.
Charlie Elphicke
Is it a Labour party manifesto commitment to have an early Budget in the last year of a Labour Government in a fixed-term Parliament scenario?
Chris Leslie
The hon. Gentleman must wait for our manifesto in which we shall reveal all those details.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
Is my hon. Friend as concerned as I am that there is so little distributional analysis in the Finance Bill, given the past five years in which the poorest in society fared the worst and our concerns about an increase in VAT looming in the not-too-distant future if the Government get back in?
Chris Leslie
My hon. Friend’s point about distributional analysis is a good one. We know that those on lower and middle incomes have been hit particularly hard: people on the lowest incomes do not benefit from many of the changes that the Government have made, and we must consider what data we need.
My point about parliamentary procedure is not just about the political dates of Budgets and so forth; it is also about the time that officials and civil servants have to draft some of the provisions and proposals. I do not understand why it has to be so last minute and by the seat of their pants. It is one thing to exclude one’s political opponents from the reveal moment of the Budget, but surely it would be good to ensure that proper internal arrangement are in place in the Treasury for drafting these arrangements.
The Institute of Chartered Accountants in England and Wales has its concerns:
“we do not think that Parliamentary consideration amounting to only one day is in any way sufficient to consider and pass another significant Finance Bill that runs to 349 pages and contains a considerable amount of controversial legislation.”
An article in today’s Financial Times quoted Heather Self of the law firm Pinsent Masons. She said that the decision to rush through the Finance Bill was
“an abrogation of the parliamentary process…Legislation this complicated should not be going through without parliamentary scrutiny”.
My hon. Friend the Member for Edmonton was right when he talked about Tolley tax handbooks—I know his walls are adorned with the tax code in fine, leather-bound tomes. He will know that when the coalition came to office, there were 17,795 pages in that tax handbook, but by the end of this Parliament that has risen to 21,414 pages. The Minister says that is not a good barometer. I suppose it is good for publishers and perhaps makes my hon. Friend’s library a little more expansive and extensive, but I suspect it makes things more difficult for people to understand and follow. I think that our constituents deserve better and want proper scrutiny of the Finance Bill, and we will try our best to do that. The House should bear in mind the fact that the Bill appeared in the Vote Office yesterday, so it is difficult even for my diligent hon. Friends properly to absorb and assimilate all the provisions and to do justice to the Bill. Nevertheless we will give it a go and try our level best.
Ultimately, the Finance Bill could not disguise the coalition’s failures of the past five years. There is a slow recovery, but it is not being felt far and wide. By the standards and tests that the Government set when they came to office and made their promises in 2010, the Conservatives and Liberal Democrats have failed, particularly on the public finances. They have failed to eliminate the deficit, which should have gone by now. In fact, in the autumn statement 2010 the Chancellor trumpeted that he would bring forward to 2014-15 the year by which the current structural deficit would be eradicated, yet we find ourselves with a £90 billion current budget deficit, which fell by only 5% on the previous year—not exactly the rate we were promised.
There are many other structural issues in the economy. I do not know whether my hon. Friends remember the Chancellor’s promise about the march of the makers, but I am afraid that this country’s exports have not lived up to the £1 trillion target set for 2020; we are already a mere £300 billion off course in achieving that. Before the last election the Chancellor set the litmus test of cherishing our triple A rating, but of course that was downgraded.
One thing in the Finance Bill that supports the Government’s fiscal strategy was the revelation of how extreme the cuts will be to public services over the next three years—twice as deep over the next three years as we have seen for the past five years. In the words of the Office for Budget Responsibility, the “rollercoaster” is about to go over the precipice, and public finances, social care, the police, defence and many other public services will be pushed over the edge of that cliff should the coalition parties Government have a further five years in office.
It is no wonder that when people look at the impact of deep and extreme cuts to what Government Ministers term “non-protected Departments”, and see how deep they will be, they say, “Well that isn’t going to happen; it’s impossible to countenance that they would end up taking 30%, 40% or 50% from some of those Departments.” It is no wonder that people then believe there must be another plan, either for raising taxes or for cutting other services that some assume ought to be protected, in particular the national health service.
We had the debate on VAT, but I find it difficult to take the Prime Minister’s words seriously. These days, he has a habit of shooting from the hip—about whether he is retiring or what his views are for the day—so I am not sure that people will necessarily say, “Oh well, the Prime Minister said he’s not going to do it. That’s that then.” That is sort of what he said before the last general election about having absolutely no plans to raise VAT, but it was only a matter of weeks before he got round to doing it.
Geraint Davies (Swansea West) (Lab/Co-op)
My hon. Friend will know that the number of people earning more than £20,000 has fallen by 800,000 since 2010, and the slack has been taken up by more and more people on low pay and zero-hours contracts. Does he accept that we are facing these draconian cuts because the Government are overseeing a completely unsustainable business model and creating more and more low-paid people who cannot pay any tax? The revenues are not coming in, which is why they have borrowed more in five years than Labour did in 13.
Chris Leslie
As ever, my hon. Friend manages to sum up the Government’s record in a pithy and simple intervention. I had not heard those statistics about the number of people earning more than £20,000, but I shall certainly take a look at the points he makes. We shall perhaps look at those statistics in more detail.
My hon. Friend’s point about living standards is a good one that all Members should intuitively and properly understand. If we do not include everybody in the growth of the economy, if everybody does not have a stake or a share in it, if their consumer capabilities are not stronger, and if we do not tackle the sustainability challenge for growth in the future, we should not be surprised to find that we have an unequal recovery. Britain will only succeed if working people succeed. That is a catchy way of summing that up, and Government Members may well hear it a few more times in the coming weeks, but it is true.
Ultimately, our public finances are not determined in isolation, as though they are frozen in aspic. They cannot simply be dealt with in terms of cuts or changes in revenue: there is a dynamic, strategic set of issues that relate to what is happening in the real economy and the real world. The health of our economy will ultimately determine the health of our public finances. The Prime Minister and others say, “Why are you talking about living standards? Why are you talking about these things? That is not really the economy; it’s not about growth.” Of course it is. Ultimately, these things are related.
The low-wage economy the Chancellor has been heading us towards is a danger to our public finances. We are enduring an epidemic of job insecurity. The number of zero-hours contracts has ballooned by more than 20% in the past year alone. That is a problem for those who cannot plan even for the child care they need for the week ahead, let alone for getting a mortgage. It is also bad because it undermines the tax receipts the Treasury needs to sustain and pay for public services. It means that tax credits need to be higher to subsidise low pay and it is why the social security bill is £25 billion higher than the Chancellor expected.
Those living standards issues come up time and again in surgeries, meetings and encounters that my hon. Friends have with our constituents. Some 900,000 people are using food banks, and some 600,000 people have been hit by the cruelty of the bedroom tax. These issues will come back to haunt Ministers. They have attempted to deal with the deficit by hurting those on the lowest incomes. It has not worked; it has not succeeded; and it is a strategy that will just get worse in the coming years.
Thomas Docherty (Dunfermline and West Fife) (Lab)
I was at a Budget briefing in Dunfermline given by a local accountancy firm, Thomson Cooper, on Friday. It was pointed out that those earning more than £150,000 a year under this Government actually have a lower marginal tax rate than those earning £100,000 a year. Does my hon. Friend think that that is a really good example of how the Government have got their numbers completely wrong? Those who can afford to pay the most are in fact paying far less.
Chris Leslie
It is in the very first clause of the Bill: it seems that the Government’s proudest achievement is to cut the highest rate of income tax for those earning £150,000. They want the rate to be 45p instead of 50p. That has been their priority. They regard that as something that the country has been crying out for and that will make a big difference to the economy. I suppose if one views the economy through a trickle-down prism and believes that tax cuts lavished on the very wealthiest in society will percolate down and everybody else will benefit as a result—
Chris Leslie
Well, maybe that is the logic of the Liberal Democrats in supporting these particular measures. I will give way to the hon. Gentleman, but he has to admit that it was an error to ensure that those earning more than £150,000 received a tax cut. Anyone earning £1 million this year will have benefited to the tune of £42,000 in tax cuts. He does have regrets about that, doesn’t he?
Ian Swales
Will the hon. Gentleman explain why the Government he was a part of put up 100 taxes in 13 years, but rejected putting up the higher rate of income tax for the entire period until the day they left office? It was 40% then—those same millionaires were that much better off under his Government.
Chris Leslie
That sounds as though the hon. Gentleman was in favour of the 50p rate and regrets that it was not implemented earlier. That is the usual argument: why did the previous Government only put it up towards the end of the Parliament? The global banking crisis hit in 2008, when we were already a long way through that Parliament. [Interruption.] The hon. Gentleman seems to be a banking crisis denier. He seems to think that it had nothing to do with the fiscal situation. He must admit in his heart of hearts that the banking crisis created great pressures on our public finances. It reduced a number of revenues and caused the deficit we have had to tackle. As a consequence, the tax changes that followed the banking crisis were bound to come in 2009, and that was the period in which we chose to introduce the 50p top rate. He should not be surprised that it came in towards the end of that Parliament, because the banking crisis and all the ripples that flowed from it also happened at the end of the Parliament. Let us nail that one for a start.
The cut in the rate of income tax was the wrong thing for the hon. Gentleman and the Conservative party to have prioritised. I think many people in our country regard it as a real obscenity. It is a perverse set of priorities and we would reverse them because the public finances need the extra support. The public finances need those with the broadest shoulders to contribute a fairer share.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
My hon. Friend will know the excellent work of the Union of Shop, Distributive and Allied Workers in raising the profile of issues affecting workers in the retail sector, who are sometimes at the sharp end when it comes to serving the public. They do a very important job. I recently met members from across the north-east who raised exactly the points he is making about insecurity at work and the need to tackle zero-hours contracts. This is a major area of concern, and retail workers in particular feel that the Government are failing to act.
Chris Leslie
The retail sector is edging towards greater and greater insecurity, as companies feel that the only way to make that extra margin is by eroding standards of contract security for many of their work force. In that context, I have to reiterate the position of those of us on the Opposition Benches: someone who works regular hours deserves a regular contract. That is why we intend to abolish exploitative zero-hours contracts.
Fiona O’Donnell (East Lothian) (Lab)
Following on from the previous intervention, in Scotland we are seeing an abuse of apprenticeship payments to young people in the retail sector. There are a lot skills involved in working in retail, but to call three months working in a shop an apprenticeship undervalues them. That does, however, help the Scottish National party to massage the figures.
Chris Leslie
My hon. Friend should bear that in mind when we hear Ministers trumpeting their apprenticeship numbers in aggregate, because there is always a story behind them. We need genuine apprenticeships to help the next generation obtain skills and career assistance, rather than what has been happening: the re-badging of many apprenticeship programmes, existing training courses and other arrangements that have been rebranded to allow tax support for applications for apprenticeships.
The Bill is not just divisive and unfair but a missed opportunity. There are several omissions. It is not just that the Chancellor could barely drag from his lips those three little letters, NHS, which I think got one mention in the Budget—Agincourt got twice as many. We should have had action to help the next generation, for example by reducing tuition fees to tackle the burden of debt facing students. Students graduate typically with £44,000 of debt, which is a burden not just on those individuals but on the national finances. Government Members should be very scared by some of the projections. Owing to their inability to collect tuition fees from some students, barely half of all tuition fees will be collected, which is adding to the national debt in the hundreds of billions of pounds. That needs to be tackled.
Chris Leslie
We are delighted that the Government took a shine to our proposals for pension tax relief changes—I suppose that imitation is the best form of flattery. We will stick with our policy to reduce tuition fees to £6,000, and we will set out in our manifesto, in a matter of days and weeks, how it will be funded. Still at this late hour, the full costings in our manifesto are available for the Office for Budget Responsibility to audit and verify—if only the Minister had shaken my hand on that. I offered him the hand of friendship—was it on the “Daily Politics” the other day?—but sadly he could not do it. It is important that we have fully costed and funded manifestos and that all parties engage in the process. We will look closely at the Conservative party manifesto. The Conservatives have made some grand promises about tax which will cost at least £10 billion to implement, even in the final year of the next Parliament, yet we have not seen a dicky-bird—even in the Budget figures—on how they will be paid for. I am looking forward to reading that chapter in its manifesto.
Geraint Davies
I mentioned that low productivity was driving down wages. Is not the point of tuition fees policy to increase the number of qualified people, productivity and national wealth, to end the deterrence on going to university, to stop people having credit ratings that prevent them from buying houses and to stop them not wanting a pay increase in case they have to pay back more of their fees? Surely this makes economic sense, while the Conservative party’s unsustainable economics of low pay and austerity is sending us into bankruptcy.
Chris Leslie
My hon. Friend knows that the change from £9,000 to £6,000 would make an appreciable difference. Of course, it is still a significant fee, but we will only ever make promises we know can be kept and that are fully funded. I would love to do more on many other tax issues, but given the state in which the Chancellor will be leaving the public finances in only a matter of weeks, we must show students that we understand the burden of debt on them and the nation. The Government never appreciated that so many students would never be able to pay back their debts and that the bill would have to be picked up by the taxpayer sooner or later.
As well as measures on tuition fees, the Bill should have contained a proper bank bonus tax for the starter jobs that many young people who are having trouble finding employment need.
Jake Berry (Rossendale and Darwen) (Con)
Will the hon. Gentleman clarify his statement about the Government not realising how many people could not pay back their tuition fees loan? If tuition fees were reduced to £6,000, under his party’s policy, at what salary would people start to pay that back?
Chris Leslie
The arrangements for the rate of payback were set out in the policy documents we published, but the hon. Gentleman should know that on current projections, by 2030, which is only 15 years away, £281 billion is expected to be added to the national debt now that we have reached the proportion of 49% of people who are incapable of paying back their tuition fees. It might have been a miscalculation by the Department for Business, Innovation and Skills, so perhaps he could blame the Liberal Democrat Business Secretary—that might be the function the Liberal Democrats fulfil—but whether it was the Business Secretary’s miscalculation or the Treasury’s miscalculation, I would urge hon. Members just to take a look at the projections.
Chris Leslie
I want to make some progress—I have several pages still to get through and I want other Members to contribute.
The Bill should have contained a bank bonus tax for starter jobs and measures to scrap the bedroom tax. Given today’s timetable, however, I must move rapidly to some specific issues in the Bill and ask the Minister some questions. It is not just that we have general objections to the 45p higher rate of tax for earnings over £150,000; we have anxieties about the plans for a married couples allowance that will benefit only one third of married couples and only one sixth of families with children, and although the increases in the personal allowance are a concession, rather than leap straight to a 20p basic rate, it would be better to start with a 10p rate, as a fairer and more effective way to ease people on lower incomes into income tax.
Mike Kane (Wythenshawe and Sale East) (Lab)
My hon. Friend makes an important case about the bedroom tax. The average cost of the bedroom tax is £700 per annum, and across Greater Manchester, 28,000 people have been affected. In my constituency alone, 3,038 families—the highest figure in the land—suffer from it, whereas in Witney in Oxfordshire, 300 families suffer from it. This has been of huge detriment to northern regions—across the country but mainly northern regions. Government Members have no understanding of its impact on our constituents.
Chris Leslie
This is always the dilemma. Do Government Members not understand—is it just a question of ignorance?—or have they just turned a blind eye? My hon. Friend has been a diligent campaigner against the bedroom tax and has managed to articulate very successfully the harm and difficulties that people have encountered, particularly those with disabilities who need the extra space in the house. Again, that should have been covered in the Bill.
Chris Leslie
Many studies suggest that it costs more than has been raised. Of course, the Government knew how unpopular the bedroom tax would be and came up with their “discretionary fund” to allow local authorities to ameliorate the impact, but it has not been enough and has certainly not been extended to many people who need it. My hon. Friend the Member for Wythenshawe and Sale East (Mike Kane) will also note that there has been no guarantee that the fund will continue into future years. The Government are hoping that this will go away and that nobody will notice, but our constituents will notice.
Chris Leslie
My hon. Friend feels strongly about this, so I will give way one more time.
Mike Kane
I do feel strongly about it. I can cite, with his approval, the case of Mr Gunning from my constituency, which has five wards in Labour Manchester and three in Tory Trafford. He lives in Tory Trafford and was not given the discretionary payment. If he had lived in Labour Manchester, he would have got the discretionary payment, although by now it would have come to an end.
Chris Leslie
That is interesting. This sort of postcode lottery has afflicted many people, so my hon. Friend makes an important point. I now want to move on.
This Finance Bill contains a series of measures relating to vehicles and emissions. On clauses 7 to 9, will the Minister take some time in his response to explain the direction of travel—if he will pardon the pun—in the differential for different types of vehicle and different years of what is charged for ultra-low emission vehicles? Our reading is that there is a differential of 4% for the financial year 2017-18 and then 3% for 2018-19. If there is an explanation for that, I am not clear what it would be. We would be grateful if the Minister could seek some inspiration over the next hour or so and help us out with that. Similarly, why are the Government using the Bill to remove the incentive for companies to provide zero-emission vans over the next Parliament? Again, I cannot understand the logic behind the provisions as it appears in the explanatory notes, so it would aid the process of debate if the Minister could clarify it for us.
In clauses 13 and 14, the Government are legislating to protect two particular groups, carers and ministers of religion, who may suffer as a result of the Bill’s abolition of the £8,500 exemption on what are known as “benefits in kind”. That is obviously welcome for those who benefit from it, but will the Minister reassure us and confirm that adequate due diligence has been applied to ensure that no other categories of low-paid worker could be adversely affected by this change? The provisions are very specific in naming the particular types of occupation, but I always slightly worry when particular types of job have to be named that other forms of occupation or employment might be affected. I would like to know more about the process the Treasury pursued in framing the clauses in that particular way.
The Bill brings forward several clauses relating to tax avoidance. Everybody knows that the Government’s record on this is atrocious, given that the tax gap increased by £1 billion to £34 billion last year. We also know that Lord Green, the champion of the Tories on many of these issues, has his own track record at HSBC. In this context, any moves to tackle extreme tax avoidance and evasion are welcome—clause 33, for example, provides for anti-avoidance measures on carried-forward losses and there are provisions on entrepreneurs’ relief—but we have some questions that it would be helpful for the Minister to answer.
Clause 12 deals with the abolition of the dispensation regime. Is there a danger that, during the course of the simplification of expense reimbursement—a principle we support—some opportunities for abuse might arise? For example, a flat-rate expenses allowance could lead to some avoidance issues. Do the Government have some figures to show the amount of taxes collected through PAYE and the benefit audit from current companies?
We support the principle of clause 20 on intermediaries and gift aid, encouraging charitable giving and making gift aid a more attractive prospect by removing the need to send off the gift aid forms through the post. Donating online is obviously welcome, but can the Government confirm how they will prevent rogue intermediaries from seeking to profit from the gift aid market? How will the Government ensure sufficient understanding of this so-called “tax to cover” principle?
Do the changes outlined in clauses 26 and 27 undermine the original anti-avoidance intentions of the late interest rule? Could these provisions be rendered in any way redundant by the ongoing BEPS—base erosion and profit shifting—process? Will the capping of group interest deductions be covered? Labour Members want to hear that proper attention has been paid to this international process and that we are not unduly jumping the gun.
We have questions about the clause 28 restrictions on research and development relief, whereby the costs of materials incorporated in products that are then sold commercially will not be eligible for that relief. Have the Government considered any exemptions for companies selling items that they had not intended to sell—for cash-flow reasons, for example? What will be the impact on liquidation of a company? Would its R and D credit-containing assets be devalued?
Before leaving my assessment of the anti-avoidance measures, I want to draw the House’s attention particularly to part 3 on diverted profits tax, which tries to deal with artificially contrived arrangements. Opposition Members want arrangements to work effectively, but we worry about the haste and laxity of the drafting. In his opening remarks, the Minister introduced this new tax on diverted profits through counteracting arrangements by which foreign companies exploit the permanent establishment rules and prevent companies from creating tax advantages by using transactions or entities that lack economic substance. We were told that the draft clauses published in December would be replaced, but the first we saw of the new iteration of the provisions was when the Bill was printed yesterday. That provides insufficient time to scrutinise and assess such a large number of highly complex and potentially important measures. This, I fear, is a direct result of the rushed timetable with which we have been presented today.
These are my questions to the Minister. What is the expected impact on the base erosion and profit shifting process? What challenges is he expecting on the basis of EU law and how will he address them? Why is it still showing such a low yield in the Red Book, given that the UK turnover of the multinational tech giants is so significant? What research has the Department undertaken into the effectiveness of the proposed enhanced civil penalties for offshore tax evasion and will the increase improve compliance?
We welcome the measure on country-by-country reporting and common reporting standard issues, but the Office for Budget Responsibility has labelled the costings and related aspects as “highly uncertain”. I understand that the wording in the draft clause that we have seen would enable public disclosure of the country-by-country reporting rules, if the OECD updated its guidance to allow for it. Is that still the case for the clause before us today? Will the Government push for public disclosure or is the Minister trying to allow the disclosure only secretly for the Revenue authorities? Public disclosure is where we should be; if not, why not?
The clauses that extend capital gains tax arrangements to foreign individuals when they dispose of UK residential properties are welcome, but again the way in which the Government have brought them forward at the last minute means that we have little opportunity for proper scrutiny. It is worrying to those outside this place to see attempts to pass such provisions in this way. We understand that the Treasury might have further legislative proposals, but can the Government address the concerns raised by the Chartered Institute of Taxation about the complexity of the new rules and the perceived unfairness in how they apply to people temporarily on assignments overseas who would not normally be required to pay a CGT charge on their main residence?
On the simplification measures, there are questions about the correct penalty regime for the new reporting requirements in the Finance Act 2014. Removing the need for a tribunal process is one such arrangement, but there might be consequences from rushing through this legislation.
My shadow DEFRA colleagues would certainly want to ask the Government why they have not done more on flooding and flood prevention. The tax change to encourage private investment in flood prevention is certainly welcome, but is it not more of a fig leaf to cover the Government’s failures properly to support flood defences? The de-prioritising of flood defence investment that we saw at the start of this Parliament will be a legacy that many communities will not forget.
On the new tax reliefs for film, TV programmes and video games, the Minister will know of the history of scams, tax shelters and bogus arrangements that have been exploited in the past. Some have been convicted of abusing those arrangements. Will he assure us that proper due diligence has been done to prevent some of those abuses from happening again?
Finally, let me deal with the measures relating to the oil and gas industry. My hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood) wrote to the Minister about the impact of the Bill on the safeguarding of the future of the North sea oil industry. The recent fall in global oil prices has put a number of jobs at risk in the sector, which is one of Scotland’s greatest success stories, and its current predicament requires a long-term solution.
We welcome the measures that will cut the supplementary charge and petroleum revenue tax, which were outlined in Labour’s “oil industry roadmap” in January. However, we have also consistently called for greater certainty for the sector, particularly because of the long-term nature of much of its investment. A simpler investment allowance should be delivered, as long as the industry can be assured that the transition from the current regime will not cause any interruption in investment.
The Finance Bill should be establishing a mechanism for joint reporting by the Treasury and the finance directorate to the United Kingdom and Scottish Parliaments on the fiscal risks of volatility, and how they will be managed in the future to maximise recovery from the UK continental shelf. I also urge the Minister to consider the need for a full assessment, in the round, of the impacts of tax reliefs and rates
My hon. Friend the Member for Birmingham, Ladywood will shortly have an opportunity to talk about other changes that we feel are necessary. Let me say now, however, that we should like to see a review of the impact of the rise in VAT in recent years, and of the changing of the top rate of tax from 50p to 45p. I hope that we can extract some more data and information from the Treasury. We should be finding ways of helping small firms with a cut in business rates, rather than always prioritising a small number of larger companies, as the Government are doing. Their priority is reducing corporation tax rather than cutting business rates in 2015-16 and freezing them in 2016-17, which we think would be preferable.
We should have had a Finance Bill that deals in the round with many of the problems that our country faces: the living standards that have been squeezed, and the fact that wages have been surpassed by prices for such a long time during the present Parliament. Our public services require revenues to help them to serve our constituents—particularly the national health service, which we have to conclude is at risk because of the Government’s extreme plans for cuts. Those plans go way beyond simply focusing on the deficit, as the Government have also done. The Office for Budget Responsibility have talked of
“a sharp acceleration in the pace of implied real cuts to day-to-day spending on public services”.
At the general election in, I believe, 43 days’ time, the country will have a clear choice between the failing plans, the failing Budget and the failing Finance Bill that we are debating today, and a better plan to put working people first and to save our national health service. We will raise living standards by increasing the minimum wage to £8 an hour, and we will try our best to fund 25 hours of free child care for working parents with three and four-year-olds by means of changes in the bank levy. Our plan will help to transform our NHS with a “time to care” fund, which we will support by asking those who are fortunate enough to live in properties that are worth at least £2 million to chip in a little more, and it will ensure that we balance the books fairly by reversing the approach of the Government parties. That would be a better Finance Bill and a better Budget, and I look forward to seeing it under a future Labour Government.
Ian Swales (Redcar) (LD)
For someone who did not feel that we had been given enough time today, the hon. Member for Nottingham East (Chris Leslie) made an incredibly long speech.
I welcome the measures in the Budget, especially those benefiting business, and I am not the only one. At a lunch event on Friday, I spoke to members of the North East Chamber of commerce, and they also welcomed the Budget—particularly the measures involving oil and gas, which are very important for manufacturing industry and contractors in the north-east. The moves on corporation tax and support for business are clearly welcome. I do, however, agree with the hon. Gentleman that there is concern about the speed with which the diverted profits tax is being introduced. I congratulate the hon. Member for Amber Valley (Nigel Mills)—who has just left the Chamber—on triggering a Westminster Hall debate on the subject, during which we scrutinised it a little further.
Ian Swales
As I said a moment ago, I do share some of that concern. The new diverted profits tax is quite complicated, and I agree that introducing it after so little time is risky. However, I also think that it is a very necessary tax. Far too much of our economic activity in the United Kingdom has been booked elsewhere, and too many of our profits are being shoved elsewhere. I therefore welcome the overall measures, and hope that they can be made to work.
I welcome the increase in the bank levy. It is clearly more sensible than taxing bank bonuses at a total rate of 115%, which is what I understand the Opposition to be proposing. That clearly would not work, and I think that their proposal shows a lack of competence. I welcome the fact that the rich are paying more. The hon. Member for Nottingham East used the emotive word “obscenity”. I think that there was something of an obscenity in the fact that people on the minimum wage were having to pay about £1,000 a year in tax under the last Government. The Liberal Democrats’ priority is to change that, and to raise the tax threshold. Our original target was £10,000, but I am delighted to say that it is now on the way to £11,000 as a result of our work in this Government.
The rich are paying much more in tax. Their income tax rate was held at 40% for 13 years by the last Government. When we came to office, the rate of capital gains tax was 18%, lower than even the basic rate of income tax; it is now 28%. People are allowed to put a quarter of a million pounds a year into pension schemes and receive full tax relief on them: the allowance is now £40,000. The lifetime allowance has been reduced again, to £1 million. I welcome all those measures. I am not going to become involved in a long debate about VAT, but it is worth noting that the VAT on a new Ferrari is £50,000. The idea that it is all paid by pensioners is clearly not right when we take account of the goods that are not subject to the standard rate of VAT.
The Budget raised stamp duty on property, and introduced yet more measures to deal with avoidance. Of course, there was industrial-scale avoidance under the last Government, and many cases are still coming to light, having arisen before 2010. I welcome the moves on the cost of living and on alcohol taxes, which support many of our important industries. I must declare an interest, as a cider drinker who greatly welcomes the reduction in cider duty. Overall, there is an inconvenient truth for the Opposition. Inequality has narrowed under this Government, whereas it widened under the last Government. People are better off than they were in 2010, and the Institute for Fiscal Studies has been saying so since January. The £1,600 figure was never about the total; it was about average incomes, which have, of course, been affected by the huge fall in youth unemployment, the huge rise in the number of apprenticeships, and the huge fall in bank bonuses. The Opposition’s stance does not bear scrutiny.
I have been asked to be brief. Let me end by saying that my part of the world has gained huge benefits under the present Government. We have benefited from the regional growth fund, from the local enterprise partnership—which is highly successful—and from the fact that this Government have spent five times more on capital investment in the Tees Valley than the last Government did in five years. In the last year, unemployment in my constituency has fallen by 781. It is still too high, but we are heading in the right direction.
My party will support the Bill today.
Chris Evans (Islwyn) (Lab/Co-op)
Let me begin by expressing my disappointment that there is to be no Public Bill Committee. I have served on every single one in the present Parliament. I do not know what I did wrong in the Whips Office, but I feel that I am missing out on something.
I congratulate the hon. Member for Redcar (Ian Swales), who is, of course, a Liberal Democrat. Following the embarrassment of the Chief Secretary standing on the steps of the Treasury with his Fisher-Price lunch box, announcing a Liberal Democrat Budget the day after the real one that he said he had signed off, I admire any Liberal Democrat who can stand up now and defend the Government’s policies.
I want to say something about the Finance Bill and the Budget. This is the truth as I see it: for one hour, the Chancellor, simply because a general election is on the way, changed his tune from that of the Conservative party conference in October, when he told us swingeing cuts were on the way and we should prepare for an age of austerity. Now, 44 days before a general election, he tells us, like a latter-day Harold Macmillan, that we’ve “never had it so good.”
Those of us who are historians remember what happened after the complacency of that Conservative Government of the 1950s and the eventual devaluation of the pound in the 1960s. The problem is that for vast swathes of constituencies like mine across the country which are trying to deal with the post-industrial age the Government did not offer any hope or optimism for the future. Families in my constituency are £1,600 worse off than they were five years ago; that is the truth, and I challenge any Government Member to come to Islwyn, walk down the streets with me and go to the food bank in Risca where I was taken the other day. I could not get through the front door because so many people there were in need. Some might say they were there for kicks, but so many of them just needed help with benefits or the health service—they were there because there was nowhere else to go. That is a sad indictment of this Government’s policies.
Islwyn is a constituency dealing with the post-industrial age. Under the last Labour Government we attracted investment, but the problem is that this Conservative- led Government have created two Britains. There is the Britain of the affluent, who are enjoying a tax cut because we are in the grip of an economic theory that failed and only brought about deficits in the ’80s. That continues with the tax cut from 50p to 45p. We also see a different kind of Britain, however: a Britain of people gathered around the kitchen tables worried about paying the bills—about how they are going to pay the mortgage, how they are going to pay the rent. These are the people who deserve the tax cut.
It is all very well the Prime Minister committing today at Prime Minister’s questions not to put VAT up. He made that commitment before the last general election, yet VAT went up. It is only ever the Tory party that puts VAT up. VAT is regressive because everybody has to pay it, whatever goods they buy; whether they are a pensioner, a student, in work, a lord or a duke, they have to pay VAT. It does not matter what they earn. That is why VAT is a regressive tax.
The Government have forgotten who pays the bills around here. It is not the millionaires. It is not the business people. It is the people on the ground. I have nothing against anybody earning big money; I have no problem with success or aspiration, or ambition or achieving anything. However, if we give a tax cut to the very rich in society, they will employ accountants who will hide the money, but if we give a tax cut to people in the middle, they will spend it in the shops and businesses and get the high streets moving. That is not what is happening. That is not the reality on the ground.
We can talk all we want, but the simple fact is there is a problem with the word “conservative”. It means preserve or conserve—to conserve a way of life that never existed. If we want examples of how the Conservatives constantly look back to a golden age that never existed, we need only listen to the references to Agincourt. This is what I say: if we are looking back constantly, we are not moving forward.
The NHS is in crisis but the Budget says nothing about that most important public service in Britain. The Tories last week confirmed plans for extreme spending cuts in the three years after the election, which will put our NHS at risk.
Ian Swales
I always enjoy listening to the hon. Gentleman’s speeches, but he ought to note that the Budget included a huge £1.25 billion for mental health spending in the NHS.
Chris Evans
I welcome any money that goes towards mental health, and I think anybody suffering from a mental health issue would welcome that as well, but I have to say this to the hon. Gentleman: I am fed up, especially as a Welsh MP and a Welshman, at the way the Welsh NHS has been attacked by this Government. It is a shame because when the Government attack the NHS in Wales, they are attacking the nurses, the doctors, the cleaners, the porters—everybody who works so hard to provide the best possible health care to our patients.
Charlie Elphicke
The hon. Gentleman is making a passionate and powerful speech highlighting why it is such a travesty that he is not at the forefront of the Leader of the Opposition’s team, as he should have been. Does he join me in regretting the fact that the Leader of the Opposition seems to be planning a jobs tax were Labour to get elected at the general election?
Chris Evans
I thank the hon. Gentleman for his kind comments, and I have to say that over the years that we have served together in this House he has always been courteous to me and I count him as one of my friends from the other side.
Chris Evans
Yes; I thank the hon. Gentleman for that, and admire his cheek in trying to get me into trouble. I shall move on quickly.
Working people know they are worse off than they were five years ago.
Jake Berry
The hon. Gentleman must accept that five years ago the personal allowance was just over £5,500, and after this Budget it will be in excess of £10,000. That is an enormous tax break, putting money into the pockets of all our constituents, some of them on the minimum wage, some of them on the lowest pay. Surely he must welcome that when he talks about working people.
Chris Evans
I would welcome it had VAT not been hiked up from 17.5% to 20%, which has affected many people and squeezed their wages down.
I do not have long left—[Interruption.] I hope I have longer in this place, but I do not have long left in terms of my speech. The people I speak to did not want the Chancellor to present an image of something that they were not experiencing. The statistics may speak differently, but for the many families I speak to who are worried about their job security and jobs being offshored, that was not their reality.
I want to end my last speech in this Session by thanking everybody on both sides of this House whom I have come to know for their various kindnesses and friendships. I have been immensely proud and honoured to represent the Welsh valleys that I was born in and grew up in, and I thank everybody for their help and advice over the years.
Mr Andrew Love (Edmonton) (Lab/Co-op)
I want to make some brief comments on a number of issues that have come up in the debate so far: tax simplification, where the impression is being given that these measures will simplify taxation; avoidance and evasion, where there are major problems in delivering on the commitments the Government have given; welfare reform, where the Government’s track record is appalling; and the impact on income distribution, where it is being suggested that those on the top incomes are most affected by the Budgets over recent years, when actually it is quite different.
First, let me join in the chorus of concern about the lack of scrutiny under this wash-up process. There have been many comments in the media today from various experts—taxation bodies, chartered accountants and others—all expressing concern that, given the level of complexity involved in this Finance Bill, we simply will not get adequate scrutiny by rushing through all its stages in one day. I share that concern, and I am pleased to see that it is a concern that is recognised across the House. I would have preferred a much simpler Bill that included only a limited number of provisions. When we return and there is a Labour Government, we can have a Finance (No. 3) Bill, enacting proper measures to deal with the problems in this country.
I wish to discuss four issues and the impact this Budget and previous Budgets since 2010 have had. The first issue is tax simplification. It would be wrong to suggest that our taxation code is not getting more complex, and this Bill will add significantly to the complexity. I put it down simply to the way in which Whitehall operates; our bureaucracy is geared to the creation of legislation and of taxation measures. To take a perfect example, the Treasury is full of people who are there to guide and advise the Government on the latest taxation measures. Up against them we have a tax simplification project that consists of three nominated officials and a few civil servants. It is an unfair game; it is impossible for the tax simplification project to counter the further moves being undertaken towards complexity in our taxation system. It requires government—I include government on both sides—to address the real need, look carefully at whether all the taxation measures in our code are necessary, and take appropriate steps to reduce the number of codings and to make our taxation system simpler.
The second issue is avoidance and evasion. The Chancellor has said that his way of saving money over the next Parliament, should the Conservatives be re-elected, is to pencil in £5 billion-worth of reductions in avoidance and evasion. The first thing that has to be said is that that is an incredibly ambitious target. HMRC’s projection for the tax gap is currently about £35 billion, out of which about £4 billion is avoidance and £3 billion is evasion. So the total for avoidance and evasion, according to HMRC, is about £7 billion, yet we are being asked to believe that the Chancellor can deliver £5 billion through tackling evasion and avoidance in the next Parliament. That is a very tall order and we need to look very carefully at his proposals. The Office for Budget Responsibility has looked carefully at the suggestions being made, both in the Budget and in the consultation document released the day afterwards, and it can find only just over £3 billion-worth of savings. It has attached to those £3.1 billion savings either a “very high risk” or a “high risk” as to whether there will be delivery. So a gap is already opening up between what the Chancellor has promised and what he can deliver, and the OBR is suggesting that the task may be very difficult for the Government because of the high-risk nature of this. We can all recall the Swiss bank fiasco; it was suggested that £3 billion to £4 billion would be raised, but we now have a much more realistic figure, much below that. In order that that does not happen again, we ask that the Chancellor be much more ruthless and realistic in his appraisals about what can be saved by tackling avoidance and evasion—it certainly is not the £5 billion that he has suggested in this Budget.
Similarly, on welfare reform the Chancellor is suggesting that he wishes to save £12 billion. I will discuss how he is suggesting it will be saved later, but first let me indulge a little in recent history. Over the past five years the Chancellor has instituted policy changes that he said would deliver £21 billion-worth of savings, yet according to the Institute for Fiscal Studies the actual reduction in the welfare bill—the actual cash saved—was £2.5 billion. So there is an enormous hole in his accounting. He is suggesting he will save £12 billion between now and 2020, but he has indicated only where £3 billion of that will be saved—there is another £9 billion to go. We hope that over the period of the general election he will give the electorate some idea of how he is going to save such an enormous sum, recognising his total failure to save the money in this Parliament. His track record is not good. Given all the other imponderables—the things that are not under Government control that can affect the welfare budget—it is difficult to see how he can save that amount of money.
That leads us to the elephant in the room: if the Chancellor does not save money from avoidance and evasion or from welfare reform, where is he going to make up the difference in order to deliver the £30 billion-worth of savings? That is where we come back to VAT. That is where the Conservatives’ track record shows from the past, and that is where we will be scrutinising carefully the comments that are made. Tax rises are on the horizon. I am being asked to cut my remarks short so I do not have time to deal with the distributional impact, but let me just say that the Budget will not affect the highest paid but will affect those in the two lowest deciles of payment more than anyone else. It is a regressive, retrograde Budget, as previous Budgets have been.
This is my last speech in the Chamber. The experience has been great and I have met a wonderful group of people, on both sides of the House. I have enjoyed it immensely, and I retire having said my piece on this Budget.
Geraint Davies (Swansea West) (Lab/Co-op)
It is a great pleasure and privilege to follow my hon. Friend the Member for Edmonton (Mr Love), who has been a distinguished Member of the House, particularly through his service on the Treasury Committee, which has added enormous insights into the deliberations of successive Governments. It is a great joy to follow my good friend and colleague.
I just want to make a few remarks. The budgetary process in the immediate run-up to the election has been very much a political stunt. The first thing to deal with is the illusion—or delusion—that there has been economic success and turnaround under the Conservatives. That is simply not the case; it is simply not borne out by the facts. The national debt is about £1.4 trillion—up 44%. Reference is made to the deficit and how much the debt is going up, but of course the current Government have borrowed more in five years than Labour did in 13 years—and we had to bail out the banks. The Government have lost the triple A rating. As I pointed out earlier, the number of people earning more than £20,000 is down by 800,000. There is a reliance on a fudging of the facts; this is a “fudge it” Budget, to make up for the fact that we have more and more low-paid people who cannot make a contribution towards the revenues in a sustainable way. Meanwhile, the Government continuously put up the tax threshold and say, “Who’s going to disagree with that?”, knowing everyone is scared to disagree. But that is the management of irresponsibility, because the money simply is not coming in to pay the bills.
So what we need is not a spat about tax and spend, but a serious consideration of how we generate productivity and growth, in order to have higher wages and a more sustainable plan for the future. Obviously, part of that was the debate about tuition fees and about enabling people to go, without fear, to university, so that we could get higher productivity and the students would not be hobbled by massive debt throughout their lives. Such debt can mean that they cannot get a credit rating and cannot get a house, and are scared of moving into a higher pay bracket because it pushes up their repayments.
Sadly, the Tories are creating a two-nation Britain. One nation will be the better off, who, lucky for them, own their own house, can get their sons and daughters into university and pass on money for them to put down a deposit on a property. There are others who may be equally or even more capable of going to university and of boosting the productivity in our collective economy but who are being stopped from getting houses in the future. We are at a turning point now. The party that gets elected will determine whether we have a more unequal or a less unequal future. I very much want us all to pull together as one nation to invest in the future.
The Conservatives have this massively political Budget profile, which has been described as a “rollercoaster”. Deep and savage cuts were going to take us back to the 1930s, but because that was pointed out by the BBC, the Office for Budget Responsibility and the Institute for Fiscal Studies, an adjustment was made. Bank shares were sold off and oil prices went down so that the public service time machine was moved back only to the year 2000. None the less, we all saw the Tories in their true oils. They were happy to make those savage cuts until the BBC highlighted what they were doing. Then they said, “Oh no, we’re not going to do that.” But there will still be savage cuts until the final year of the next Parliament, 2019-2020, when there will be a sudden acceleration in public spending—the biggest spending increase for 10 years—presumably to try to get Boris Johnson elected as the next Tory Prime Minister. That is probably what will happen in the unfortunate event of the Tories getting in again in some strange alliance with the UK Independence party, which would be a disaster for Britain.
We must strike a balance between trying to achieve economic growth and having to balance the books, instead of scrabbling around trying to decide which poor people to clobber. As my hon. Friend the Member for Edmonton pointed out, welfare cuts such as the bedroom tax raised only £400 million, which is small change compared with the numbers that we are talking about. Two thirds of the people hit by that tax are disabled. The cuts to tax credits are hitting people with children who are trying to work. It is ridiculous to try to squeeze more and more out of the poorest to make ends meet. Clearly, it is right that the richest pay more, whether those with more than £2 million pay the mansion tax—
Geraint Davies
They need to pay lots more, not a bit more. Of course some of the very rich are paying more, but that is because they are getting richer and richer on massive pay awards. They are earning so much more than anyone else, and the situation is getting out of control
Geraint Davies
I will not give way to the rover from Dover, thank you very much. He is known as the Dover soul. [Laughter.] Obviously, that was the highlight of my speech.
Finally, I wish to comment on the rabbits that have been pulled out of the hat. Today, we were told, “Oh, there will be no VAT increases.” Is the Prime Minister going to commit himself to that in his five-year plan? A couple of days ago, we heard that another £46 billion was being spent on various railway connections in the north. There seems to be a desperate attempt to make things up on the hoof.
I do not necessarily disagree with this devolution of economic and service power to the north—to Manchester. We did that in Wales, but it was done on the back of an Act of Parliament and a referendum. In their haste to generate higher ratings at the polls, the Government are doing anything, including undermining the constitution and the economic balance and fragmenting the NHS in the process. Their recent track record, therefore, has not been impressive. The future looks bleak. I very much hope that we can focus on increasing growth. We should consider tuition fees, a cast-iron promise to stay in the EU, which is so important for inward investment, and procurement. The reality is that when it comes to procurement we should look at favouring, if we can, small British companies that pay British tax—corporation tax and income tax—rather than giving the work to foreign companies that do not pay our tax and do not contribute towards growth.
Charlie Elphicke
I thank the hon. Gentleman for being so generous in giving way to the rover from Dover. I gently point out that the reason why we cannot show a preference towards our own businesses in matters of procurement is to do with the European Union, which he loves so much.
Madam Deputy Speaker (Dame Dawn Primarolo)
Order. Believe it or not, that discussion is outside the scope of the Budget resolutions. But given that the hon. Gentleman had just acquired a nickname—although I will not be addressing him as such—I decided to allow him to intervene. Mr Davies, I should be grateful if you returned to the Finance Bill.
Geraint Davies
Clearly, I accept the ruling on the rover from Dover. I was simply making the point that, in our growth strategy, we should be encouraging small businesses. In Wales, something like 60% of procurement goes to small businesses, half of which are based in Wales. In England, the comparable figure is something like 25%. I am suggesting that, through encouragement rather than breaking EU rules on competition, we should make things easier for small businesses in order to help growth, tax, and supply chains. We should do that, rather than just say, “What can we do?” Labour increased this economy by 40% in the 10 years to 2008, before the banking crisis.
Madam Deputy Speaker
Order. Mr Davies, you are way out of scope now, so we will go to the concluding remarks of this debate, because we are running out of time.
Shabana Mahmood (Birmingham, Ladywood) (Lab)
I have only a short time in which to speak, so let me start by saying that we have heard some very good speeches today. The debate was opened powerfully by the shadow Chief Secretary, my hon. Friend the Member for Nottingham East (Chris Leslie). My hon. Friends the Members for Islwyn (Chris Evans), for Edmonton (Mr Love) and for Swansea West (Geraint Davies) all spoke well. The rover from Dover will live long in our memories and trumps, I think, “Dover soul”, which is not really up to the mark in quite the same way.
I pay tribute to my hon. Friend the Member for Edmonton who made his valedictory speech today. I am sorry that he had to cut his remarks short, but I wish to put it on the record that he has had a very distinguished period of service in this House. It has always been a pleasure to sit in debates on Treasury matters and to hear him speak. I have learned a huge amount from him. His service on the Treasury Committee has been to his credit, and he has a record of which he can be proud. The House and his constituents will miss him greatly.
As my hon. Friend the shadow Chief Secretary said in his opening remarks, the Budget is as fundamental as it gets when it comes to the business of the Government, and the Finance Act—the legislation that enacts most of that Budget—is also fundamental. But, effectively, the vast majority of this Bill will go through without debate. I confess that the negotiations into which I entered with the Financial Secretary last week was my first experience of the wash-up. Although I acknowledge the hard work done by his officials and even by him in terms of the tenor with which he approached those discussions, neither of us can pretend that this is a satisfactory way in which to make very complex taxation legislation. In particular, we know that outside commentators have an eye today on the diverted profits tax. The Opposition have to make a judgment call based on often very little, or last minute.com, information. For example, we have to judge whether blocking something now so that we can do it better later would give a signal that it will not happen at all and so cause uncertainty or whether an appropriate reassurance can be made.
I know about the lively discussions outside the House about the diverted profits tax. Let me just say that we support the thrust of what the Government intend to do, but the Bill was being drafted at the end of last week, when the Minister and I were trying to conclude our negotiations. That is unsatisfactory, because the Bill is complex. In our first Finance Bill when we are in government, we will seek to remedy any defects that prevent that measure from being both effective and strong. I am happy to let it through not because I think that it is a completely 100% foolproof bit of work, but because I fear that the Tories in opposition might not be quite so keen to see the measure on the statute book. I wanted to ensure that we got it passed, and then we could fix any issues later.
Although we will support many of the measures now going through—later we will debate the measures that we think are missing—we think that the Bill is a missed opportunity, as my three hon. Friends who spoke from the Back Benches all said. The Government could and should have taken the opportunity really to start making a difference to the lives of our constituents across the country, but they failed to do so. Only a Labour Government and a Labour Finance Bill immediately after the general election will start putting those matters right.
The Exchequer Secretary to the Treasury (Priti Patel)
It is a great pleasure to close this debate on Second Reading. I would like to thank everyone who has spoken for their contributions, particularly the hon. Member for Edmonton (Mr Love), who has served this House with such distinction. I wish him well. We have had an interesting debate. I should like to set it in the context of the Chancellor’s Budget last week.
A number of points about living standards have been raised. I reiterate that living standard will be higher in 2015 than they were in 2010, real household disposable income per capita will grow at its fastest rate since 2001 and, according to the Institute for Fiscal Studies, families are now set to be £900 better off this year than they were previously. That is all in line with our plan to fix the British economy, take us out of the dreadful mess we inherited back in 2010 and, quite rightly, give the British public the recovery they deserve.
The Bill marks the next step in that plan. It puts more money in people’s pockets, delivers further growth and puts fairness, which has been mentioned, at the heart of our recovery. We continue to put fairness at the heart of the recovery through our increase in the personal allowance. We will take people on the national minimum wage and working up to 30 hours a week out of income tax altogether by 2017. That is about rewarding work and raising living standards, which is what this Government stand for.
I will address a number of points that have been raised. The hon. Member for Edmonton spoke about £5 billion in tax avoidance. To answer his question, yes, it is a realistic achievement to bring in the revenue that has been spelt out. There is no reason to doubt that the Government can raise the figures we have already announced, so we will proceed with that. On the point about the tax code, we established the Office of Tax Simplification in 2010, and the Bill includes a number of measures that build on its recommendations.
Points were also raised about oil and gas. The Bill introduces radical measures to support the oil and gas industry, giving investors long-term certainty. We have been working very constructively with the industry to ensure that the package will provide it with the right fiscal environment.
On clause 12, which the hon. Member for Nottingham East (Chris Leslie) mentioned, the exemption will not apply where expenses are paid under a salary sacrifice arrangement. That will stop employers artificially lowering their national insurance contribution bills by replacing some of their employees’ salaries with expenses.
Clauses 13 and 14 implement recommendations set out by the Office of Tax Simplification. On clause 20, which relates to gift aid, more details will be set out in regulations, which of course will improve donor understanding of tax to cover. On clause 28, I should like to reassure the hon. Gentleman that it applies to expenditure on consumable items only if the item is transferable in the ordinary course of the relevant person’s business.
Flooding was mentioned. In the spending review the Government committed an unprecedented £2.3 billion to tackle flooding and coastal erosion. In addition, clause 35 supports business contributions to alleviate the impact of flooding.
The hon. Gentleman also mentioned clause 29, which sets out film tax relief opportunities. The structure of the current relief is completely different from that introduced under the previous Government’s scheme, which was prone to abuse, so there are no issues of avoidance in this case. He also mentioned zero-emission bands. Stakeholders have asked for rates to be announced four or five years ahead, and the Government have been committed to announcing rates three years in advance, which is why we have done so.
Let me move on to the whole issue of tax avoidance. The UK is demonstrating further leadership by implementing the diverted profits tax, which is also consistent with the principle of aligning taxing rights to economic activity. The Bill quite rightly ensures that everybody contributes fairly to the Government’s long-term economic plan. During this Parliament, Her Majesty’s Revenue and Customs has secured £100 billion in additional revenue, thanks to this Government’s avoidance and evasion policies. Over a third of the Bill’s provisions will enact measures that go even further in tackling avoidance and evasion, including new measures on corporation tax and offshore evasion and avoidance and, of course, increases in the bank levy. That will raise nearly £8 billion more over the next five years, helping to reduce the deficit and strengthen the country’s economic recovery.
The Bill will help households up and down the country with the cost of living, make the country even more competitive internationally and, through the tax avoidance and evasion measures that we are putting in place, ensure that everyone pays their fair share of tax. The Bill marks the next step forward in our long-term economic plan, and I commend it to the House.
Question put and agreed to.
Bill accordingly read a Second time; to stand committed to a Committee of the whole House (Order, 24 March).
Finance (No. 2) Bill
(9 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
16:33 - divided: - Ayes: 231 / Noes: 305 - Question accordingly negatived.
17:31 - divided: - Ayes: 230 / Noes: 309 - Question accordingly negatived.
18:42 - The Committee divided: - Ayes: 229 / Noes: 306 - Question accordingly negatived.
18:57 - The House divided: - Ayes: 307 / Noes: 226 - Question accordingly agreed to.
The Second Deputy Chairman of Ways and Means (Dame Dawn Primarolo)
With this it will be convenient to discuss the following:
Clause 67 stand part.
New clause 1—Report on impact of value added tax—
“(1) The Chancellor of the Exchequer shall, within three months of the passing of this Act, publish a report on the impact of the increase in the standard rate of VAT which took effect from 4 January 2011.
(2) The report must estimate the impact of the increase in the standard rate of value added tax on—
(a) living standards;
(b) small businesses;
(c) the fairness of the taxation system; and
(d) economic growth.”.
The Financial Secretary to the Treasury (Mr David Gauke)
Before speaking to clauses 66 and 67 and new clause 1, may I first say what a great pleasure it is to serve under your chairmanship, Dame Dawn? This is the last of a great number of Finance Bills in which you have played one role or another, and I have had the privilege of serving with you on a number of those occasions. This is the last afternoon on which you will be dealing with tax matters, having done so for an unconscionably long period, so I thank you for all that you have done over many years and for your service as Deputy Speaker and wish you a very happy retirement.
Clauses 66 and 67 set out the Bill’s provisions on VAT. Clause 66 refunds VAT to charities involved in co-ordinated search and rescue operations, air ambulance charities, hospice charities and blood bike medical courier charities. Clause 67 refunds the same levels of VAT to the strategic highways company—from 1 April it will take over the functions of the Highways Agency—as are paid to the Highways Agency itself. It is largely a tidying-up matter.
It is worth pointing out that refunding VAT will benefit around 400 charities that work alongside the emergency services, provide palliative care to terminally ill patients or support the national health service. The Hospice of St Francis in Berkhamsted in my constituency is very appreciative of the measure and thinks that it will make a significant difference to the service it can provide to my constituents in South West Hertfordshire. I suspect that clauses 66 and 67 will not cause great controversy in Committee, but I will of course be happy to take any questions on them.
Ian Lucas (Wrexham) (Lab)
I am sure that we all welcome the clauses relating to VAT relief for hospices, which do such a tremendous job. Can the Financial Secretary help me by explaining how charities are selected and how VAT exemptions are secured? I have previously raised the case of a charity dealing with disabled people in Wrexham that provides transport services, which are subject to VAT under the current arrangements. The process of securing exemptions seems easier for ski lifts, for example, than for disabled people in my constituency, so I would be interested to find out how on earth one secures exemptions for worthy charities.
Mr Gauke
I have heard the hon. Gentleman make both points in the past, and if I remember correctly, I responded to an Adjournment debate on those matters. There are significant benefits in our tax system for charities, but the Government look at cases partly depending on the demands on the public finances and what is affordable. We have looked in particular at hospices. There is a particularly strong case there, and to some extent they are put at a disadvantage compared with parts of the NHS because of the irrecoverable VAT that they pay. This is a matter that any Government would keep under review. I am sure that the hon. Gentleman, as a persistent Member, will raise the matter again if he has the opportunity to do so in future.
In new clause 1, the Opposition ask us to publish a report on the impact of the increase in the standard rate of VAT in 2010. No doubt, the hon. Member for Birmingham, Ladywood (Shabana Mahmood) will set out her thinking on that, but let me make a pre-emptive strike, if the Prime Minister has not already done so. Before I turn to the details and the imposition of VAT in 2010, I shall briefly set out the context for that decision.
Let us be clear that we increased the standard rate of VAT in 2010 as a consequence of the mess that the Opposition left the public finances in and the fact that, although the previous Government had left a mess, they had not left behind a plan to clear it up. Of course, a tax impact information note was published by HM Revenue and Customs at the time of the June 2010 Budget, but let us look at the situation that we inherited. At that time, the independent Office for Budget Responsibility’s pre-Budget 2010 forecast revealed that the structural deficit—the part of the deficit that will not go away with the recovery—was higher than previously thought: around £9 billion or 0.6% of GDP higher in 2010-11. Debt repayments were forecast to reach more than £67 billion by 2014-15, more than was spent on defence or on schools in England. The UK had one of the highest deficits of any advanced economy, so this Government had to take urgent action to eliminate the bulk of the structural deficit, which is a necessary precondition for sustained economic growth.
Sheila Gilmore (Edinburgh East) (Lab)
The Minister referred to the Prime Minister’s pre-emptive strike, but he will be well aware that similar statements were made before the last election. Does not the whole VAT issue illustrate the difference between the parties? The Labour Government’s response to an economic recession was to stimulate the economy by reducing VAT. The response of the incoming Government was to deflate the economy by increasing VAT.
Mr Gauke
The previous Government brought VAT back up. We know from his memoirs that the then Labour Chancellor of the Exchequer, the right hon. Member for Edinburgh South West (Mr Darling), believed that a Labour Government after 2010 should increase VAT. A Budget document was even published showing VAT going up to, I believe, 18.5%. I know that that was published by mistake, but it clearly shows that serious consideration was given to that. The previous Labour Government recognised that taxes would have to increase. They had proposals to increase employers national insurance contributions, or the jobs tax. Given that there is such uncertainty about the Opposition’s plans for what they would do in government, the question is whether they would rule out increasing employers national insurance contributions.
Shabana Mahmood
I am grateful to the Financial Secretary. As we have been in the Chamber, he may not be aware that we have ruled out any rise in national insurance.
Mr Gauke
Well, there we go. I am struck by the fact that the Leader of the Opposition was very reluctant to say that earlier, but I am pleased that he has been bounced into providing that clarification. [Interruption.] I noticed that he did not answer questions earlier today. [Interruption.] Indeed, he will never have the chance to answer questions at Prime Minister’s Question Time.
Julie Hilling (Bolton West) (Lab)
It has taken me five years to learn that Prime Minister’s questions is about the Leader of the Opposition and us asking questions and the Prime Minister not answering them. It is not Leader of the Opposition’s questions; it is Prime Minister’s questions. We do not answer questions; the Government are supposed to.
Mr Gauke
I notice that the hon. Lady does not answer questions. I am glad we finally got some clarification on that point, but as I say, I do not think the right hon. Member for Doncaster North (Edward Miliband) will ever have the opportunity to answer Prime Minister’s questions.
David Wright (Telford) (Lab)
Does the hon. Gentleman agree that VAT is a regressive tax in principle? Can he tell us why the Government chose to use an increase in VAT as a tool for bringing down the deficit?
Mr Gauke
I will turn to that question in a moment, but before I do so, I shall say a little about this Government’s record.
High public debt can lead to a loss of market confidence and higher market interest rates, raising the cost of borrowing for families and businesses and discouraging investment and consumer spending. So what has our long-term economic plan delivered? Today public sector net borrowing as a percentage of GDP is forecast to have halved between 2009-10 and 2014-15. Latest data from the IMF show that this Government also reduced the structural deficit by more than half between 2010 and 2013. In fact, the UK’s structural deficit fell by 4.6% of GDP over 2010 to 2013—a larger reduction than any other country in the G7.
Since the autumn statement last year, the UK’s fiscal position has improved right across the forecast period, with higher receipts and lower debt interest. This Government have restored stability, put the public finances on a sustainable path and are about to put public sector net debt on to a declining path as a share of GDP.
Mr Gauke
Let me make a little more progress.
The previous Government failed to take decisive action to get our country moving again. Our record speaks for itself. Employment is now at its highest ever level. Economic growth is now firmly in place and at the Budget the OBR revised up its forecasts. The UK economy is forecast to grow by 2.5% in 2015, 2.3% in 2016, 2.3% in 2017, rising to 2.4% in 2019.
Mr Gauke
I suggest that the hon. Gentleman look at the analysis by the Office for Budget Responsibility of why its forecasts on deficit reduction were not met. It has been very clear that the three reasons it did not happen were the eurozone crisis; the after-effects of the financial crisis being greater than it or, indeed, other independent observers had expected; and higher commodity prices than had been expected. That made deficit reduction harder than it would otherwise have been.
The critique of Labour Members is sometimes to say that we have rigidly stuck to our plans to reduce spending, and on other occasions to say that we have failed to reduce the deficit as fast as we said we would. As regards our spending plans, the departmental and welfare spending reductions that we set out have been delivered. The automatic stabilisers came into effect; we have shown the flexibility to allow that to happen. As a consequence, we have delivered what we set out in terms of reducing spending, although we have faced more difficult circumstances. Labour Members are all over the place in this debate. Sometimes they say that we have stuck rigidly to plans that we should not have stuck to, and at other times they say that we have let the deficit rise.
We must remember that Labour Members opposed every single measure that we took to reduce the deficit. Had they been in power and had they been consistent in what they said—at least in their rhetoric—in opposition, we would have seen borrowing at a substantially higher level over the past few years, leaving our public finances in an unsustainable position, putting our recovery at risk, and damaging the economic credibility of the United Kingdom. Thankfully, they did not have the opportunity to crash the car, having done so once already.
Geraint Davies (Swansea West) (Lab/Co-op)
Does the hon. Gentleman not accept that the deficit targets were not satisfied because the growth projections went down, and that is because consumption went down, and that is because VAT went up? I appreciate what the Prime Minister said earlier, but does the hon. Gentleman accept that if VAT went up now, when we have 0% inflation, that would spiral the economy down, and that it would be better to reduce VAT than to reduce tax thresholds in order to stimulate growth to balance the books?
Geraint Davies
I am saying that given a choice between lower VAT or lower tax thresholds, does the hon. Gentleman accept that lower VAT would give higher growth and help to reduce the deficit—or is he a just a politician without any economic sense?
Ian Swales (Redcar) (LD)
Does the Minister share my surprise that a policy is being proposed whereby the biggest winners would be pop stars, premiership footballers and bankers, who spend the most?
Mr Gauke
My hon. Friend makes a good point. I will come back to that later.
Our long-term economic plan has delivered economic growth and record levels of employment, and it has put this country on a sustainable economic footing. Specifically on VAT, we have maintained the VAT registration threshold, which is now £82,000—the highest in the EU. That is of significant benefit to small businesses right across the country. While the bulk of the deficit reduction has come from spending, we chose to increase VAT from 2011. If it is necessary to raise large sums of money, as it clearly was in 2010 when we saw the structural deficit deteriorate—at least, the assessment made by the previous Government, and then by the independent OBR, showed a significant deterioration—then it is necessary to raise one of the bigger taxes.
Happily, we are no longer in that situation under the plans put forward by the Conservative party. I am afraid that Labour Members’ plans—not engaging in reducing the welfare budget and not committing themselves to controlling departmental spending in the way we would—mean that they will need to find a substantial tax increase. A Labour Government in 2010 would have put up the jobs tax—a different choice from ours. In those circumstances, it is hard to believe that we would have 1.9 million more people in work today than we had in 2010.
Fiona O’Donnell (East Lothian) (Lab)
If the Conservatives’ plan was so brilliant, will the Minister explain why, even at the height of the global crash in the UK, under the Labour Government we did not lose our triple A credit rating, but on his watch we did?
Mr Gauke
We have retained the confidence of the markets, and we have retained very low long-term interest rates. When we came to power, we were on a par with the likes of Spain and Italy; now, we are seen very much as a safe haven. The UK’s fiscal credibility has been maintained, and it would not have been had we stuck to Labour’s plans, even with a significant increase in the jobs tax.
Julie Hilling
Does the Minister not see that raising VAT and cutting benefits hits the most vulnerable in society? Does he think it is right that children in this country should lose weight over school summer holidays because their parents do not have enough money to feed them, that people are dependent on food banks, and that we have had people starve to death because of benefit cuts? Is that the way this country should be in this day and age?
Mr Gauke
Under this Government, child poverty has fallen, and pensioner poverty is at a lower level than it has ever been. Only today, we have seen numbers showing that there are 600,000 fewer workless households than there were in 2010. If we wish to deal with poverty, and we certainly do, the best way is to have a job-creating, growing economy, and that is precisely what the long-term economic plan is delivering.
To be fair to the hon. Member for Swansea West (Geraint Davies), he says that he would cut VAT, but I am not hearing that from Labour Front Benchers. I must remind Labour Members that, with a handful of exceptions, none of them voted against the increase in VAT in 2010. I note that one of the handful of exceptions is sitting on the Opposition Benches, but Labour Members did not vote against it.
Charlie Elphicke (Dover) (Con)
On the subject of deficit reduction, does my hon. Friend recall a report from the IFS a little while ago that said that Labour’s plans would have resulted in about £200 billion more borrowing if the Labour Government had continued, given the change in circumstances? Does that not show that there is a massive black hole at the heart of Labour Members’ current plans that would be made worse by the out-of-the-blue, panicky pledges on tax that they are suddenly making on the hoof on the news after pressure at today’s Prime Minister’s questions?
Mr Gauke
My hon. Friend makes a good point that is very relevant to the debate we are having about VAT.
The three main parties in this House have agreed that we will deliver a cyclical current budget surplus by 2017-18; that is what the charter of fiscal responsibility states. The vast majority of Labour Members trooped through the Lobby to support that measure. Independent analysis, as well as the Treasury’s analysis, confirmed that that requires some £30 billion-worth of fiscal adjustments. From my party’s point of view, that would be made up of £13 billion from departmental spending, £12 billion from welfare spending, and £5 billion from anti-tax evasion and tax avoidance measures.
The Liberal Democrats have set out how they will get their £30 billion. Their plan has a different balance and make-up from the Conservative plan, but they have set it out. The Labour party has not set out how it will reach that £30 billion. If Labour is not going to cut welfare in the way the Conservatives are, and if it is not going to cut departmental spending as we are—as far as I can see, that, after all, is the heart of Labour’s election campaign—more money must come from tax. That is why the question of who will raise taxes and what taxes will be raised is much more acute for Labour Members. They have questions to answer. There is a gap in their public finance plans, whereas we have set out plans that do not require us to put up taxes on hard-working people.
Sir Edward Leigh (Gainsborough) (Con)
The Minister is being unfair to Labour Members. They will manage to reduce the deficit by not opening any more free schools, and by abolishing police and crime commissioners. That will undoubtedly solve the problem.
Mr Gauke
We must not forget that Labour will put up gun licences—that is also on the list.
I note that the shadow Secretary of State for Work and Pensions, the hon. Member for Leeds West (Rachel Reeves), announced yesterday that she will “abolish the bedroom tax” and use the savings for something else. I am not sure that I understand how there can be savings from that measure.
Mr Gauke
What I have said is consistent with what the Chancellor has said again and again. Our plans do not require us to increase taxes for hard-working people, which is why we can rule out putting up VAT—[Interruption]—or extending it. The point the hon. Gentleman must answer is that his plans require taxes or borrowing to go up. He wants to ask hard questions about filling in fiscal black holes by raising taxes. They are questions for Labour Front Benchers, not for me, because our plans clearly do not need it.
Geraint Davies
The Minister assumes that the choice is between tax and spend. Does he accept that if the tax and spend options are made in one way rather than another they will promote more growth and therefore more revenues? If more money goes to poorer people who spend all their money, as opposed to rich people who hide it in tax havens—10% of UK wealth is offshore—and if we had a Labour Government and a fairer distribution, we would surely have more growth and fewer cuts.
The Temporary Chair (Mr Jim Hood)
Order. I shall ask Members once not to shout across the Chamber at one another, and to listen to whoever is on their feet, which at this time is the Minister.
Mr Gauke
Thank you, Mr Hood.
When President Hollande took office, with the enthusiasm and support of the Labour party in this country, I have no doubt that he wanted growth to increase in France. The fact that our economy is growing something like seven times faster than France’s is not because of a lack of desire on the part of the French Government, but because some policies work better than others. The Labour party’s policies would not result in higher growth—it is so anti-business that it would drive investment from this country, and its tax policies seek to punish wealth creators. I question Labour’s supply-side policies.
Simon Kirby (Brighton, Kemptown) (Con)
Does not the latest Labour U-turn on the jobs tax—perhaps it was forced into it—create an even bigger black hole in its finances? How will Labour balance the books?
Mr Gauke
He does. I am sure he was a very young man at the time. Under a great deal of pressure, Hugh Gaitskell ruled out all sorts of tax increases and at the same time made all sorts of promises about public spending. The British people rumbled the Labour party in 1959 and did not believe that that was a credible position. As a consequence, they returned a Conservative Government with an even bigger majority. Labour Members might want to be a bit careful about drawing parallels with 1959.
Mr Love
As we are talking about rumbling the Government, the election will be an opportunity to scrutinise the Chancellor’s claim about the £30 billion of savings. He has said there will be £12 billion savings from welfare reform but has indicated how only £3 billion will be found. He has said he will get £5 billion from anti-evasion and avoidance measures, but has indicated where only £3 billion of that will come from. There is still a huge credibility gap. Will the Minister help us with it?
Mr Gauke
I will tell the hon. Gentleman where the credibility gap is. Labour Members effectively voted for a £30 billion target. They then denied it. They now will not indicate what adjustments they will undertake in 2016-17 and 2017-18. They have not said how they will reduce departmental spending, or how, or whether, they will reduce welfare spending. They have not said how much they will raise from tax. If they will not give us answers to those questions, we can only assume that it is because they intend to tax and borrow more. If they will not provide clarity on that, we will make that point time and again.
Charlie Elphicke
Speaking of Labour’s spending and tax commitments, how many times over have Labour Members spent the bank bonus tax? Is it 10 times, or more? I have lost count.
Shabana Mahmood
For the avoidance of doubt, and for what feels like the 278th time in Treasury debates, I should tell the Minister that the bank bonus tax will pay for one policy and only one policy: the paid starter jobs—the compulsory jobs guarantee. Why do the Government not match us on that policy rather than harp on about their failed rhetoric on the bank bonus tax?
Stephen Pound
I would be delighted to do so. I campaigned against Sir Oswald Mosley in Kensington North—admittedly, I was only 11 years old, but I did a fairly good job. He did not win.
I put it to the Minister that, in 1959, the Conservative party was very different—it was a much more consensual, nay Butskellite, Conservative party. One thing the Conservatives stood on was house building. They had a proud record. Does the Minister believe that the Bill will help house building in this country?
Mr Gauke
I share the view that we need to build more houses in this country, but I am pleased that last year housing starts were at a record high for seven years or so, that planning permissions are going up, and that we have reformed planning law to enable more houses to be built. In the Budget last week, there were details of 20 housing zones that could support something like 45,000 homes. That is consistent with a desire to ensure greater opportunity for people to acquire their own home.
It is also worth pointing out that in last week’s Budget we introduced Help to Buy individual savings accounts, which will enable people to acquire deposits so that they can enter the housing market. In terms of continuity, I would not necessarily be proud of everything connected with the Conservative Government of the 1950s. I absolutely think we need to do more to get more people into the housing market, and this Government are delivering on that and we are definitely moving in the right direction.
Mr Gauke
It should be noted that the Office for Budget Responsibility does not believe that any of the measures announced last week will feed through to higher house prices. We also announced supply-side policies and 20 housing zones last week. It is right that we take steps to support supply.
The hon. Gentleman said that I was being generous with my time, but I am conscious that I am also being generous with the Committee’s time, so let me make a little progress. To return to the point made by the hon. Member for Telford (David Wright), the VAT increase in 2010 applied only to the standard rate. Everyday essentials such as food and children’s clothing, as well as newspapers and printed books, have remained zero-rated throughout this Parliament, which protects those on low and middle incomes. On fairness, we have reduced income tax for more than 27 million individuals, with basic rate taxpayers £905 better off in cash terms compared with 2010.
There is no need to publish a report on the impacts of the rise in VAT announced in 2010—a rise that, after all, the Labour party did not oppose. The Government’s economic record speaks for itself: record employment in the UK against virtually record unemployment in France. By 2017, basic rate taxpayers will be £905 better off in cash terms compared with 2010, and 3.7 million individuals with low incomes will have been taken out of income tax altogether. The European Union’s own analysis describes UK living standards as the fourth highest in the EU, above those of France, Italy, Spain, Ireland and the Netherlands.
We have delivered sustainable economic growth while across the EU economies stagnate, but we recognise that the job is not finished. This Government continue to take the difficult decisions needed to secure a responsible recovery and stay on course to prosperity. I therefore hope that the Labour party will not press new clause 1 and that clauses 66 and 67 will stand part of the Bill.
The Temporary Chair (Mr Jim Hood)
I have now to announce the result of the deferred Division on the question relating to the draft Infrastructure Planning (Radioactive Waste Geological Disposal Facilities) Order 2015. The Ayes were 277 and the Noes were 33, so the Question was agreed to.
[The Division list is published at the end of today’s debates.]
Shabana Mahmood
It is a pleasure to serve under your chairmanship, Mr Hood. New clause 1 stands in my name and those of my right hon. Friend the Member for Morley and Outwood (Ed Balls) and my hon. Friends the Members for Nottingham East (Chris Leslie) and for Kilmarnock and Loudoun (Cathy Jamieson). It requests the Treasury to commission
“a report on the impact of the increase in the standard rate of VAT which took effect from 4 January 2011.”
The report must estimate the impact of that increase on living standards, small businesses, the fairness of the taxation system and economic growth.
The House has debated issues relating to VAT on a number of occasions, which the Minister referenced in his opening remarks, and it was, of course, a hot topic of debate at Prime Minister’s questions today. If the Prime Minister or any Conservative Member thinks that they can put the issue to bed today, let me tell them that they will not find it that easy, and I will set out the reasons for that during the course of my speech. Frankly, to believe what the Prime Minister has said today about VAT would be rather like believing what the Deputy Prime Minister said about tuition fees before the last general election. The public are simply not going to buy it, and I think the whole House is well aware of that.
Our new clause asks for a review because Oppositions are limited in what they can call for in amendments to a Finance Bill, but no Member can be in any doubt about our argument about the consequences of the political choices that are being—and that have been—made by the Conservative party and signed up to by the Liberal Democrats, even though they have been desperately trying to pretend that they had nothing to do with the fiscal assumptions given to the OBR, on the basis of which it made its assessments of what is likely to happen in the next Parliament. I welcome to the debate the lone Liberal Democrat on the Government Benches, the hon. Member for Burnley (Gordon Birtwistle). Perhaps if I give way to him he can rule out raising VAT.
Gordon Birtwistle (Burnley) (LD)
I thank the shadow Minister for inviting me to give my views on the fiscal situation. My constituency has seen unemployment fall from 7.5% to 2.5% and has received more than £50 million of Government money. I remember 1959, because I was 16 and had just started work. I canvassed for a guy called Arthur Davidson, who was a Labour Member, and he said the same old things that the Labour party always says: “Vote for us and there’ll be no problems. We’ll have full employment.” Well, I remember what happened after 1959, because I lived through it. It is very cruel of the hon. Lady to suggest that some of the thing we are agreeing to now are wrong—
Shabana Mahmood
Thank you, Mr Hood. I am grateful for the hon. Gentleman’s intervention, during which he did not rule out a rise in VAT under the Liberal Democrats. Perhaps we will have to wait for others to comment on that.
David Wright
Will my hon. Friend give us a bit more detail about new clause 1? I would like the study to look at the impact of VAT on the poorest people in our community, who are hit disproportionately by increases in VAT. The Conservative party has form on VAT, so the poorest people will be very concerned that it will rise again after the election.
Shabana Mahmood
My hon. Friend is absolutely right. That is exactly what people across the country will be concerned about. The Conservative party has form, about which I will go into in detail during my speech. History proves that what the Prime Minister said at Question Time today should not be believed, because it has all been said before and VAT has always gone up.
Charlie Elphicke
Would the hon. Lady rule out a Labour Government keeping VAT at the same level, or would they reduce it? The hon. Lady ought to tell the Committee.
Shabana Mahmood
I will come on to what we announced yesterday, but we are not going to raise VAT. That is as clear as it gets, and the hon. Gentleman knows that.
I remind the Committee that VAT is the tax that hits everyone, with the same rate paid by the pensioner as by the millionaire. For many pensioners and those on the lowest incomes, it is the biggest tax that they pay. It is also the tax that hits people every single day, whether they are buying a cup of coffee or filling up the family car. Everybody does that every single day. The Government’s decision to raise the standard rate of VAT has, without doubt, hit the living standards of millions of people. According to the Treasury’s own figures, it has cost families an average of £1,800 over the past four years. That is no small trifling sum of money, even if it is averaged over four years.
As I heard from constituents across Birmingham when I was there with the shadow Chancellor yesterday, £1,800 has had a huge impact on their ability to make ends meet and to do the basic things in life—putting food on the table and keeping a roof over their families’ heads, desperately hoping they will not have to go to a food bank, even though they have a job, just to put food in the bellies of their children. That £1,800 is a significant sum of money and, coupled with the other facts of this Government’s record, such as wages being down by an average of £1,600 a year and the combined impact of tax and benefit changes, families are on average more than £1,000 a year worse off.
Charlie Elphicke
Given that both parties have ruled out an increase in VAT and that the hon. Lady will not commit to a reduction in VAT, it is hard to understand Labour’s position. This debate is a theatre of the absurd.
Shabana Mahmood
I have a lot of time for the hon. Gentleman and we spend much time debating Finance Bills, but I must say to him as gently as I can that that was an absurd intervention. We have made a clear commitment to the British people on what will happen to VAT on our watch. It will not go up. We know that it will go up if his party wins the next general election. There are no two ways about it. It does not matter what the Prime Minister has said and it does not matter what the hon. Gentleman says now. We know that because of his party’s record and form on VAT. I shall give a lengthy exposition of that history and form very shortly.
Gordon Birtwistle
The hon. Lady says that the Conservative party will definitely increase VAT. What proof does she have of that? If she has proof, will she come clean about it today?
Shabana Mahmood
If the hon. Gentleman gives me a few minutes, I shall get on to that point very shortly. He will understand that the past performance and form of the people who sit opposite me today, the Conservatives, is the clearest and surest indicator. Unfunded tax cuts have already been promised and spending plans have been made that require a Government to cut further and faster in the early part of the next Parliament than they have in this Parliament, and that is the clearest indication we can get. They can do nothing else but put up VAT; that is their tax of choice when it comes to raising the tax revenues they are looking for.
As I have said, the independent Institute for Fiscal Studies has said that the Government’s Budget plans mean that spending cuts after the election will be twice as deep as anything seen in the past five years. The cuts will go deeper and be made faster in the early part of the next Parliament than we have seen during the past five years. In reality, that will translate into extreme cuts to our crucial front-line public services, such as the police, defence and social care. The cuts will be so deep that they will be almost impossible to achieve, first, without putting the NHS at risk, and secondly, without making a further rise in VAT on the Tories’ watch simply inevitable.
Not only do the choices that the Government, and the Conservatives in particular, have made about spending and deficit reduction make such a VAT rise inevitable, regardless of the Prime Minister’s bluster today they are ingrained in their collective DNA. Before the 1979 general election, the then shadow Chancellor Geoffrey Howe said:
“We have absolutely no intention of doubling VAT.”
He specifically talked about doubling it. In his first Budget, however, he raised VAT from 8% to 15%. Conservative Members may take comfort from the fact that eight times two is 16, not 15, but they should not be proud of a seven percentage points rise in VAT or show off about its not being the eight percentage points rise that it might have been, given that such a rise had been absolutely ruled out and that there was no intention to double VAT. [Interruption.] Such a point brought no comfort to people who ended up paying the 15% rate of VAT, despite what the Financial Secretary, who is chuntering from a sedentary position, seems to think.
In 1991, Chancellor Norman Lamont increased VAT from 15% to 17.5%, claiming that his approach was “consistent” with the “strategy for tax reform” first set out by Geoffrey Howe in the 1979 Budget. Chancellor Lamont was correct that the approach was consistent: it was consistent with the approach of raising VAT rather than doing anything else. It seems that that approach may have slipped his mind, because just a year later, before the 1992 general election, Norman Lamont told Parliament that he
“again made it clear that the United Kingdom has no intention of changing our VAT rate.”—[Official Report, 13 June 1991; Vol. 192, c. 627W.]
That promise was reiterated by the former Prime Minister John Major, when he promised Parliament:
“There will be no VAT increase. Unlike the Labour party, we have published our spending plans and there is no need for us to raise VAT to meet them.”—[Official Report, 28 January 1992; Vol. 202, c. 808.]
He also said that year that he had
“no plans and no need to raise extra resources from value-added tax.”
The arguments then are almost exactly same as those we are hearing now.
Will Government Members remind us what happened after the 1992 election? There are no takers, because they know the answer: the Conservatives remember their consistent approach to raising VAT. The then Chancellor introduced VAT on domestic heating and fuel in the 1993 Budget, phasing it in at 8% from 1994. When he became Chancellor in 1993, the right hon. and learned Member for Rushcliffe (Mr Clarke) refused to reverse that increase saying that
“no one is going to die from VAT on heating.”
That is a very bad way of making a point, because people have in fact ended up dying from the cold. We know that people, the elderly in particular, often have to choose between heating their home and eating. Had it not been for a Labour defeat in the House of Commons, under the Conservatives we would have seen VAT on electricity and gas bills increase to 17.5% in April 1995.
Twenty years later we find ourselves listening to a familiar story. Before the last general election, the Prime Minister, the then Leader of the Opposition, said:
“We have no plans to put up VAT, it’s not part of our plans.”
I like the double emphasis: say it twice, and that might make it true. The Chancellor, the then Shadow Chancellor, said:
“The plans we set out involved around 80 per cent of the work coming from spending restraint”—
cuts—
“and about 20 per cent from tax increases. The tax increases are already in place, the plans do not involve an increase in VAT.”
So such a rise was ruled out by the Prime Minister and by the Chancellor when they were in opposition. However, just weeks after taking office, like all the former Conservative Chancellors before him, the current Chancellor increased VAT to achieve his plans of 20% consolidation coming from tax increases and 80% coming from spending cuts. He said:
“To achieve that additional tightening while maintaining the right ‘four-to-one’ balance between spending and taxation means that I have to announce further tax rises today. On 4 January next year, the main rate of VAT will rise from 17.5% to 20%.”—[Official Report, 22 June 2010; Vol. 512, c. 177.]
There is no doubt that such a rise has hit family budgets hard. Despite knowing that that would happen, and that there would be a huge impact on the economy as a whole, the Chancellor chose to do what every Conservative Chancellor has always chosen to do—put up VAT. That is why we can say so emphatically—I say this to Liberal Democrat Members in particular—that if the Tories are elected at the general election in just a few weeks’ time, they will do it again. It is in their collective DNA, and ruling it out but then doing it is precisely what they have form on. That is their history, and I believe that they will honour their history if they are elected.
Analysis produced by the Treasury in July 2010 showed the estimated impact of a one percentage point rise in the standard rate of VAT. That analysis means that we know, for instance, that in the past four years the Government’s VAT rise has cost a single pensioner £500, a one-parent family £900, a pensioner couple £1,100 and a couple with children £1,800.
Ian Lucas
I do not want my hon. Friend to be too charitable to the Chancellor of the Exchequer, so may I remind her that in addition to the 2010 increase in the standard rate of VAT, the Chancellor made proposals in 2012, in the middle of his disastrous economic policy, to extend VAT through the pasty tax and the caravan tax? Not only did he increase VAT in 2010, but he went back to the well in 2012 when the policy was collapsing.
Shabana Mahmood
I was just about to make exactly that point. My hon. Friend is absolutely right that in 2012, having already done what all Conservative Chancellors do and put up VAT, the Chancellor sought to expand it by applying it to pasties and caravans in the so-called omnishambles Budget. I have always thought that it was a bit of a shame that that term from “The Thick of It” was used, because if the sequence of events that unfolded following that Budget had been presented to the scriptwriters of “The Thick of It”, they would not have touched it. They would have said that even for “The Thick of It” it was an unbelievable series of events. Yet that is what the Chancellor delivered. My hon. Friend is absolutely right that the Chancellor tried to expand the scope of VAT, yet today the Conservatives wonder why nobody will believe what the Prime Minister said at Prime Minister’s questions.
We do not have to go back over the past 20 or 30 years. We can just look at the record of the current Chancellor and Prime Minister on VAT. They like to put it up, and they sought to expand its application. I noticed that earlier the Financial Secretary appeared to rule out an expansion of VAT, but I was not entirely sure whether he had done that deliberately. Will he intervene on me to confirm that not only will VAT not go up—that is according to the Prime Minister, although I do not believe it—but it will not be expanded? I wonder why the Financial Secretary is not biting my arm off to intervene and confirm that.
Shabana Mahmood
So basically, both those things are definitely going to happen if the Financial Secretary’s party is elected in a few weeks’ time.
Where are we today? The same old Tories and the same old story. Whatever the Prime Minister has said today simply will not answer the justifiable charge against the Government about why they should be trusted if we look only at their record and at what they have delivered in this Parliament. They broke their promise after the last general election and they will do the same after the next one. At the end of each Parliament since 1979 in which the Tories have been in government, they have raised an average of £13.5 billion from VAT changes. The electorate know that when it comes to VAT and the Tories, actions will always speak louder than words. People know that they cannot be trusted because they break their promises again and again. They broke their promises in 1979, 1992 and 2010, and they will break them in 2015.
Charlie Elphicke
This debate seems to be based on a false premise. The Government have been clear that a rise in VAT is not necessary to balance the books because we do not have a hole in our plans for public finances. The Labour party does have a black hole and it cannot be trusted on anything it says about the jobs tax.
Shabana Mahmood
If the hon. Gentleman will allow me I will answer that by posing a simple question back to him, and then I will give way so that he can answer it. Where will the £12 billion of cuts to welfare come from? How will the £5 billion for tax avoidance be found? If he can answer those questions he will go further than those on his Front Bench have managed to do while making those promises. Perhaps he can shed some light on the issue for the British public.
Charlie Elphicke
The Government have been clear in setting out their plans in the Red Book, and they have been audited, considered and reviewed by the Office for Budget Responsibility. What are not clear are the plans of the Opposition, although it is increasingly clear that there is a black hole in those plans and that they consistently make it up as they go along. I suggest to the hon. Lady that Labour’s so-called pledge on the jobs tax cannot be believed at all.
Shabana Mahmood
That was not even a valiant attempt to try to answer my questions, but the hon. Gentleman is not on the Front Bench and I suppose I am being a little uncharitable in suggesting that he cannot answer a question that his own Chancellor is not prepared to answer either.
We have numbers of £12 billion, £13 billion and £5 billion from the Chancellor, yet with all the might of the Treasury behind him and lots of officials to do the numbers we have no detail on how those figures will be found. The Government spent a whole Parliament trying to talk up their record on tax avoidance and they are saying that they will get £5 billion in the next Parliament, yet there is no detail on how those amounts will be made up and no guarantee that they will be delivered. I am not surprised that the hon. Gentleman cannot answer those questions if those on the Government Front Bench will not either.
The Conservative party’s plans for what they would like to do if elected in a few weeks’ time are extreme and go much further than deficit reduction. They are trying to deliver a surplus of £7 billion. That had to be changed from the previous desire to get a surplus of £23 billion, because the Government got spooked by recognition across the country of what that would mean for the size of the state. They have now come down to £7 billion, which still means that they have to go further and faster in the early part of the next Parliament than they have in the previous five years.
Those choices have to be paid for. Given that some budgets are protected and that commitments to international development and aid spending will not change, and given the scale of what the Conservative party wants to achieve with the country’s finances, it is physically not possible to do such things without putting the NHS at risk of cuts or potentially of charging, or without raising VAT. That is the charge being made—it is not just about the history and the record. The hon. Gentleman could have resiled from the Conservative party’s record, but he chose not to do so. The combination of the Conservative party’s history on VAT and its figures for the next Parliament tells us that if it is elected a VAT rise is coming. There can be no doubt about it, given the combination of those two factors.
The hon. Gentleman attacked our plans and commitments, but for every commitment that involves raising revenue, we have highlighted where that revenue will come from and we have made the figures public. It was the Labour party that called for the OBR to conduct an independent audit of all parties’ manifesto commitments. We could have avoided this debate if we had allowed the OBR to do so. I was very happy to submit my party’s plans to an independent audit. I wonder why the Government chose not to do so. Perhaps they had something to hide. Perhaps they did not want to be robbed of the ability to have a “tax bombshell”-type poster. The needs of the Conservative party’s election marketing material should not have trumped the responsible thing to do: to allow the OBR independently to audit all parties’ manifesto commitments. I was very happy for that to happen.
The bankers bonus tax would pay for one policy and one policy alone: the compulsory youth jobs guarantee. [Interruption.] If the hon. Gentleman thinks the stubbornly high rate of youth unemployment is a laughing matter, he is mistaken. The Conservatives stole a few of our policies in last week’s Budget. Rather than laughing off the idea of the bankers bonus tax, I would have been happy for them to have stolen that policy, as it would have delivered jobs for the young people in my constituency who could find themselves on the jobs scrap-heap for many years to come. The Conservatives should have adopted it; it would have made a real and practical difference.
Stephen Pound
I am extremely grateful to my hon. Friend for her innate generosity in giving way. Does she not agree that new clause 1 would provide transparency and openness, and that the report would be immensely useful? Does she honestly think that any true democrat and believer in fiscal transparency could do anything other than support the Labour amendment?
Shabana Mahmood
My hon. Friend is absolutely right. We have been debating whether VAT will go up, but new clause 1 is pretty innocuous. It calls only for a review and an assessment of the impact the rise in VAT has had on living standards. If the Minister wanted us to believe what the Prime Minister said today in Prime Minister’s questions—that he is ruling out a rise in VAT—then what is the problem? Adopt the new clause, add it to the Bill and let us have the assessment. He would be able to show how VAT has had an impact and why the Conservatives are doing such a good job, if they are elected again, in not letting it go up.
Fiona O'Donnell
Given the lack of a response from Government Members, may I suggest that seeing the impact of the increase in VAT written down might make it harder for the Tories and the Liberal Democrats to break their promise the second time around?
Shabana Mahmood
My hon. Friend is absolutely right. That is the only conclusion we can draw from what the Minister and the Prime Minister have been saying today. If the Minister really wanted to back up the Prime Minister’s claims, and to give us a hint that he might be believed, he should have just accepted our new clause. It is straightforward, and adding it to the Bill would shine some light on the impact of VAT. We are very clear that we will not raise VAT. It may be that the Government do not want the facts out in the public domain because they plan to do so.
Shabana Mahmood
I am going to finish now, because I want to give time to everybody else who wishes to speak in the debate.
We all know what is coming if the Conservatives are elected at the next general election: VAT will go up. That is what their record tells us and that is what their plans require. If the Minister wants to be even a little bit believable—even 1% believable—he should at the very least accept new clause 1 and set the cat among the pigeons, but I do not think he will take that opportunity today.
Fiona O’Donnell
It is pleasure to speak in this debate—I hope it will have been worth the wait—and to serve under your chairmanship, Mr Hood. I hope that we both have the opportunity to repeat the experience after 7 May.
I rise to support this excellent improvement to the Bill proposed by my hon. Friends on the Front Bench, because I would like to better understand the impact of the VAT increase in my constituency. The Tory long-term economic plan is a marketing con and a rebranding of a five-year failed economic plan—five years of broken promises on borrowing, the deficit and VAT. I do not know if Government Members have been watching a new programme—on ITV down here, but on STV in my constituency—in which hypnosis is used to shift people’s perception of reality. I am not sure if that is what they are doing, although there does not seem to be anyone asleep in the Chamber. We all seem to be wide awake—certainly Labour Members are wide awake to the impact of the Government’s failure to deliver on their economic promises. Simply saying, “We’ll now call it a long-term economic plan, because it has not quite worked out in the short term”, is not going to fool anyone.
On the increase in VAT, I remember meeting my local chamber of commerce. In East Lothian, we do not have large-scale manufacturing or large employers, apart from in the public sector, so the private sector is largely made up of small and medium-sized enterprises. When I asked them how they were coping with the changes in the economy they said that the single-biggest factor for them was the VAT increase. It had done the most damage to their businesses. Other Members have spoken about its impact on the poorest in our communities, but in East Lothian it has also had an adverse impact on entrepreneurs and businesses—the people who should be creating the jobs that could eradicate unemployment in my constituency.
David Wright
As my hon. Friend will have noted, the new clause states that the Chancellor should produce a report within three months of the passing of the Act. I suspect that the Treasury already have these figures and could probably move more quickly. If her point about businesses is right and businesses are complaining to Members, they must also be feeding this information back to the Treasury, so I suspect that it already has these figures and could publish the report any time it wanted.
Fiona O’Donnell
My hon. Friend has been doing this job much longer than me, so I suppose he has earned the right to be more cynical. I am still flush with the newness of this change of role in my life, and I would like to think that that was not the Government’s intention, but I shall bow to his longer service in this place and more expert analysis.
It was interesting to hear the Financial Secretary speak about the role that VAT had played in the Government’s short-term failed economic plan over the last five years. He talked about the mess the previous Labour Government had left, but the economy was growing when we left office, and, as other hon. Members have said, part of the reason it reversed was the increase in VAT, which stifled confidence and the spending power of many in our communities. I would also like to hear from a Government Member whether a great deal of the deficit resulted from the decision by the then Chancellor, my right hon. Friend the Member for Edinburgh South West (Mr Darling), to bail out the banks. Would Government Members have bailed out the banks, or do they think we should have left them to fail? Is anyone going to jump up? Anyone? No, they are all hypnotised, it would appear, and unable to respond. Bailing out the banks was the responsible thing to do. It might have seemed unfair, but it was important to people in my constituency that when they went to the ATMs the next day they could still draw out their wages.
The Financial Secretary talked about the Government’s sustained economic growth agenda. I do not remember sustained economic growth following the increase in VAT. I seem to remember the worst recession that this country has ever had, following that intervention by the Government. That has hurt people in my communities and, I am sure, in communities right across the country.
Ian Lucas
It is a pleasure to speak under your chairmanship, Mr Hood. I want to say first how much my hon. Friend the Member for Edmonton (Mr Love), who is no longer in his place, has been valued in our economic debates. His contribution will be missed, and we all wish him well for the future.
The new clause is eminently reasonable, and it should not be a matter of dispute between the parties in the House that such a report would make a valuable contribution to any decision the Government take on VAT. We have had an interesting day on VAT because it was raised in Prime Minister’s questions. As hon. Members know—certainly the Minister will know—VAT is a subject in which I have an interest. Throughout this Parliament, I have pressed not just the Government Front-Bench team but the Labour Front-Bench team on the issue of VAT.
The Prime Minister is an honourable man. He has made a commitment from the Dispatch Box today that is different from the position outlined by the Chancellor of the Exchequer to the Treasury Select Committee only yesterday. I am interested to see the Treasury Minister nodding to confirm that there has, in fact, been a change in Government policy since yesterday. When I woke up this morning, I heard on the “Today” programme my hon. Friend the Member for Bassetlaw (John Mann) questioning the Chancellor on the issue of VAT. I heard the Chancellor set out the same mantra that there were no plans to extend VAT or increase its rate. My understanding of what the Prime Minister said today is that he has given a cast-iron guarantee—to use a phrase that the Prime Minister has used before—not to extend or increase the rate of VAT.
So the position has changed today, and it is a change that I welcome. For that reason, I think that the information requested under the new clause would be valuable. It is always better for us all to have more information about the impact of tax changes. We know, of course, that this Government introduced this tax change in June 2010 when they said that they would eliminate the deficit by 2015. The plan—the “long-term economic plan” then—was to eliminate it by 2015, and part of the plan was to increase the rate of VAT. It would be valuable to know what happened as a result of the raising of VAT in January 2011. In my constituency, people are under real financial pressure, and VAT affects all of us.
David Wright
When the Chancellor decided to increase VAT, he must have asked Treasury officials to produce projections on its likely impact on the economy at that point. It would be interesting, would it not, to compare the projections given to him by Treasury officials with an official report, which this new clause suggests should be commissioned, to see whether the two tally up?
Ian Lucas
Indeed. My hon. Friend has made a very valid point. I think that we should all be interested to know what was the impact of the last Tory-Liberal Democrat increase in VAT, which was introduced in January 2011, because it should inform future policy. It seems extraordinary to me that that should be resisted.
According to the Office for National Statistics, the median salary in my constituency, Wrexham, has fallen by 7.4% in the last year. The town centre is, unfortunately, populated—like many other town centres throughout the country—by too many empty shops, and part of the reason for the emptying of those shops over the past few years has been a decrease in consumer activity. What VAT does—and this is why I am passionate about VAT—is take money out of the pockets of consumers on the high street and send it straight to the Treasury. It has a massive impact on local businesses. Those of us who run local businesses and employ people want to ensure that we have the best and fairest type of tax system to develop local economies.
That is why I want to know the impact of the 2011 VAT increase. I think that the Minister is a reasonable man. I cannot for the life of me understand why he does not want to have that information, or, if he has that information, why he does not want to share it with the House.
We have made a lot of progress today. The Prime Minister has been dragged, kicking and screaming, to a point at which he has ruled out a VAT increase by the Conservatives in the next Parliament—if he is ever in a position to make such a decision. That is major progress. It is certainly a change, not just from the Prime Minister’s position earlier in the current Parliament, but from the position that the Chancellor outlined in his Budget statement last Wednesday, when he set out the spending and taxation plans that he expected to be implemented. Why did he not tell us that the Tories were going to rule out a VAT increase in the next Parliament? That is what amazes me. What has happened between last week and this week? What happened yesterday?
What has happened, in my view, is that because the Labour party, in opposition, made a commitment not to increase VAT in the next Parliament, Lynton has been on the blower. He has said. “We are under pressure, Dave. We are under pressure, Prime Minister. We have to match the commitment that the Labour party has made. You have to rule out a VAT increase in the next Parliament.” So that is why the Prime Minister made his statement at the Dispatch Box today—a statement that I welcomed.
History will judge whether that promise will be kept. We heard from my hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood) about the history of Conservative commitments on VAT: about what happens before elections, and about what happens after them. When I speak to my constituents over the next six weeks, I shall remind them of that record. I shall remind them of what the Conservative party and the Liberal Democrats said before 2010 and what they did afterwards, and I shall remind them of what this Chancellor tried to do in 2012 with the pasty tax and the caravan tax.
The tax of choice for the Conservative party is VAT. History tells us that. If the Conservatives want to increase taxes, they increase VAT. The country will have to judge whether the commitment that the Prime Minister has given today is one that will stand the test of time.
Sheila Gilmore
It is a pleasure to serve under your chairmanship, Mr Hood. I was also going to say that it was a pleasure to be in the company of so many Members who had participated in Finance Bill Committees during this Parliament, but one by one they have disappeared from the Chamber—even the hon. Member for Dover (Charlie Elphicke), who has been one of the most assiduous Committee members—which is a shame as I was looking forward to hearing the usually very robust views they express, when we are upstairs in Committee at least. Presumably they have something else on their mind today.
The period we are in, which spans one VAT increase to possibly another, is a very interesting one. One of the things that the Government are trying to say—interestingly, some of the other parties are trying to say the same—is that there is no difference between the policies of the Government and the Opposition and that we would all have to make the same decisions. However, the Institute for Fiscal Studies has clearly stated that there is a huge difference between the forward plans of the Government and those of the Opposition. Our policies involve a different attitude towards spending cuts and tax increases in order to reduce the deficit over a period. That is what we said back in 2010; we were clear that we would be following a different pathway. We were not deficit deniers, as was sometimes suggested, but we were clear that we had a different view on how this could best be handled and that there would therefore be fairness in our measures. That remains the case because, prior to the Budget, the IFS said that, given our forward plans and taxation proposals, in contrast to the £55 billion of spending cuts the Conservatives would have to find, the Labour Opposition would be looking to make only £4 billion of spending cuts. More recently the IFS has said that in order to carry out our plans we would not need to make any further spending cuts in the forthcoming Government. So that is a very big difference in our policies. From that point of view, we are in a position to say not just that we would not increase VAT, but that we have a different and much fairer road to go down.
It is right for us to ask what the Government—whether the coalition or the Conservative party; it is not always clear—would be doing. Not only have they said that they need to find those spending cuts to carry out their deficit reduction proposals, but they have also suggested further tax reductions through the continued raising of the tax threshold. At no time since that announcement was made by the Prime Minister at the Conservative party conference has there been any clarity as to where that money would be coming from. So not only are they clearly tied to making substantial departmental spending cuts, but they have not shown us how they are going to close this financial gap. That is why people are saying, “We think it’s going to be VAT.” It is hard to tell where else it might come from. Of course, if it is coming from somewhere else, we would expect that to be said. So the Prime Minister stands up and says, “Oh no, we won’t be increasing VAT,” but the other half of that statement has not been made. We do not know how he is going to square this circle.
Andrew Gwynne (Denton and Reddish) (Lab)
As we saw in 2010, what the Prime Minister says this side of an election is not necessarily the same as what then happens in future Conservative Budgets. Has my hon. Friend also pondered the quandary that they might stick to their pledge not to increase VAT this time, but they have not ruled out extending the scope of VAT to currently exempt items?
Sheila Gilmore
That is clearly another way the Conservatives might seek to close this gap they have opened up for themselves.
We need to know a lot more about this going forward, and so do the electorate. As hon. Members have said, VAT is a regressive tax. Even though those who have bigger spending power sometimes spend more and so may, in cash terms, spend more in VAT. It is a regressive tax, as are all these indirect taxes. Our position on this is clearly different: we do not believe it is right that people on low incomes should be taxed, in effect, to give other people tax cuts.
We have said a great deal about the 50p issue, which we will discuss later this afternoon, but one of my big concerns for some considerable time has been that low-paid workers already under the tax threshold were being offered nothing from the Government, who constantly talk about raising the tax threshold further. They have no plans to help those people any more. Those people face a real risk that if VAT is increased, they will end up paying the price of a reduction in income tax from which they will not benefit by one penny.
Lyn Brown (West Ham) (Lab)
Does my hon. Friend agree that a rise in VAT will not only have an impact on the living standards of millions, but do something to inflation? Does she think, as I do, that inflation may well rise with a VAT rise, again inflating the costs of ordinary, basic things for ordinary people?
Sheila Gilmore
I thank my hon. Friend for her intervention. Of course the position she sets out is exactly what we saw in the early part of this Parliament when VAT was increased and a number of other measures were put in place. At that point, inflation hit about 5.5%, which then allowed the Government to say, “Aren’t we wonderful? We have just put pensions up by the biggest ever amount.” But that increase would have come even under the old system—even under a system that was simply tracking pensions to inflation—because of the inflation rate. Pensioners were not getting some amazing extra increase that year; there was a simple tracking of what had happened, largely because of the VAT issue.
Not only have many of those low-paid people not got any further gain to get if the tax threshold keeps increasing, but they have actually lost out at the same time, because one thing that has helped to pay for all this has been the reductions in things such as tax credits. Many low-paid people lost more in tax credits than they gained in the rise in the tax threshold. The Government keep endlessly repeating that low-paid people are the ones who have benefited, but that has not been the case in practice for many of these people, particularly those with families and children—they have particularly suffered. For them, the Budget is a bit of non-event and it will continue to be so.
That is why the £12 billion of welfare cuts that have been pencilled in for some two years now in various statements by the Treasury, and by the Chancellor in particular, are very important. Part of that approach might be to cut away further the support given to people in work, perhaps through the tax credits system, at some future point. Tax credit is to be replaced by universal credit, but the issue remains much the same in terms of how it tapers off and where the losses might come.
We already know that in many respects universal credit will be less beneficial for a lot of people in work, as they increase the hours of work they do. So how much of this £12 billion will come from that source? Again, people may be given a little bit with one hand, through the increase in the tax threshold, but find that they lose as a result of what the other hand is taking. We just do not know because we have been given no detail; it has been deliberately withheld, although one suspects that someone, somewhere has a plan. It would be strange if they did not have a plan. If, under welfare cuts, we are taking away things such as support for people who are in work, it is extremely important.
The other area is housing benefit, because, again, that is increasingly being claimed by people who are in work, not just by people who are out of work. Those people who are in work will be hurt again if there are further attempts to reduce the housing benefit bill, by eroding the amounts that individuals get. Again, we have this lack of clarity and detail. It is understandable why some of us are extremely suspicious about the alacrity with which the Prime Minister wished to distance himself from a VAT increase. For all the talk about a long-term economic plan, we have a lack of any clear policy and detail about what the Conservatives will do if they are re-elected. I hope that they will not be in government, so perhaps they do not need to give any detail, but the people who will be voting in a few weeks’ time deserve to know such things.
We should not be in the position that we were in before the 2010 election when we were promised things, such as that there would be no VAT increase, that were undone very, very quickly. I do not think that people were told about the scale of the reductions that would be made.
Barbara Keeley (Worsley and Eccles South) (Lab)
My hon. Friend is making a very good speech. She has returned to the point about the scale of the cuts. Is she as concerned as I am about that? My local council has been cut by 43% since 2010. We now have 1,000 people losing their social care packages this year. Is it not very frightening that what we face in the next couple of years are cuts that are deeper than anything we have seen before? I find that prospect frightening for social care and local services, which are already crippled, and for policing—for keeping our local community safe. Does she feel that way, too? We have already seen what has happened—
Sheila Gilmore
I thank my hon. Friend for her intervention. Clearly, those are the kinds of concern that people have.
On the VAT proposals, the changes and exemptions that the Government may wish to make for some worthy cause are welcome. I am talking here about the help for organisations such as hospices. But there is scope to go further. I will say something now that, although not Front-Bench policy, is perfectly legitimate to raise in Committee. As someone who has been very involved in housing, I know that the housing world is keen to see VAT relief on improving and restoring properties.
VAT can make refurbishing properties more expensive than rebuilding. Demolition and rebuild has become a cheaper option than preserving some of our properties. Having worked with many housing associations, I know that there have been times when they have wanted to do that kind of refurbishment and preservation work, but they had to do a massive upgrade behind that to bring the homes up to the required standard. Such a VAT exemption is something for which the housing world has campaigned for a long time. As we all want to increase sustainability, I hope that that is an issue that my own Front-Bench team will reconsider when they are in government.
Lyn Brown
I understand that we are not talking to a benevolent Government here, but as my hon. Friend is listing what she would like to see VAT removed from, I would like to include sanitary products. I know that many of my constituents think that, as those are not luxury goods, they should be exempt from VAT. I just thought that I would add that to the list of things that should have VAT removed.
Sheila Gilmore
I think that campaign has taken off again, having been going for a considerable number of years.
Sheila Gilmore
Indeed. As the current campaigners have noted, there is no VAT on shaving cream, but there is on sanitary products, which suggests—
Sheila Gilmore
Yes, it is gender-made law. We will all have received a considerable number of e-mails about that recently, and I am sure that the campaigners would be pleased to hear the Minister commit at least to reviewing the situation.
Fiona O'Donnell
On that issue, growing a beard is an option for a man, but being unhygienic is not an option for a woman. My local food bank is increasingly having to offer women sanitary products because they simply cannot afford them.
Sheila Gilmore
That is a very interesting piece of information, and it is something that people should bear in mind—
The Temporary Chair (Mr Hood)
Order. It is very interesting, but we are straying a wee bit from what we are supposed to be debating.
Sheila Gilmore
Thank you for your guidance, Mr Hood. I am sure that you would not want me to stray on to the whole issue of food banks, which would probably take us to midnight.
In conclusion, new clause 1 would provide us with an opportunity to look at the impact of VAT changes over this Parliament. We believe that they have been regressive and that many of our constituents have been affected, and we are concerned about the future. We need to look very carefully at what has happened before any decisions are made on further increases. We are always taken to task for proposing new clauses to Finance Bills that would set up reviews, and I understand that there are technical difficulties. I am sure that current Government Members will have the same difficulty when they come to scrutinise a Finance Bill in opposition in the next Parliament. Perhaps we will then make the alternative criticisms.
It is important that we fully understand the impact of the VAT changes, and not just through some kind of impact assessment that is done theoretically, but through an assessment of what has actually happened; they are not always the same thing. However, such proposals have been turned down in every Finance Bill I have encountered in this Parliament. The hon. Member for Dover (Charlie Elphicke)—he has still not returned to his seat—and I are obviously similar; we are either terribly keen to serve on Finance Bill Committees, or we are such a soft touch that when our Front Bench teams or Whips ask, “Wouldn’t you like to serve on the Finance Bill Committee?”, we say, “Oh, all right then.” Some of us have certainly done our stints on Finance Bill Committees, and I am sure that we all hope to be able to do so again from a governmental position.
Mr Gauke
We have had a lively debate and heard contributions from a number of Members who could be described as Finance Bill recidivists. I am delighted that so many of them were able to participate on this, the last occasion to debate tax matters in this Parliament. The hon. Member for Edinburgh East (Sheila Gilmore) talked about VAT on sanitary products. Under EU law, we are permitted to have a reduced rate for sanitary products—indeed, it has been reduced to 5%—but they are not among the products for which we can have a zero rate under EU law. Consequently, without changes at EU level, it is not possible to reduce it further. I have a lot of sympathy with the argument that is made on that point, but it would need to be addressed at EU level.
Fiona O'Donnell
The Chancellor fought incredibly hard in the EU to protect bankers bonuses, so can the Minister tell us what efforts the Government have made to have that rule changed?
Mr Gauke
This has been a long-standing issue. The experience of trying to bring in new zero rates has been very difficult. If an opportunity arose, any future Government would want to pursue that.
Let me make a couple of points. We need to make progress on a number of items of business this afternoon. On living standards, this Government have taken many steps to help with living standards in difficult circumstances, such as the increase in the personal allowance, the freezing of fuel duty and the freezing of council tax. With reference to the impact on small businesses, this Government have a proud record of helping small businesses in the current difficult circumstances, not least by introducing the employment allowance, which is a cut in the jobs tax, and introducing an exemption for under 21s starting in April, which is a cut in the jobs tax. The following year, there will be no jobs tax for apprentices under the age of 25. We have a record of reducing the jobs tax. That is not the position of Labour.
My party has set out how we will reduce the deficit in terms of departmental spending, welfare and tax evasion and tax avoidance. Our plans are clear. The same is not the case with the Opposition. There is a black hole in their finances. As a consequence, the risk of a big increase in tax from the Opposition is clear. Their tax of choice is employers national insurance contributions. That is the one that the British public should be frightened of. The Leader of the Opposition refused to rule it out earlier. I understand that a panicky press release was issued this afternoon, but the British public know very clearly what will happen under a Labour Government—borrowing and taxes will go up. Consequently, I urge the British people not to allow that to happen, and I urge the Committee to reject new clause 1 today.
Question put and agreed to.
Clause 66 accordingly ordered to stand part of the Bill.
Clause 67 ordered to stand part of the Bill.
New Clause 1
Report on impact of value added tax
(1) The Chancellor of the Exchequer shall, within three months of the passing of this Act, publish a report on the impact of the increase in the standard rate of VAT which took effect from 4 January 2011.
(2) The report must estimate the impact of the increase in the standard rate of value added tax on—
(a) living standards;
(b) small businesses;
(c) the fairness of the taxation system; and
(d) economic growth.—(Shabana Mahmood.)
Brought up, and read the First time.
Question put, That the clause be read a Second time.
Shabana Mahmood
I beg to move amendment 1, page 2, line 1, at end insert—
“(3) The Chancellor of the Exchequer shall, within three months of the passing of this Act, publish a report on the impact of setting the additional rate of income tax at 50 per cent.
(4) The report must estimate the impact of setting the additional rate for 2015-16 at 45 per cent and at 50 per cent on the amount of income tax currently paid by someone with a taxable income of—
(a) £150,000 per year; and
(b) £1,000,000 per year.”
The Temporary Chair (Sir Roger Gale)
With this it will be convenient to discuss clause 1 stand part and clauses 2 to 5 stand part.
Shabana Mahmood
It is a pleasure to serve under your chairmanship, Sir Roger. Amendment 1 stands in my name and those of my right hon. Friend the Member for Morley and Outwood (Ed Balls), my hon. Friends the Members for Nottingham East (Chris Leslie) and for Kilmarnock and Loudoun (Cathy Jamieson), and the hon. Member for Brighton, Pavilion (Caroline Lucas). It calls on the Chancellor to produce within three months of the enactment of this Bill a report on the impact of setting the additional rate of income tax at 50%. The report must estimate the impact of setting the additional rate for 2015-16 at 45%—the current higher rate—and at 50% on the amount of income tax currently paid by people with a taxable income of £150,000 and £1 million a year.
As we all know, the 50p rate of tax for those earning more than £150,000 was reduced to 45p by this Government in 2012. That was hotly debated at the time and it has been hotly debated ever since. The Minister refers to a debate on the additional rate of tax as an annual event whenever we discuss a Finance Bill. Government Members may groan that the debate is rearing its head again, but I am, if nothing else, an optimistic person and I continue to hope that Government Members will be swayed by my arguments and be persuaded to accept our eminently sensible and reasonable amendment.
Shabana Mahmood
It is a little unfair of the hon. Gentleman to shake his head at such an early stage of my speech. He should at least give me a chance to develop my arguments.
Helen Goodman (Bishop Auckland) (Lab)
Does my hon. Friend agree that one of the worst aspects is the massive loss to the Revenue? Am I right in recollecting that the projected annual revenue loss to the public purse in 2011 was some £3 billion?
Shabana Mahmood
My hon. Friend is absolutely right. The measure has a static cost of £3 billion a year, and behavioural changes also have an impact. That is the hot debate in which the Minister and I have been engaged ever since I have been in the shadow Treasury team.
Mr Gauke
The hon. Lady raises an interesting point about the static and behavioural effects. She will be aware that the shadow Chief Secretary to the Treasury said:
“We have a choice about a tax rate that would raise £3 billion”.—[Official Report, 5 November 2014; Vol. 587, c. 849.]
Does she believe that putting the 45p rate back to 50p would raise £3 billion for the Exchequer?
Shabana Mahmood
The Minister is tempting me to go further than I want to at this stage, because I am going to develop exactly those arguments about the costing, what the measure is likely to raise, and the inherent uncertainty in the Government’s work and the report that they produced. The Minister will be welcome to intervene once I have reached that point in my speech.
Ian Murray (Edinburgh South) (Lab)
As always when it comes to talking about the 50p tax rate, my hon. Friend is incredibly persuasive. Does she not find it strange that the Government are projecting a £7 billion tax cut but refusing to raise tax in this way, so the only conclusion the public can come to is that they must be looking to break their promise and raise VAT?
Shabana Mahmood
My hon. Friend is both generous and correct. Members who were here for the last debate will know that Government Members utterly failed to meet the charge levelled at them, which was that the combination of their history on VAT and what they wish to achieve in the next Parliament means that a VAT rise is inevitable if the Conservative party is elected to government in a few weeks’ time.
We know that the Government’s decision to reduce the top rate of tax for those earning more than £150,000 is as much at the heart of the current political debate today and in the next few weeks as it was in 2012. The debate is about where we raise revenue from and who we ask to shoulder the burden to help bring down the deficit further.
Ian Swales
I know that the shadow Minister was not a key part of the previous Government, but does she believe that the right shoulders to bear the burden were those of people on minimum wage, who were paying £1,000 in tax? The highest rate of income tax was 40% for every single day but one that Labour sat on the Government Benches.
Shabana Mahmood
I was not a Member at that time, so I was not a part of that Government at all, but I am proud of the previous Government’s record over 13 years. The hon. Gentleman will know that we raised the top rate of tax to 50p in response to the global financial crisis, and that was the right thing to do—[Interruption.] He asked about the minimum wage and mentions it yet again from a sedentary position, but we were the Government who introduced the minimum wage in legislation. That was one of our proudest achievements, and my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) told me last week that the last all-night sitting of the House of Commons was when the Labour Government introduced the national minimum wage. Labour Members were in the House at eight in the morning to vote it through and they were absolutely right to do so.
Andrew Gwynne
My hon. Friend is absolutely right to recognise the importance of the national minimum wage to many people in this country. Of course, tax changes are one side of the equation, and the other has been the changes to tax credits, which benefited many people under the previous Government. Is it not the case that we have seen a £3 billion cut for the very richest with the cut in the 50p rate, at a time when average families are £1,100 worse off as a result of the tax and tax credit changes?
Shabana Mahmood
My hon. Friend is absolutely right. I was coming on to exactly that point. This is a question about living standards: what is happening to the poorest in our society and where the burden should ultimately rest for sorting out the nation’s finances after the global financial crisis.
At the Budget last week, the Chancellor would have had us believe that people are on average £900 better off as well as more secure as the result of his policies. I have to hand it to him—he has been highly innovative in using a new measure of living standards to try to back up his claim, but it includes income to universities and charities. I do not blame him for trying, but he knows the truth, as do Members and the public, which is that people say time and again that they are worse off. A poll of 5,000 consumers’ responses to the Budget showed that three quarters of people have seen no improvement in their living standards. A Populus poll before Christmas found that only one in seven adults said they were feeling the benefit of recent economic growth.
As my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) has said, wages after inflation are down by £1,600, and the combined impact of tax and benefit changes has left families on average £1,127 a year worse off. That was the context in which it was decided to reduce the additional rate of tax to 45p, giving millionaires a tax cut worth an average of £100,000, which is a huge sum of money by any standards. As I have just said, wages are down by £1,600 a year, tax and benefit changes have left people £1,127 worse off, and, as we heard in the previous debate, higher VAT has left people £1,800 worse off over four years. For people at the bottom end of the income spectrum, such sums are the difference between being able to put food on the table and to put clothes on their children’s back or not, while the choices for those at the other end of the income spectrum, who are benefiting from a tax cut to the tune of £100,000, are probably about the poshness of the car on the forecourt of their home, not the basic necessities of life and of survival. That is the important point for struggling families across our country.
David Wright
Is my hon. Friend interested, as I am, in the line developed by the Liberal Democrats that the 50p rate was in place only at the end of the previous Labour Government for a very short time?
David Wright
Indeed. This is all about the choices made to bring down the deficit. We made a choice—a forward offer or plan—to use a higher top rate of income tax to bring down the deficit, and the Liberal Democrats decided to vote against that strategy.
Shabana Mahmood
My hon. Friend is absolutely right. The hon. Member for Redcar (Ian Swales) always takes part in Finance Bill debates, and he always makes one point in exactly the same way. I sometimes wish that he would listen to the answer he gets when he does so. The answer is that the top rate was increased as a specific response to get down the deficit after the global financial crisis. It was the fair and right thing to do then. It was unfair and wrong to decrease the rate from 50p to 45p, which he, as a member of one of the parties of government, supported. It will be right for the next Labour Government to raise it to 50p again.
Stewart Hosie (Dundee East) (SNP)
The hon. Lady is absolutely right that that rate of tax should have gone up to 50p during the downturn and that it should not have been cut. She is equally right to compare the tax cut for millionaires with the poverty of ordinary people, so why did Labour Members sit on their hands when we had the one opportunity not to have a tax cut for millionaires?
Shabana Mahmood
One of the things about the annual debate on the 50p rate is that the usual suspects make the same points in exactly the same way. We have heard that point from several members of the hon. Gentleman’s party. I say to him what I have always said—that we have had a consistent approach to the top rate of tax. There has been no change to that, and we will put it up to 50p if we are elected in a few short weeks’ time.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
My hon. Friend is making a powerful case. Is not one example of how the burden is not being shared fairly the fact that, as we were reminded earlier today, there was one food bank in Scotland when Labour left office, but there are now 50? I am sure that example could be repeated throughout the entire country, and it emphasises the inequitable nature of the Government’s policies.
Shabana Mahmood
My hon. Friend is absolutely right. In fact, when I was talking about VAT in my constituency yesterday, I was struck by the number of people I met who were in work but using food banks. They are trying to do the right thing and working as hard as they possibly can, yet they still cannot put food on the table. How must it feel for them to find themselves in that situation and to know that under the current Government, a millionaire is better off to the tune of a hundred grand a year? I would say that it feels pretty rubbish, and that is what my constituents are telling me every day.
Lyn Brown
I was on the phones canvassing the other week, and a man from a neighbouring constituency said that he felt the Government should be more Thatcherite in their attitude towards taxes. I did not really know where to go with that, but I listened on. He said that it was because Margaret Thatcher had had a 60% tax rate for some years, only getting rid of it in 1988. He said that the current Government, who seem to idolise Margaret Thatcher, might take a leaf out of her book. He had been a Tory voter, but stopped being one simply because of the unfairness of the rate going down from 50p to 45p. I never thought that I would stand here urging Conservative Members to be more Thatcherite, but to represent such views fairly I think it is my duty.
Shabana Mahmood
My hon. Friend has acquitted herself of that duty in her usual brilliant way. We may not be able to persuade the Conservatives to be fully Thatcherite, but getting them part of the way there would be welcome. If they cannot bring themselves to support bringing back the 50p rate, which of course they will not, they should at least support our amendment. As I said, it comes down to a simple question: is the burden of deficit reduction and dealing with the fall-out from the global financial crisis being shared fairly across all parts of our society? The amendment is genuinely intended to shed some light on that.
Ian Murray
I am grateful to my hon. Friend for giving way again. She is always incredibly generous, especially in Committee debates on Finance Bills.
If the Government are correct in their assertions about tax take and behavioural change—that a 45p rate generates more than a 50p rate and is fairer—does my hon. Friend share my surprise that they object to bringing forward a report that would tell us exactly that?
Shabana Mahmood
That is exactly the point. If the Government have nothing to hide and nothing to fear from all the data being out there for us to interrogate, they should accept our amendment and get on with the review that we have called for. They should have got on with it when we first called for it, immediately after they made the change to the rate. Our amendment genuinely seeks to shine light on what has been happening to people’s incomes and the impact of changes to the top rate of tax. When the Government commissioned their report, the data were not extensive, and the report has been contentious from the minute it came off the printer. The reasons for that go to the thrust of what the Financial Secretary was asking me earlier, and I will come on to those points shortly.
As we have heard, the Labour Government introduced the 50p rate. It came into effect in 2010-11 and was a decision made after the financial crisis as we sought to get the deficit down. There was nothing in the coalition agreement about abolishing the 50p rate, but in 2011 HMRC was asked to look into it and the yields it produced. It did not take a genius to work out that the Chancellor was thinking about cutting the top rate of tax, and in 2012 with HMRC’s report, the Exchequer effected a 50% additional rate of income tax to back up the Chancellor cutting the rate to 45p.
Andrew Gwynne
My hon. Friend talks about the work done by HMRC. Is that almost the same piece of work that the Labour amendment would require the Government to do, in that it would show an analysis of how much money the 45p rate is bringing in and how much the 50p rate would bring in? It would also allow hon. Members to have a proper debate about the proportion of taxes that should go towards deficit reduction as opposed to spending cuts.
Shabana Mahmood
As ever, my hon. Friend is absolutely right, and it is precisely to get that additional data that we have tabled this and similar amendments ever since the change was made. Why would the Government go through the process of looking at yield and getting HMRC to produce a report in 2011? That is important, because everyone knew—both at the time and ever since—that there were not enough data to come to an accurate view about yield as the rate had not been in place long enough. To put it bluntly, the Chancellor probably felt that some people might not agree with his decision to give people earning more than £150,000 a massive tax cut, given the state of the rest of the economy and the crushing of people’s living standards on his watch. What he needed to back his decision was a report that said that the 50p rate hardly raised anything at all, which is precisely what the HMRC report said. After analysing a host of facts and figures, the report concluded that a cut that would, by the Government’s initial estimates, cost £3 billion— the so-called static cost, excluding all behavioural changes— would cost only £100 million.
The trouble with the report is that, as everyone acknowledges, there are too many uncertain variables to be anywhere near sure that the figure of £100 million is even close to reality. The report was based on only one year’s worth of data relating to 2010-11. That is a significant weakness, since we know that some incomes were taken earlier to avoid the extra tax. Further detail is now available, including for the tax years of 2011-12 and 2012-13 when the 50p rate was still in place. The writers of the 2011 report did not have those data available, so their report is therefore lacking. That could be remedied were the Government to accept our amendment.
The report attempts to quantify behavioural change. The scale of behavioural change is primarily based on an assessment of taxable income elasticity—basically the extent to which taxable income changes when the tax rate changes. The IFS says that there is a margin of error within calculations for the 2011 report, and that staying within that margin of error one could easily say, depending on taxable income elasticity, that cutting the rate of tax could cost the Exchequer £700 million or could raise £600 million. That gives an idea of the range of figures we are talking about and of how uncertain such projections are.
I return to my central point: more data are now available and could help to calculate a truer picture of the yield of a 50p tax rate as opposed to a rate of 45p. If Conservative Members are so certain that their position on the abolition of the 50p rate is true, why will they not agree to the scrutiny that the amendment suggests?
Mr Gauke
I come back again to what the hon. Lady’s colleague, the shadow Chief Secretary, said from the Opposition Dispatch Box, when he referred to the 50p rate as
“a tax rate that would raise £3 billion”.—[Official Report, 5 November 2014; Vol. 587, c. 849.]
Does she stand behind the statement that the 50p rate would raise £3 billion?
Shabana Mahmood
I was here for that debate and my hon. Friend the shadow Chief Secretary was recognising that the first thing we start with is the static costing. That is the only certain figure we have and that starts us off at £3 billion. We have, of course, to make an allowance for behavioural change and that will impact on the yield, but the calculation for how we get to understanding the behavioural change is the bone of contention between the Financial Secretary and me.
Mr Gauke
The hon. Lady is making a perfectly sensible point now, but it is a very different point to that made by the shadow Chief Secretary. He did not say, “The static cost is this, but then there is the behavioural cost” and so on. He said that it was
“a tax rate that would raise £3 billion”—[Official Report, 5 November 2014; Vol. 587, c. 849.]
It sounds to me that the hon. Lady does not agree with that. She is not claiming that it would raise £3 billion. Is my interpretation of what she is saying correct?
Shabana Mahmood
My interpretation of what the Minister is saying is that he is making a valiant attempt at trying to create something out of nothing. As I said, I was here for that debate and I remember that exchange very well. The Financial Secretary and my hon. Friend the shadow Chief Secretary had a bit of to-ing and fro-ing over the static costing, but the rest of the debate and everything my hon. Friend said was absolutely clear. It has always been our position that we start with the static costing and that is not in doubt: it is £3 billion. The question then is: what happens when we allow for the impact of behavioural change? My contention—it has always been our contention; it is exactly what the shadow Chief Secretary said in his remarks in that debate on that day—is that the extent of behavioural change, as envisaged in the 2011 report, was based on an uncertain set of figures and that we have much more data now to be able to get to a certain point.
Shabana Mahmood
I am not going to give way again, because I have very little time. The Minister can pick the point up again in debate and I am sure he will do so.
It is not sufficient for Government Members simply to point at the increased yield following the rate cut to 45p and deem that their point has been proved. Just as people brought forward their incomes before the rate was introduced, so people held off taking income until the rate was lowered. We know the increase in yield at 45p was due primarily to record bonuses, which were up 80% in the year after the rate was reduced. If the truth is what is sought, then rigorous analysis is what is required. The blunt truth, however, is that the truth is not what is being sought here by the Government. The decision was taken for ideological reasons. There is no other justification. The abolition of the 50p rate was nothing other than a huge tax cut for the very richest, while ordinary families continued to struggle, and struggle for longer.
There is growth in the economy and that is welcome, but it has been a long time coming. It is ordinary families who have ended up paying the price. That is why we have continued to press home the point about the top rate of tax. While ordinary families are paying the price, we have let the very wealthiest in our country have a huge tax cut. That cannot be right. A top rate of tax at 50p will play an important role towards fair deficit reduction under the next Labour Government. If the Government have absolutely nothing to hide or fear in the facts and figures behind the cut from 50p to 45p, they should accept our amendment to clause 1.
Mr Gauke
It is a great pleasure to serve under your chairmanship, Sir Roger.
First, I shall say a word about the clauses in this group. Clause 1 provides the charge and sets the rates for income tax for 2015-16; clause 2 relates to limits and allowances; clause 3 sets the personal allowance for 2015-16 at £10,600; clause 4 relates to the basic rate limits; and clause 5 sets the personal allowance for 2016-17 at £10,800 and for 2017-18 at £11,000. That is a dramatic increase on the rate we inherited in 2010, when it was below £6,500, and makes good progress towards the target that my party and the Liberal Democrats have set of £12,500 by the end of the next Parliament.
Mr Gauke
None the less, under this Chancellor and this Government, we will stick to the long-term economic plan and avoid populist giveaways that could damage the public finances.
I could spend some time on these clauses—they are a significant achievement for the Government and I am delighted we are making further progress on increasing the personal allowance—but I shall deal with amendment 1, tabled by the Opposition. It is the annual debate we have on these matters; it is familiar to me and, I suspect, to you, Sir Roger. It proposes that the Government publish a report reviewing the impact of setting the additional rate at 50% within three months of passing the Bill. In addition, it asks for an assessment of
“the impact of setting the additional rate for 2015-16 at 45 per cent and 50 per cent on the amount of income tax currently paid by someone with a taxable income of…£150,000…and…£1,000,000 per year.”
To be credible, such an analysis would need to take behavioural impacts into account, like the HMRC report on the additional rate published at Budget 2012. Simply looking at theoretical income tax liabilities when increasing taxes is not enough. For perhaps the first time in a long time in these debates, we might have made a bit of progress in trying to understand Labour’s position. The HMRC report concluded that the underlying yield from the introduction of the 50p rate was much lower than originally forecast owing to large behavioural effects. It would be fair to say that when the 50p rate was introduced by the previous Government, they made allowances for behavioural effects. The question is whether it was sufficient.
When HMRC looked at this again, it was clear that the behavioural effect was greater than anticipated by the previous Government. Indeed, it is quite possible that it cost the Exchequer money. So let me take this opportunity to assure hon. Members once more that the Government already consider the impacts of any policy decisions taken, and they take the behavioural effects into account. The simple point is that the 50p rate was failing to raise the money anticipated.
Ian Swales
People find some of these behavioural effects hard to imagine. One of them, of course, was that under the previous Government somebody paying tax at that kind of rate could put £250,000 into a pension fund and save all the tax—£125,000. The maximum that can be saved now is £18,000.
Mr Gauke
My hon. Friend raises an important point. There are a number of behavioural effects. Sometimes when we have this debate, there is a tendency for Opposition Members to say, “Ah, behavioural effects. You are just talking about tax avoidance.” Tax avoidance can be an element, but it can also be behaviour that is clearly compliant both with the letter and the spirit of the tax system yet will reduce yield. Increasing contributions to pension schemes, for example, could result in a reduction in revenue. It could be that somebody decides to relocate out of the United Kingdom. It could be—an important point that gets to the heart of why we reduced the tax— that international businesses in deciding where to locate staff might conclude that the costs of doing so in the UK are greater than elsewhere, and that there are better climates and environments in which to locate highly paid staff.
Those are some of the behavioural impacts that are a consequence of having an uncompetitive rate of income tax. That is one of the challenges that Governments have to face. To be fair, the previous Labour Government, for the vast majority of their time in office—this point has already been made by my hon. Friend the Member for Redcar (Ian Swales)—did not increase the 40p income tax rate. Tony Blair was very clear that in his view increasing the rate above 40p would be a mistake. We have taken the view that it was right to reduce the rate down to 45p, but the important question remains of what is the purpose of having a high rate of income tax. Is it to raise revenue or is it simply about sending a signal? If it is to raise revenue, we have to ask ourselves how much it will raise.
This is why I return to the comments—I cited them accurately and in context earlier—made by the shadow Chief Secretary on 5 November:
“We have a choice about a tax rate”—
he is clearly talking about the 50p rate—
“that would raise £3 billion, and it is important that we take that opportunity to tackle our deficit, rather than giving that money away to those people who are already in an extremely privileged position.”—[Official Report, 5 November 2014; Vol. 587, c. 849.]
He is talking about raising £3 billion. I pressed the hon. Member for Birmingham, Ladywood (Shabana Mahmood) on two or three occasions because she was making a different argument. She was saying that the static cost is £3 billion, and then it is a question of working out what the dynamic and behavioural effect will be so that we have a true and accurate position on how much this tax will raise. That is a perfectly reasonable point—it is not possible to disagree with the fact that there is a static number, but that is not terribly helpful in guiding us towards a sensible policy, because we have to know the behavioural effects. Let me be clear. The hon. Lady is clearly stepping away from the suggestion that this will raise £3 billion—
Shabana Mahmood
If the Minister was listening to my speech, he would know that I am asking for a report to give us a better idea of what this measure will raise—including all the data to hand from the additional years in which the rate was in place but not included in the 2011 HMRC report. All I can say to him on the figures is that the only certain figure we have is the £3 billion static cost. I accept that behavioural change will bring that down and decrease the yield, but neither he nor I can say, with hands on our holy books, that we know the exact number. That explains what I have asked for in the amendment. I believe this could be a revenue-raising measure to get the deficit down in a fairer way. The extent to which we can do that is the thrust of my amendment.
Mr Gauke
We are making further progress. The hon. Lady has now explicitly said that the 50p rate will not raise £3 billion. [Interruption.] She has explicitly said that, because she has accepted that there will be a behavioural effect that will bring the amount down. I do not know why she is complaining and chuntering, because she has just made the unarguable point that the amount raised will be less than the static cost. That is not the point that the shadow Chief Secretary was trying to make.
Labour politicians are generally very good at saying, “It is a £3 billion giveaway”, in an attempt to give the impression that it will be a £3 billion increase in revenue. I accept that the shadow Chief Secretary probably misspoke, and that when he said that the 50p rate would raise £3 billion, he was getting a little carried away. Labour politicians usually avoid saying, “It will raise £3 billion”, for the very good reason that that is a completely unsupportable position. To be fair to the hon. Member for Birmingham, Ladywood, she is not making that case today. However, I wish to point out that even the Labour party does not believe that the 50p rate will raise £3 billion, which it clearly will not.
Andrew Gwynne
I appreciate that we are five and a half weeks from a general election, so we can exchange party-political knockabout. Having said that, I would politely say to the Minister that the point he is making—very eloquently, I must say, if I am being fair to him—is precisely the point made by my hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood). There is a degree of uncertainty. Is that not exactly why he should support the amendment?
Ian Swales
I thank the Minister for giving way again. He is being very generous with his time.
As assessment has been made by an independent group, the Institute for Fiscal Studies, which came up with a figure of about £100 million. Labour Members have used the word “exact”. Does the Minister reject the idea that the amount can ever be estimated exactly, partly because of the behavioural factors to which he referred a few minutes ago?
Mr Gauke
That is a very good point, which leads me to the two quotations that I was about to give. Paul Johnson, the head of the IFS, said in a paper that was published on 27 January 2014:
“The best available estimate of what reversing the cut would raise is therefore about £100 million too.”
He also said that
“the best evidence we have still suggests that raising the top rate of tax would raise little revenue and make, at best, a marginal contribution to reducing the budget deficit an incoming government would face after the next election.”
Fiona O’Donnell
I thank the Minister for his generosity in giving way again. The Institute for Fiscal Studies has said that the Government’s plans for tax cuts by 2020 would cost £7.2 billion. Can he tell us where that money would come from?
Mr Gauke
We have a record of increasing the personal allowance. This is a very good time to make that point, as we are debating, among other things, clauses 1 to 5, under which the personal allowance will move up to £11,000 during the next few years. We have a record of being able to deliver big increases in the allowance, and that is what we will do.
Let me now press on. The economic recovery is well under way, and last year Britain grew faster than any other major advanced economy in the world. The Government will not consider any action that would put the United Kingdom’s recovery at risk. While the additional rate has been reduced to ensure that the UK remains internationally competitive, the Government’s policy is to repeatedly increase the tax contribution of the wealthy. The share of income tax paid by the top 1% of taxpayers is projected to rise from 25.1% in 2010-11 to 27.3% in 2014-15, which means that they are expected to pay a greater share of income tax in 2014-15 than in any year under the last Government.
Shabana Mahmood
I beg to move amendment 2, page 3, line 39, at end insert—
“(3) The Chancellor of the Exchequer shall undertake a review, within six months of the passing of this Act, of the impact of a cut of one per cent to the main rate of Corporation Tax for financial year 2016, with particular reference to—
(a) the impact on businesses with fewer than 50 employees;
(b) the impact on investment by businesses with fewer than 50 employees; and
(c) alternative tax measures, including non-domestic rates, which would have a greater benefit for businesses with fewer than 50 employees.
(4) The Chancellor of the Exchequer must publish the report of the review and lay the report before the House.”.
The Temporary Chair (Sir Roger Gale)
With this it will be convenient to discuss clause stand part.
Shabana Mahmood
The review proposed in amendment 2 would give us a better understanding of the factors that are helping small businesses to grow and those that are limiting their expansion. Most small and medium-sized businesses with a smaller number of employees tend to be run from premises that have a rateable value of below £50,000. I should say at the outset—the Minister and I have had this debate before—that Labour does not oppose the recent changes to the rate of corporation tax that have so far come into effect. That is in keeping with our party’s policy over the past 15 years. When Labour left office, Britain had the most competitive rate of corporation tax in the G7. The rate has been cut several times over the past few years. The small business rate for companies whose profits are less than £300,000 now stands at 20%, and the rate for companies earning more than that will be 21% from April—in just a few days.
Andrew Gwynne
Is not a theme developing today: the extent to which tax cuts and spending cuts should contribute towards deficit reduction and, with regard to tax cuts, who should benefit? As with the debates on VAT and the 50p tax rate, we are arguing for greater consideration to be given to small businesses, because larger businesses have already benefited from corporation tax cuts.
Shabana Mahmood
My hon. Friend is right. This comes back to the impact of the choices being made—who is being prioritised and who is not, who is bearing the greater share of the burden and who is not. That is the material point.
We know that the Government’s impact assessment prepared for the 2014 Budget estimates that the cost to the Exchequer of the corporation tax cut would be some £400 million in 2015-16, £785 million in 2016-17 and £865 million the following year. In the 2015 Budget Red Book the estimates are revised upwards: for 2015-16 £550 million, for 2016-17 £1.045 billion, and for 2017-18 £1.1 billion. Those are not insignificant sums for a policy that affects a relatively small number of businesses. That is exactly my hon. Friend’s point.
The Government estimate that some 40,000 businesses pay the main rate of corporation tax and a further 41,000 businesses pay at the marginal relief rate. The Department for Business, Innovation and Skills estimates that the UK has some 5.2 million private sector businesses, the majority of which—3.9 million—are sole proprietorships, and 1 million have fewer than 10 employees. Clearly, if about 81,000 businesses benefit from the corporation tax cut, the opposite is also true—5.1 million businesses do not benefit in any way from that rate change.
The Government believe that a further cut in the corporation tax rate makes UK plc a more attractive place to invest and a more attractive destination for business to locate. The Minister and I have often debated the importance of the headline rate of corporation tax when that judgment call is made by businesses. It is important—a point that I have made on several occasions—but it is worth noting that on the former point it is far from clear that this is the case. We know that business investment fell from 8.2% of GDP in 2010 to 7.8% in 2013. That should not come as a big surprise.
Businesses tell us that they face a range of issues and that their decisions about where to locate and where to remain and invest are not based only on the headline rate of corporation tax. They take many other factors into account, such as infrastructure and the skills available in the labour market. Businesses often say that these factors are very important to their decision making, but they worry that under this Government those areas of policy have not gone in the right direction.
Ian Swales
This is one point on which I think we can agree. Does the hon. Lady share my worry that investment is threatened partly by the uncertainty about the UK’s place in Europe, and that evidence is growing that that is already having an impact?
Shabana Mahmood
This might be the one time during a Finance Bill debate when the hon. Gentleman and I have been in complete agreement. The uncertainty caused by the Conservative party’s positioning over Europe and the Prime Minister giving in to the needs of his party, rather than the national interest, have caused a huge amount of uncertainty. In every conversation that I have had with businesses ever since the Prime Minister made his announcement, that has been the No. 1 issue that they have raised when talking about their future in our country, their future ability to invest in our country, and their future ability to employ more people in our country. It has caused a huge amount of consternation and uncertainty, and the Conservative part of the coalition has been wrong to put its party interest ahead of the national interest.
Our amendment seeks to put flesh on the bones of what is happening to corporation tax by assessing the impact on and the benefit to smaller companies with 50 or fewer employees, which make up the vast majority of private companies in our country. At a time when there are still difficult financial choices to make and a relatively limited number of ways to raise revenue and help support businesses to grow, the evidence suggests that now is the time to give much more support to smaller businesses, and to prioritise smaller businesses for some change in their circumstances, ahead of larger businesses, which have, with the support of all parts of the House, fared pretty well when it comes to cuts to the headline rate of corporation tax.
There is general agreement that small and medium-sized enterprises are the engine of growth in our country, employing more than half the private sector work force and contributing to 50% of UK GDP, but times remain tough and they face wide-ranging challenges. They struggle with high energy costs that do not seem to be getting much better despite wholesale price cuts of 20% in the past year, and with late payments and charges. According to the Government’s own figures, 44% of SMEs had a problem with late payments last year, with the average small business owed over £30,000—an astonishingly high figure.
Fiona O’Donnell
Does my hon. Friend agree that it is important that we assess what the larger corporations do with their extra income as compared with small businesses? Small businesses in my constituency are more likely to create jobs, while larger companies are more likely to give the money to their shareholders.
Shabana Mahmood
My hon. Friend makes an important and interesting point. This is not only about how we how we make choices that prioritise help for those who particularly need it—my case is that SMEs need particular help with business rates—but the impact of the choices we are making and whether they are leading to the change that we hope to see. My case—I know she will agree—is that additional support for SMEs will yield greater gains for UK plc.
This is not about pitting one type of business against another. Government Members have tried to argue that the rise in corporation tax from 20% to 21% that we advocate is an anti-business move, but every single penny of the money from that change will be spent on SMEs, and I defy them to try to imply that they are not true businesses.
Shabana Mahmood
If my hon. Friend wants to intervene, I will give way again.
Fiona O’Donnell
I am grateful to my hon. Friend; I was enjoying her contribution so much that I was going to desist. Does she agree that in the Consumer Rights Bill the Government missed an opportunity to give small businesses consumer rights, and that is often leaving them open to abuses by larger organisations?
Shabana Mahmood
My hon. Friend is right. I am glad that she has put on record the interplay between the Consumer Rights Bill and small businesses. That was a missed opportunity. The Government should have taken the opportunities available to them during the passage of that Bill to offer a further boost to these struggling businesses—all 5.1 million of them. The vast majority of businesses in our country could have been supported.
Small businesses struggle not only with high energy costs, late payments and charges, but with access to finance. Every time we discuss these issues, the problem of access to finance comes up. I am afraid that the Government have failed to get a grip on this. Since 2010, lending has fallen by a colossal £56 billion. Even in the most recent quarter, net lending to small business fell by a further £1 billion. Research has shown that some 85% of small businesses are locked into the big five banks alone. It has also shown that most SMEs will approach only the larger banks when looking for finance, and that even then the rejection rate is about 50%.
Then there is the pressing issue of business rates. Business rates are levied on the estimated market rental cost of most non-residential properties, and currently based on 2008 rental values. In 2012-13, they raised £26.1 billion. Relief on business rates exists for low-value properties—those with a rateable value of below £6,000—which are subject to a 100% discount. Since April 2013, local authorities in England have been able to retain between a quarter and a half of the rates raised from new developments.
For many small businesses, business rates are a significant overhead that they need to factor in. More than one in 10 small businesses say that they spend more on business rates than on their rent. The only choice for many of those shops, workshops, start-ups and others that pay business rates is to pass the costs of the rates on to their customers.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
Does my hon. Friend agree that supporting small businesses, developing skills and apprenticeships and cutting tuition fees, which is what a Labour Government would do, would also benefit large corporations? We need broader measures that work in the interests of the whole economy.
Shabana Mahmood
My hon. Friend is absolutely right and her point takes us back to our earlier debate about the value of the headline rate of corporation tax and the policy environment that supports it.
Clearly, more needs to be done on the business rates regime. We back the announcement of a review of business rates. There are problems in the system. For example, a factory investing in a new piece of equipment will find that its bill will go up next year because property is now worth more, which could be a disincentive to invest. Although our corporate property tax system needs to be fundamentally rethought, small businesses need urgent and immediate relief. Our proposal for a cut in business rates in the first year of the next Parliament, followed by a freeze in the second year, will make a genuine difference. I hope that Government Members will today take the opportunity that they have failed to take previously, support our amendment and thereby show their support for small and medium-sized businesses.
Ian Swales
This might be my last contribution in this place, so I would like to say what a great privilege it has been to represent the people of Redcar for the past five years. I thank colleagues for making my time here such a vivid experience. I would struggle to apply the word “vivid” to the many Finance Bill Committees and finance debates I have taken part in, but overall I have had a terrific time.
I support the lower rate of corporation tax. When opponents of such things talk about lower tax rates, retaining profit is often described as some kind of evil, but what happens to that money? The characterisation is that it will probably end up in high pay for the people at the top, but companies with money have lots of choices and do lots of different things. They might pay more money to their shareholders, the vast majority of which are institutions such as public sector pension funds. They might invest the money or employ more people. They might spend the money on innovation or on building skills, and they might spend more money with SMEs, because all big companies have supply chains that involve small companies.
Fiona O'Donnell
It is an honour to intervene in what might be the hon. Gentleman’s last speech in this place. Has he considered the impact on the rural economy, which suffered particularly harshly during the recession? The recovery there is very fragile and corporation tax cuts will not help rural communities. Does he not think that this could be the wrong cause?
Ian Swales
The economy of the country is an ecosystem. No company exists in isolation and each relates to other companies. One measure that we are not talking about this afternoon is the cut in fuel duty, which is enormously helpful to rural citizens and rural companies, so the Government have taken some steps, although that is probably not relevant to this debate.
Of course, we expect people to pay their share of corporation tax and to do it properly. I remember the head of the CBI saying towards the end of 2013 that he was confused about what Parliament wanted because there was so much noise about tax avoidance. It is not very confusing at all: we want businesses to account for their operations in the UK properly and to pay tax on the money they make in the UK. I do not think that that is complicated, but some businesses appear to think that it is.
I welcome the successive measures that the Government have taken on tax avoidance. They are not just about individual avoidance but about corporate avoidance, too. The Bill contains many provisions, but I shall mention just three: it stops contrived arrangements on carried forward tax reliefs; it restructures bank loss relief; and it puts limits on research and development tax credits to deal with certain items. Once again, the Government are looking in great detail at how companies sort out their tax and picking up anything that looks anomalous. I welcome that.
We can go a step further. Both the Chancellor and the Chief Secretary to the Treasury said last week that we are now consulting on new criminal measures to deal with companies that advise on or enable tax evasion. I am choosing my words carefully. Aggressive tax avoidance, which we often hear about, is more of a grey term, but tax evasion is very clear. If a company advises people on how to evade tax or enables that through the provision of accounts or processes, it is not just the person evading the tax who is criminal. We want those who help—I think aid and abet is the legal term—to be in the dock, too. That will further help to change the climate and the number of prosecutions necessary will be much less than the amount of activity that the provision prevents just by existing.
I welcome the consultation that has started, which is yet another step that would be helpful. We are talking about corporation tax and it is relevant to mention the diverted profits tax. As we know, a lot of corporations divert their profits or do not account properly for their operations in the UK. The diverted profits tax is a good step forward. It is quite limited in scope, but it will help to put the initial stakes in the ground for how we want to deal with things in the future.
There is more to do. I was pleased to hear the Minister talk in his opening remarks about the need to look further at internet companies, because we all know that they can position themselves anywhere. It is quite wrong to assume that the address of the server is where the business is. It is really where the customer is. In fact, the HMRC small print already says that, but it is quite difficult to implement. There is a lot more to be done for internet companies, not least because they are competing against bricks-and-mortar companies, particularly the small businesses that the shadow Minister has been very vocal on and quick to talk about. That is another step that needs to be taken.
John Robertson (Glasgow North West) (Lab)
Does the hon. Gentleman think it right for a Government to take money from a city where a lot is paid in rates—with people from outside the area coming into it—and then spread it around the rest of the country?
Ian Swales
Another thing that the Government have done is to move towards localising business rates again. Certainly my part of the world, which had huge industrial sites such as the one I have mentioned, was pretty nonplussed when all that money was collected by a Government in the 1980s, taken to the centre and then doled out in different proportions. We need to move towards more localisation, not least to incentivise councils to drive economic development. I would argue that that has not been happening sufficiently in some parts of the country, and I live in one of them.
I understand the hon. Gentleman’s point, and there is also the issue about where people live, where they work and what services they use. The south-west has a particular issue when its population doubles every summer, because people may not make a contribution through taxes paid directly in the south-west, but they are using services there. There is another whole argument to be had about the location of rates versus how they are collected.
I will not detain the Committee long. The Government are on the right track with corporation tax. Let us put it this way: there is plenty of work for the next Parliament to do, and I shall watch with interest from afar.
Sheila Gilmore
It is a great pleasure to follow the hon. Member for Redcar (Ian Swales), because we have served together on a number of Finance Bill Committees during the past five years. The debates on the details of a Finance Bill in Public Bill Committee are often better than those on the parts of the Bill taken on the Floor of the House. The theory is that the debates on the more important and bigger parts of the Bill are taken in the Chamber and then the Bill goes upstairs, but the Public Bill Committee often allows us to have quite fruitful debates on many of the issues.
One thing that has been very clear during this Government—perhaps this has always been the case, but it seems to be growing—is that all the political parties are falling over themselves to talk about the importance of small and medium-sized businesses, and we are all the friends of small business. Small businesses are probably very pleased to hear politicians talk so much about them, but then the issue becomes one of whether it is talk or action. It is very easy to praise small businesses, but such businesses, especially new ones, sometimes feel that the system is set against them.
One new business in my constituency involved two young women who set up a fitness studio. They went into premises on what was effectively a redevelopment area after our old hospital had been relocated. Largely because of the financial crash and the recession, the whole redevelopment took longer than expected, so the population to support new businesses had not arrived at the expected rate. Although they got a rent holiday for the first 18 months from the developer who was renting them their premises, which was welcome, they were struggling with business rates. Oddly, even though my local council said that it wanted to encourage economic development and had particularly encouraged the redevelopment of that site, it was not particularly forthcoming with help for a new business.
Those young women were not in the region of having to worry about corporation tax—that was not where their business was. They had to worry about the rates. It was touch and go, but I was pleased to see recently that they are still there and have managed to overcome their initial difficulties. Some of the other redevelopment is beginning to happen, so I hope that they will continue to be successful. However, we do not always join the dots either locally or nationally. Things such as rates are essential for a lot of small businesses, and we have to support such businesses to the greatest extent that we can.
I have some sympathy with the hon. Gentleman in his points about business rates being retained locally. We have to work through the conflict between that and redistribution to ensure that different areas of the country are assisted in developing. When I was on the council in Edinburgh, we often raised the issue. It was and still is an expanding city, and it generates a lot of business. We have big events that generate worldwide attention, and a lot of businesses feel that they bear the cost of all that without necessarily seeing the rates coming back to the city. It is all very well to say that we get rates in because we have events such as the festival and big tourist attractions, but sometimes it feels that the rates are not coming back. I understand the tension between that and looking at the region or country as a whole and trying to build wealth. It is not easy, but we have to incentivise businesses as far as possible to feel that keeping on growing is to their advantage as well as to wider advantage.
Politicians and political parties must not just pay lip service to the importance of small business. We must do specific things to assist, and that is what amendment 2, moved by my hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood), is intended to do.
The hon. Member for Redcar probably has a different view of economics from mine, but he appeared to be of the view that if a company is making a profit, it will be ploughing it back in the right directions. I do not think that is necessarily always the case. Big businesses in particular should make a good contribution to our society, and we have to ensure that they do. I urge the House to support the amendment.
Fiona O’Donnell
It is a pleasure to see you back in the Chair, Mr Hood.
I wish to talk particularly about the rural economy and the opportunities that the Government might be missing, given the importance of small and medium-sized enterprises to rural economies. Given that this may be my last contribution in this Parliament, I also want to reflect briefly on the political situation in Scotland.
We have had more than one eclipse in Scotland in recent weeks. It seems to be a daily occurrence that Alex Salmond’s moon blocks out Nicola Sturgeon’s sun. At one time, the current leader of the Scottish National party—people might easily be confused as to who that is these days, but I remind them that it is Nicola Sturgeon—did a U-turn on the SNP’s proposal in its White Paper “Scotland’s Future” to reduce corporation tax by 3%. I welcome that, because I do not think it would have been a progressive move or have provided the right environment for the stability, job creation, employment rights and pay and conditions that we want in a fair, modern and successful Scotland. The Minister may wish to reflect on that and the debate that went on around the referendum, because the measure was not popular with working people or businesses—certainly not with SMEs that would not have seen any benefit.
The Financial Secretary said that he does not want to do anything to risk the recovery, but I urge him to think about what more his Government can do to aid recovery in rural areas. Most of the conversation and discourse I have heard from Government Members—for example in the Enterprise and Regulatory Reform Bill Committee—was about employment rights. The Minister seemed to think that the way to help small businesses was to erode workers’ rights, but I think that has the opposite effect because it can be more difficult for them to recruit staff.
Much as I admire the beautiful city of Edinburgh, our capital, I am concerned that so many people from my rural constituency commute there for work. At a time when the population of East Lothian is set to grow at the fastest rate of anywhere in Scotland, with 10,000 more homes, we need jobs in our own communities. We must look at the impact that the Budget will have on SMEs with 50 or more employees, and we are asking the Government to pause and reflect on what that impact might be.
We are losing many skills in local, rural and remote economies, especially in the construction industry—that relates to the point raised by my hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood) about difficulties with lending. Small construction firms are finding it very difficult to access lending, which means that they are disadvantaged when it comes to procurement contracts. If they take on small housing developments in the community, the people working on the construction sites will often be local young men and women who are benefiting from an apprenticeship and learning skills, and they will be spending money in that local community. The healthy cycle of the rural economy is thus given new impetus and energy. Will the Minister at least reflect on that?
When small businesses fail, it does not make the headlines in the same way as when a large manufacturing company announces job losses. The news about Longannet, which is across the water from my constituency and where many of my constituents are employed, is deeply concerning. When a small business fails, it does not make the headlines in the same way, but for the rural economy and community it can be devastating. The village where I live in East Lothian, Pencaitland, has two village shops and a pub, and the thought that any of those could fold at any time would have a devastating impact on our community. At that point, community cohesion goes and the place becomes just a dormitory, somewhere people go to lay down their head at night, rather than the vibrant community we want.
We have heard much about devolution during this Parliament. When it comes to how we support and drive growth in the SME sector, we need to trust people at local authority and community level to make decisions about how businesses are supported, how they grow and create jobs and wealth, and how they provide sustainability. We must trust the people who know the area and the skill requirements to make those decisions. Talking about who gets to vote on what Bill does not have the same impact; it does not empower. It may take power away from individual MPs, but it does not empower communities, which is what devolution should be about.
I ask the Financial Secretary to consider the intervention I made on my hon. Friend the Member for Birmingham, Ladywood who spoke from the Opposition Front Bench. What evidence do the Government have that cutting corporation tax will create more jobs than supporting SMEs, particularly in the rural context?
I am very grateful to Members who have been sitting patiently and silently for allowing me to make this pitch on behalf of the rural economy. I look forward to hearing the Minister’s comments.
Andrew Gwynne
It is always a pleasure to serve under your chairmanship, Mr Hood. It is also a pleasure to follow my hon. Friend the Member for East Lothian (Fiona O'Donnell), who I am almost certain will be back in the next Parliament to pursue these cases vigorously with the next Labour Government. I was tempted to speak by the Minister’s generosity in likening me to a future statesman. I appreciate that I have some way to go, although I have not handed him the Red Book across the Table, as I did to his Liberal Democrat counterpart on Thursday.
The debates we have had today really come down to one issue: balance and priorities. It is about the share we expect to take from tax or the share we expect to take from spending cuts to deal with deficit reduction in the next Parliament. As I said in an intervention on my hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood), the issues are the same whether it is the VAT debate, the 50p debate or the debate we are now having on business rates and corporation tax.
John Robertson
The best way to get the tax contribution is to give people real jobs with real pay; then we will get the money in.
Andrew Gwynne
My hon. Friend is absolutely right, and that goes to the nub of the issue today. As my hon. Friend the Member for Birmingham, Ladywood eloquently set out from the Opposition Front Bench, the numbers are clear. In respect of corporation tax, we are talking about a very small number of large businesses operating across the country. The benefits of that tax cut will not necessarily be felt throughout the wider economy. I would argue—I know my hon. Friend makes the same argument—that targeting the same amount of money on a business rate cut for the first year and a freeze for the second year is much smarter, because it would affect 5.1 million small and medium-sized businesses and others. That is the right thing to do for the struggling high street.
I therefore urge the Minister to consider very seriously what the Labour Front-Bench team is asking for. We are not asking him to implement Labour party policy, as much as I would like him to, and we are not asking him to freeze business rates or to cut them. We are asking him to conduct a review so that we can have a proper debate on whether his approach of cutting corporation tax is the right one, or whether, as we argue and believe, cutting and then freezing business rates is a much smarter way of using the same amount of money, as it would create a bigger boost for the economies of towns, villages and cities across the country.
I want to add one note of caution. I am very supportive of the devolution agenda in England. As a Greater Manchester MP, Members would expect me to say that I very much support the efforts by the Greater Manchester combined authority and the 10 local authorities—eight are Labour, one is Conservative and one is Liberal Democrat controlled—and recognise the benefits of the conurbation working together. The Government’s announcement included the retention of additional business rates from growth, but I urge caution. I support the proposal, but we have to approach it on a conurbation, city region and county region basis. Growth areas in cities and counties are often located in particular geographical areas, whereas needs are spread across whole areas. With that, I urge the Minister to accept Labour’s amendment, which requires nothing more than a report that I think would back our plans 100%.
Mr Gauke
First, I pay tribute to my hon. Friend the Member for Redcar (Ian Swales), who spoke in this debate as he has done in so many Finance Bill debates over the past five years. He has always provided a voice of calmness and sanity. I have not agreed with everything he has said, but he has mostly made helpful contributions, and thoughtfulness is a consistent characteristic of those contributions.
The corporation tax rate is set in legislation a year in advance on an annual basis. Clause 6 sets the corporation tax rate and charge for the financial year beginning on 1 April 2016. The House will be aware that in 2013 legislation was passed cutting the main rate of corporation tax from 21% to 20% for the 2015 financial year. The cut will take effect in seven days and give the UK by far the lowest rate in the G7 and the joint lowest rate in the G20. The clause confirms that the rate will remain at 20% in 2016.
The Government have made it clear that we want a business tax regime that is competitive and fair, and since 2010 we have made clear strides towards that goal. The main rate of corporation tax was 28%. We have cut it by almost a third to make the UK more competitive and to support growth and investment. At the same time, we have taken significant measures to clamp down on tax avoidance, and on Second Reading we debated the diverted profits tax introduced by the Bill.
Low corporation taxes enable businesses to increase investment, take on new staff, increase wages or reduce prices. Overall, the corporation tax cuts we have delivered since 2010 will save businesses £10 billion a year from 2016. To give Members a sense of scale, that is the equivalent of giving businesses enough money to hire 270,000 new employees. Oxford university’s centre for business taxation estimates that our reduction in the corporate tax burden will increase business investment by £11 billion; and as well as supporting businesses already operating in the UK, lower rates of corporation tax make the UK more attractive to international businesses. Last year, UK Trade & Investment reported a record number of inward investment projects that led to the creation of 66,000 new jobs and safeguarded 45,000 more.
The corporation tax cuts and other reforms, such as the introduction of the patent box, have completely changed perceptions of the UK tax regime. Five years ago, businesses were leaving the UK because of our tax regime. That regime has now become an asset that attracts firms to the UK. In surveys, the UK is now regularly cited as one of the most competitive regimes in the world. The clause embeds the message that the UK is open for business by affirming that the UK rate will remain at the record low of 20% in 2016.
The Opposition amendment proposes a review of the impact of a 1% cut to the main rate of corporation tax for the financial year 2016. A great deal is already known about the impact of corporation tax policy. We know that lower rates encourage growth and investment, and that stable and simple taxes give businesses confidence to invest and expand. The clause refers only to a single rate because we have already legislated to unify the main rate and small profits rate of corporation tax and to scrap the complex marginal relief system for all companies, except those with ring-fenced profits.
These changes will take effect next week and give the UK for the first time a single headline rate of corporation tax and provide administrative savings for a huge number of businesses, particularly the nearly 50,000 companies that pay the marginal rate of corporation tax each year. The move was recommended by the Office of Tax Simplification, and I would like to take the opportunity to pay tribute to Michael Jack, John Whiting and the team for all the work they have done since we introduced the OTS at the start of this Parliament. The Institute for Fiscal Studies has also been supportive of our reforms. In a recent report, it said:
“The simplification of moving to a single rate of corporation tax…is a real achievement of the coalition government’s tax policy, and it is one that should not be reversed.”
The evidence on corporation tax is clear: low rates and a simple system support business and support growth. In our view, the proposed review would provide little benefit, so we are not minded to accept the amendment.
As far as business rates are concerned, the Government recognise that they represent a fixed cost for businesses. That is why during this Parliament we have continued to double the small business rate relief schemes, supporting 575,000 businesses, of which 385,000 pay no rates at all. We have capped the inflation-linked increase in the business rates multiplier at 2% for two years, and we have provided a £1,000 retail discount this year, rising to £1,500 next year for small shops, pubs, cafés and restaurants, supporting the high street.
Labour said it would cut business rates by 1% for lower-value properties in 2015-16. Under its plan, the smallest single properties would pay more. A property with a rateable value of £5,000 saves £1,165 under this Government compared with the Opposition’s proposals. The high street would also lose out. A shop with a rateable value of £30,000 saves £1,080 under this Government when compared with the original proposals. We have published terms of reference for a wide-ranging ambitious review of Budget business rates to report back to the Government. That is, of course, on top of what we have done on fuel duty, which helps small businesses, and the employment allowance, which does the same.
In conclusion, cutting corporation tax has been a central part of our economic strategy—a strategy that is working. In 2014, growth in the UK outstripped that of every other G7 country. Employment is at record levels, business investment is growing rapidly, and this clause ensures that the rate of corporation tax for 2016-17 will remain at 20%—an extremely competitive rate and a foundation of tax system designed to support growth and investment. Reversing the progress we have made would be a big mistake and send a terrible signal to businesses around the world. That is why I believe the clause should stand part of the Bill.
Question put, That the amendment be made.
Caroline Lucas (Brighton, Pavilion) (Green)
On a point of order, Mr Hood. Can we look again at the way in which the business of this House is organised, because it brings our procedures into real disrepute when we have not had the chance even to look at a set of important amendments, much less to debate them. [Interruption.]
The Temporary Chair (Mr Jim Hood)
Order. I ask Members for order to allow the hon. Lady to make her point of order.
Caroline Lucas
I was simply making the case that our procedures are brought into disrepute when we have not had the chance even to debate a huge number of amendments, much less to put them to the vote, including an important amendment that would have closed a tax-dodging loophole for private equity firms. Can we look again at the way in which the business of this House is organised, Mr Hood?
The Temporary Chair
I thank the hon. Lady for her point of order. She may want to take her point up with the Procedure Committee. Unfortunately, it is not a matter for me.
Ms Angela Eagle (Wallasey) (Lab)
On a point of order, Mr Deputy Speaker. It has just come to my attention that the Government have tabled a motion for debate on the final day of this Parliament, with no notice whatever to myself as shadow Leader of the House. The motion proposes changes to the way in which the Speaker is elected—procedural matters in the House—with no consultation with Her Majesty’s loyal Opposition and no consultation with the Chair of the Procedure Committee, for debate in only one hour tomorrow. Is this in order? Do you believe that the procedures of this House should be bandied around by the Government in this way, and that we should have surprises delivered to us in this manner on the last day of the first ever fixed-term Parliament? The motion attempts to influence the results of the first thing that will happen in the next Parliament, with no chance for large numbers of Members who had no knowledge that this was happening to participate.
Mr Deputy Speaker (Mr Lindsay Hoyle)
It is a business matter for the Government, as the shadow Leader of the House is well aware. Rightly or wrongly—whichever the House may decide—a business motion was agreed to yesterday, as I understand it, and as we know, business of the House is decided by the Government, not by the Chair, so it is not a matter for the Chair.
Kevin Brennan (Cardiff West) (Lab)
Further to that point of order, Mr Deputy Speaker. Usually I am an assiduous attender, as you know, of business questions, but I was unable to attend last week. Was this announced then? If it was not, can you tell us when you and Mr Speaker were informed that the motion was to be tabled?
Mr Deputy Speaker
It was a business motion that was agreed yesterday, but not the terminology, I presume. Mr Speaker is not in the Chair so I do not know when he was told. I was told about five minutes ago when I came into the Chair. [Interruption.] No, that is correct. There is a business motion. [Interruption.] Mr Doughty, we are trying to deal with this. We have many other points of order on that matter.
Mr John Spellar (Warley) (Lab)
Further to that point of order, Mr Deputy Speaker. We have had some slightly strange events on the Budget, with Ministers speaking from the Government Dispatch Box—from the Treasury Bench—but speaking for their parties. My understanding is that the Government speak from there—the Government Benches. May we be clear? Is the motion a Government motion, which has therefore been signed off by the coalition partners, or is it a motion from the Conservative party?
Mr Deputy Speaker
We are getting into areas that are not a matter for the Chair. This is agreed business of the Government. That answers that.
Barbara Keeley (Worsley and Eccles South) (Lab)
On a point of order, Mr Deputy Speaker. Is it in order for a member of a Select Committee who has been involved in a serious leak and a possible breach of privilege in this House then to raise that, as happened today at Prime Minister’s questions in a question from the hon. Member for Bristol North West (Charlotte Leslie), thus exacerbating the situation the Committee has found itself in? I would be grateful for your advice.
Valerie Vaz (Walsall South) (Lab)
Further to that point of order, Mr Deputy Speaker. Other members of the Health Committee are also affected. The hon. Member for Bristol North West (Charlotte Leslie) has openly leaked the private considerations of the Committee. What action can be taken immediately?
Mr Deputy Speaker
May I just say that we are raising a matter where a Member is being discussed? I presume that they are aware that this matter was going to be raised as a point of order.
Rosie Cooper (West Lancashire) (Lab)
Further to that point of order, Mr Speaker. Like my hon. Friends, I think that we, as members of the Health Committee, need the advice of your good self as to how we can address the distorted report of events at the private sitting of the Committee without falling foul of the very convention that prevents this. Conservative members of the Health Committee have previously been referred to the Liaison Committee by a vote in the Committee, and here we have it again. How do we defend ourselves?
Grahame M. Morris (Easington) (Lab)
Further to that point of order, Mr Deputy Speaker. I do think it is an absolute outrage that the hon. Member for Bristol North West (Charlotte Leslie) did not give us notice that she was raising the matter. She is subject to a referral. Other Select Committees have chosen not to publish reports.
Mr Deputy Speaker
I am sure that you are aware that Mr Speaker has sent a letter to the Chair of the Select Committee. I can also inform you that it is not a matter for the Chair; it is a matter for the Committee. In the new Parliament, there will also be a new Committee that can look into it. Unfortunately, as I say, it is not a matter for the Chair.
Prevention and Suppression of Terrorism
(9 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister for Security and Immigration (James Brokenshire)
I beg to move,
That the draft Terrorism Act 2000 (Proscribed Organisations) (Amendment) (No. 2) Order 2015, which was laid before this House on 23 March, be approved.
The threat level in the UK, which is set by the independent Joint Terrorism Analysis Centre, remains at “severe”. This means that a terrorist attack in our country is highly likely and could occur without warning. We can never entirely eliminate the threat from terrorism, but we are determined to do all we can to minimise the threat to the UK and to our interests abroad. It is also important that we demonstrate our support for other members of the international community in their efforts to tackle terrorism wherever it occurs. Proscription is an important part of the Government’s strategy to disrupt terrorist activities.
The two groups we propose to add to the list of terrorist organisations, amending schedule 2 to the Terrorism Act 2000, are Jamaat ul-Ahrar and the Haqqani network. This is the 18th proscription order under the Act. Under section 3, the Home Secretary has the power to proscribe an organisation if she believes it is currently concerned in terrorism. The effect of proscription is that a listed organisation is outlawed and is unable to operate in the UK. It is a criminal offence for a person to belong to, support or arrange a meeting in support of a proscribed organisation, or to wear clothing or carry articles in public that arouse reasonable suspicion that an individual is a member or supporter of a proscribed organisation.
Having carefully considered all the evidence, the Home Secretary believes that JUA and the Haqqani network are both currently concerned in terrorism. Hon. Members will understand that I am unable to comment on specific intelligence, but I can provide a summary of each group’s activities in turn.
Jamaat ul-Ahrar is a militant Islamist group that split away from Tehrik-e-Taliban Pakistan in August 2014. JUA aims to establish an Islamic caliphate in Pakistan and aspires to extend global jihad into the Indian subcontinent. The group has claimed responsibility for a number of recent attacks. In September 2014, JUA’s spokesman released a statement criticising the British Government for arresting suspected Al Muhajiroun associates and made a threat, stating that
“your future security depends upon how nicely you treat the Muslims in Britain”.
Additionally, the group has claimed responsibility for the fatal attacks on Christian sites in Lahore earlier this month.
The Haqqani network is an Islamist nationalist group seeking to establish sharia law and to control territory in Afghanistan. It is ideologically aligned with the Taliban. It has links with a number of terrorist groups in the region, including proscribed central Asian group Islamic Jihad Union, and long-established links with al-Qaeda.
The Haqqani network continues to play an active and influential role in the Afghan insurgency in the east of the country, and is seeking to expand its influence into other areas of Afghanistan. Given the Taliban practice of claiming attacks on behalf of the insurgency as a whole, it can be difficult to identify the Haqqani network’s specific responsibility for attacks, but the group is believed to have been responsible for the attack against the British embassy vehicle in November 2014 that killed six people, including a UK national and an Afghan member of UK embassy staff, and that injured more than 30 people. It is likely that the Haqqani network will continue to view Kabul as a key target location due to the concentration of UK and western interests in the capital.
In conclusion, it is absolutely right that we add JUA and the Haqqani network to the list of proscribed organisations in schedule 2 to the Terrorism Act, subject to the agreement of the House and the other place. The order will come into force on Friday 27 March.
Diana Johnson (Kingston upon Hull North) (Lab)
I thank the Minister for his statement. There is a long tradition of cross-party co-operation on national security. The Opposition will support the Government motion. We are satisfied that the groups included meet the test of terrorism under section 3 of the 2000 Act.
This is the last time we will discuss a proscription order during this Parliament. I believe it is the eighth time I have responded for the Opposition on a proscription order, and the sixth time in the past two years. The increasing rate of proscription orders reflects the increasing terror threat in recent years and the emergence of terror groups across the world.
During this Parliament, we have proscribed groups such as Boko Haram from Nigeria, and Imarat Kavkaz from the Caucasus. Less than two years ago, we were proscribing the Islamic State in the Levant, which is now the world’s largest, best-funded and most powerful terrorist organisation ever. The two groups we are discussing are, in some ways, a break with the trend of the past five years. They are established and well-publicised groups relating to long-standing terror groups including al-Qaeda and the Taliban.
The Opposition, as always, have not had access to the same information about the groups as the Minister. However, given that the two groups are already well established and high profile, and are linked to a series of shocking and violent terrorist acts, we are happy to support the Government motion.
As the Minister laid out in his statement, JUA is an Islamic extremist group that is seeking to establish a so-called Islamic caliphate in Pakistan, and to commit a global jihad across the Indian subcontinent and beyond. As he explained, the group is linked to several high-profile attacks from last year, and has spoken out to support UK-based hate preacher Anjem Choudary.
The Haqqani network appears to be an even larger group, hailing from Afghanistan and aiming to establish sharia law and take control of territory. As the Minister said, the group is aligned with both the Taliban and al-Qaeda, as well as with other known terror groups such as Islamic Jihad Union. Taken together, the groups provide a substantial force with a reach across central Asia. The Opposition are particularly concerned about the apparent involvement of the Haqqani network in attacks on the British embassy, and so absolutely support its proscription.
I agree with the Minister that proscription is a vital tool against terrorism, and that it enables us to tackle and disrupt terror groups co-operating around the world, but as we come to the end of a Parliament during which there has been an exceptional number of proscription orders, we need to consider whether the proscription powers we currently use are having the results we require. The effect of a proscription order is to make it illegal to join, support or even wear a uniform associated with a terrorist group, but it seems that proscription orders are not having the effect of reducing a group’s presence on social media. I am sure the Minister is acutely aware of the findings of the Intelligence and Security Committee that social media sites were a “safe haven” for terrorist groups.
The last proscription order we passed in the House related to a group that had Arabic and English official Twitter accounts, and an official YouTube channel. They seem to be unaffected by the proscription order. Various Twitter accounts associate themselves with the Haqqani network and an associated group that has posted numerous YouTube videos.
Does the Minister agree that we need to reconsider the situation whereby legislation says it is illegal to wear a uniform, but there is no problem hosting extremist videos or distributing hate messages to millions of people? Why was there nothing in Monday’s counter-terrorism strategy announcement to deal with social media?
I want to press the Minister on the issue of prosecutions of members, supporters and facilitators of proscribed organisations. The ISC report on Lee Rigby’s murder, which was published last year, highlighted the low number of prosecutions and the difficulties the police face in obtaining the necessary evidence. Have the Government had a chance to respond to that particular aspect of the report?
Jim Shannon (Strangford) (DUP)
I do not want to detain the House for longer than is necessary. I welcome the Minister’s commitment to the changes. The attack on the church in Lahore was carried out by people who move from organisation to organisation. Some of those involved have also been involved in other attacks, but they go under a different name each time. Is it possible for us to take a different approach? Rather than having to come back here every time a new organisation claims responsibility for something that involves people who have been involved in other attacks, is there any way that we could circumvent this process?
On social media, last night I attended a talk on women and terrorism that underlined very clearly the threat of social media and how it is used to influence people. Is there anything more we can do to address the issue of social media?
James Brokenshire
On social media, I underline the work of the counter-terrorism internet referral unit, which since February 2010 has secured the removal of more than 80,000 pieces of unlawful terrorist-related content that encourages or glorifies acts of terrorism. In the context of today’s debate, CTIRU has identified and secured the removal of nine Twitter accounts and one Facebook account relating to Jamaat-ul-Ahrar. The Haqqani network has no formal social media presence at present, but the CTIRU continues to monitor the situation.
The industry must ensure that the internet does not become a safe haven for terrorists and extremists. Communications service providers have a responsibility to prevent their networks from being used to recruit vulnerable people and plot attacks. That is why the Home Secretary attended the recent countering violent extremism summit in the United States—it was attended by representatives from more than 70 countries and large communications service providers—to emphasise the importance of the work we are doing and the fact that more needs to be done. That is precisely what this Government are committed to doing.
On enforcement, between 2001 and the end of March 2014, 33 people were charged with proscription offences as a primary offence in Great Britain and 16 have been convicted. Obviously, the ability exists to make arrests, and arrests are being made in relation to alleged proscription offences. That may lead to other charges relating to terrorism, and it is important that that is understood.
I welcome the House’s support for the proscription order under discussion. It is important that we are vigilant. The threat we face from terrorism is real and pervasive and it will continue. We have a generational struggle against ISIL and the ideology that underpins it. That is why this Government are committed to our continued security.
In my last speech of this Parliament, I know this House will want to join me in commending and sending a big thank you to the police, the security services and our intelligence agencies for their tireless work in keeping us safe and ensuring that that continues into the future.
Question put and agreed to.
Business without Debate
Mr Deputy Speaker (Mr Lindsay Hoyle)
With the leave of the House, we shall take motions 5 to 10 together.
Motion made, and Question put forthwith (Order, 24 March and Standing Order No. 118(6)),
Pesticides
That the draft Public Bodies (Abolition of the Advisory Committees on Pesticides) Order 2015, which was laid before this House on 15 December 2014, be approved.
Social Services
That the draft Care Act 2014 and Children and Families Act 2014 (Consequential Amendments) Order 2015, which was laid before this House on 5 February, be approved.
Statistics Board
That the draft Statistics and Registration Service Act 2007 (Disclosure of Revenue Information) Regulations 2015, which were laid before this House on 5 February, be approved.
Broadcasting
That the draft Community Radio (Amendment) Order 2015, which was laid before this House on 26 February, be approved.
Local Government
That the draft Local Authorities (Prohibition of Charging Residents to Deposit Household Waste) Order 2015, which was laid before this House on 25 February, be approved.
That the draft Council Tax and Non-Domestic Rating (Powers of Entry: Safeguards) (England) Order 2015, which was laid before this House on 27 February, be approved.—(Mr Wallace.)
Question agreed to.
Petitions
Mr Peter Lilley (Hitchin and Harpenden) (Con)
I would like to present a petition from my constituents in Hitchin and Harpenden, who are concerned about the tiring and lengthy journey to London that many cancer patients requiring radiotherapy have to make, sometimes daily. They call for a satellite radiotherapy centre to be established at the Lister hospital. The petition is similar to one presented by my hon. Friend the Member for Stevenage (Stephen McPartland) and my hon. and learned Friend the Member for North East Hertfordshire (Sir Oliver Heald) and has 1,602 signatures.
The petition states:
The Petitioners therefore request that the House of Commons urges the Government to encourage NHS England to provide a radiotherapy facility at Lister Hospital in Stevenage in order to make the journey for radiotherapy treatment much easier for patients who live in the Hitchin and Harpenden constituency.
Following is the full text of the petition:
[The Petition of residents of the constituency of Hitchin and Harpenden,
Declares that patients who are residents of Hitchin, Harpenden, Redbourn, Sandridge, Wheathampstead and the surrounding villages have to travel to Mount Vernon Hospital in Hillingdon to receive radiotherapy treatment and that this journey is long and exacting and often has to be made on consecutive days.
The Petitioners therefore request that the House of Commons urges the Government to encourage NHS England to provide a radiotherapy facility at Lister Hospital in Stevenage in order to make the journey for radiotherapy treatment much easier for patients who live in the Hitchin and Harpenden constituency.
And the Petitioners remain, etc.]
[P001491]
Susan Elan Jones (Clwyd South) (Lab)
My petition concerns the remediation of contaminated land in Coedpoeth and Brymbo.
The petition states:
The Petition of residents of the UK,
Declares that land in Coedpoeth and Brymbo is contaminated as a result of pollution from lead smelting on the site over 200 years ago...further that residents of Coedpoeth and Brymbo are calling for the Government to step in in the same way that they did in Blanefield, Scotland where part of the cost of removing lead and arsenic contamination was met by the Government; and further that a petition from residents of Coedpoeth and Brymbo has been signed by 1555 individuals.
The Petitioners therefore request that the House of Commons urges the Chief Secretary to the Treasury to provide funding for the remediation of contaminated land in Coedpoeth and Brymbo.
Following is the full text of the petition:
[The Petition of residents of the UK,
Declares that land in Coedpoeth and Brymbo is contaminated as a result of pollution from lead smelting on the site over 200 years ago; further that the local council has informed residents that they must pay a proportion of the remediation which, in some cases, could cost up to £10,000; further that residents of Coedpoeth and Brymbo are calling for the Government to step in in the same way that they did in Blanefield, Scotland where part of the cost of removing lead and arsenic contamination was met by the Government; and further that a petition from residents of Coedpoeth and Brymbo has been signed by 1555 individuals.
The Petitioners therefore request that the House of Commons urges the Chief Secretary to the Treasury to provide funding for the remediation of contaminated land in Coedpoeth and Brymbo.
And the Petitioners remain, etc.]
[P001483]
Sir William Cash (Stone) (Con)
The petition is from many hundreds of residents in my constituency.
The petition states:
The Petition of residents of the constituency of Stone in Staffordshire,
Declares that residents of Eccleshall and Woodseaves object to the use of the A519 (running through Eccleshall and Woodseaves) by HGVs; further that the Petitioners object to the application for a new access road to serve the Raleigh Hall Industrial Estate, which would increase HGV use of the A519; further that the new access point would be more dangerous because large HGVs would be turning to join a 60mph road; further that the number of these vehicles using the A519 route has become completely unacceptable, with hundreds passing through a day; further that the increased HGV traffic poses a serious danger to pedestrians; further that the risk of a crash is high, and could cause considerable damage to property and loss of life; further that the subsequent volume of HGVs using Stafford Street and Castle Street in Eccleshall means they are damaging the road surface; further that this situation has led to problems in Eccleshall because HGVs have difficulty passing each other on the Stafford Road outside the Claremont Garage, putting pedestrians at risk; further that the pavements in Woodseaves are very narrow, and HGVs are mounting them to pass one another; further that the A519 is not a primary route and there is no intention of it becoming a primary route and that Satellite Navigation companies should be advised of this matter; further that planning permission has been provided for haulage companies to set up in the Eccleshall area with a focus on the A519; further that Woodseaves residents in particular have been forced to abandon their front gardens because of noise and pollution, they are unable to sleep at night because of the noise, and their homes are being damaged by the weight of HGV traffic on the road; and further that approximately 3 HGVs pass through Woodseaves per minute.
The Petitioners therefore request that the House of Commons urges the Department of Transport to impose a speed restriction and weight limit on HGVs using the A519, to object to the proposed application for a new access road off the A519 that will serve the Raleigh Hall Industrial Estate and to advise Satellite Navigation companies that the A519 is not a primary route.
And the Petitioners remain, etc.
[P001482]
Andrew Stephenson (Pendle) (Con)
The petition states:
The Petition of residents of Nelson,
Declares that the Petitioners believe patients of Fairmore Medical Practice of 211-213 Leeds Road, Nelson are having difficulty finding suitable parking places near the practice, and that the Petitioners believe there is a vacant site on Leeds Road, Nelson near the practice that could be used as a car park facility.
The Petitioners therefore request that the House of Commons urges the Government to support the Fairmore Medical Practice Patient Participation Group in securing additional parking spaces and to encourage NHS England to reconsider their funding request to support extending car parking facilities at Leeds Road.
And the Petitioners remain, etc.
[P001485]
Duncan Hames (Chippenham) (LD)
I wish to present a petition on behalf of my constituents calling on the Government to fund an urgent care centre at Chippenham community hospital. The proposals come from Chippenham’s doctors. The town’s three GP practices came together to draw up the plans, which would bring urgent services together in one place—accessible 24 hours a day, seven days a week—relieving pressure on accident and emergency departments at nearby hospitals in Bath and Swindon. The petition is signed by several hundred local residents on paper and online.
The petition states:
The Petition of residents of the Chippenham constituency,
Declares that an urgent care centre at Chippenham Hospital is needed to improve access to urgent health services and to relieve pressure on nearby Accident and Emergency departments.
The Petitioners therefore request that the House of Commons urges the Government to fund an Urgent care centre at Chippenham Hospital as proposed by Chippenham’s GPs.
And the Petitioners remain, etc.
[P001486]
Ian Murray (Edinburgh South) (Lab)
I wish to present a petition on behalf of my constituents to prevent housing development on Midmar Paddock in Edinburgh.
The petitioners declare that Midmar Paddock in Edinburgh is used by hundreds of people every week for open-air exercise with children, families and dogs, as a green lung in the city; further that it is green-belt land, a special landscape area, designated open space and a local nature reserve, where planning developments have been resisted for decades; further that it is under imminent threat following its sale with development potential for housing development, and a planning application is expected shortly; and further that a local petition on this matter was signed by 330 individuals in the local area, supported by the wonderful Friends of the Hermitage of Braid, and the Morningside community council, especially Mr Goff Cantley.
The Petitioners therefore request that the House of Commons urges the Secretary of State for Scotland to encourage the Scottish Government and the City of Edinburgh council to intervene to stop housing development on Midmar Paddock.
Following is the full text of the petition:
[The Petition of residents of the UK,
Declares that Midmar Paddock in Edinburgh is used by hundreds of people every week for open air exercise with children and dogs; further that it is green belt land, a special landscape area, designated open space and a local nature conservation site; further that it is under imminent threat of housing development and a planning application is expected shortly; and further that a local Petition on this matter was signed by 330 individuals.
The Petitioners therefore request that the House of Commons urges the Secretary of State for Scotland to encourage the Scottish Government to intervene to stop housing development on Midmar Paddock.
And the Petitioners remain, etc.]
[P001487]
Mary Creagh (Wakefield) (Lab)
I should like to present a petition on behalf of my constituents about the Government’s proposed changes to GP budgets in Wakefield. It is supported by many of our local GPs, local councillors such as Councillor Rory Bickerton, and Ryan Case, who is a local resident.
The petition states:
The Petition of residents of the Wakefield constituency,
Declares that the Petitioners are concerned about the proposed £3.8 million cuts from budgets for GPs; further that these cuts could result in small practices closing, 38 full time doctors or 95 full time nurses being lost and patients waiting longer to be seen by a GP; and further that a local petition on this matter has been signed by 850 individuals.
The Petitioners therefore request that the House of Commons urges the Government to reconsider the proposal to make cuts to budgets for GPs in the Wakefield area.
And the Petitioners remain, etc.
[P001489]
Ian Murray (Edinburgh South) (Lab)
I wish to present a petition on development on green-belt land in Edinburgh.
The petition states:
The Petition of residents of the UK,
Declares that the Local Development Plan 2015–2020 has proposed a number of sites on the south side of Edinburgh for development; further that local residents want the sites at Broomhills, Old Station Road, Burdiehouse, The Drum, Ellen’s Glen and Moredun to be exempt from the new plan; further that local residents, community groups and the local community councils—
especially the Gilmerton Inch community council and the Liberton and District community council—
are concerned by the likely impact on local amenities if these plans are approved; further that the Petitioners call for the plan to be scrapped and a proper process to be put in place to determine the future development of the city which works in conjunction with local communities and not against them; and further that a local petition on this matter was signed by 130 individuals.
It was also signed by the Liberton and District community council and the Gilmerton Inch community council.
The Petitioners therefore request that the House of Commons urges the Secretary of State for Scotland to encourage the Scottish Government to remove the sites on the south side of Edinburgh (Broomhills, Old Station Road, Burdiehouse, The Drum, Ellen’s Glen and Moredun) from the Local Development Plan’s proposals for development and to put a process in place to determine future development of Edinburgh which works in conjunction with local communities.
And the Petitioners remain, etc.
[P001488]
Rehman Chishti (Gillingham and Rainham) (Con)
On a point of order, Madam Deputy Speaker. I had intended to present a petition to the House tomorrow in relation to my constituents wanting three ships—HMS Cressy, HMS Hogue and HMS Aboukir—to be protected under the Protection of Military Remains Act 1986. However, I have been advised that as tomorrow is the last sitting day, there will be no Adjournment debate, and on that basis no Member can present a petition to the House. Can you advise me? If I bag the petition today will it still be regarded as having been formally presented to the House?
Madam Deputy Speaker (Mrs Eleanor Laing)
The hon. Gentleman asks a good question, and he has done well in drawing to the attention of the House, Members on the Treasury Bench and undoubtedly the relevant Minister the point that he quite rightly wishes to make on behalf of his constituents. I can assure him that if he produces the petition today, it may go in the bag, and it will be treated as a presented petition. The House has heard what he has had to say.
Social Care and Military Compensation
(9 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Gordon Marsden (Blackpool South) (Lab)
As has now been confirmed several times, this is the last occasion to raise such issues in this Session, and I wish to speak about the unfair treatment of some veterans owing to the disparity in the way that different armed forces compensation schemes are treated when social care costs are calculated. I pay tribute to Poppyscotland and the Royal British Legion, which highlighted that issue with their Insult to Injury campaign. In the past, I have been pleased to work closely with the Royal British Legion, both nationally and locally in Blackpool, and together we delivered a petition with 3,000 signatures calling for stronger punishment for those who vandalise war memorials. I was also pleased to support the Blackpool armed forces covenant and veterans charter in 2011. I wish to touch on that veterans charter and covenant, praying in aid the arguments I will present tonight.
As chair of the all-party group on veterans, which deals with a number of issues, including welfare, I was fortunate to initiate a meeting in Parliament with the Forces in Mind Trust. Its latest report is about support for veterans’ families, and we will hear tonight about veterans who are losing the means to support their families when compensation payments are removed. Fundraising year-on-year by the Royal British Legion and other ex-service organisations, including Poppyscotland, provides extra support for veterans. Locally and nationally, our veterans should not be left by the state in financial circumstances that are unfair. The state must do its bit, particularly when there are unequal Government regulations.
Tonight I will focus on the disparity between the way that the two different compensation schemes operate. Those injured before April 2005 received compensation for particular injuries through the war pension scheme, which provides regular payments based on the severity of injury. Those injured from April 2005 onwards receive support for any disablement through the armed forces compensation scheme—AFCS. That comes in two parts: a lump sum and, in a similar fashion to the war pension, a regular payment for the most severely disabled veterans and ex-servicemen. Those two schemes seek to compensate for the pain and challenge of particular injuries that some veterans receive when serving bravely in our armed forces, but when it comes to how they are processed through the social care system, they are treated very differently.
As of 2012, any veteran supported by the newer AFCS scheme has all that income disregarded while they are means-tested for social care. Although their other forms of income are rightly considered so that they make the same contribution as any civilian to their social care, they will still have left over the income they receive to compensate for the injuries they received in the military. Those on the older war pension scheme, which could cover awards from the second world war up to 2005, receive far less support. Only £10 of their war pension is automatically disregarded, and the rest can be clawed back by local authorities into paying for their standard social care. The full value of the war pension—which of course reflects the level of disablement suffered by that veteran—is on average £80 a week and can be as much as several hundred pounds a week for the most severely injured.
Does the Minister agree that it does not show enormous respect to veterans on the war pension scheme, who have fought in conflicts from the second world war to Korea, the Falklands and in some cases as recently as Afghanistan, if we suggest that the pain of those disabling injuries is worth only £10 a week? What compounds that regrettable diminishment of the veterans’ sacrifice is the apparent injustice and inconsistency in the way the two schemes are treated in social care and the way different arms of Government look at the problem.
Almost all local authorities use their discretion fully to exempt the income from both compensation schemes when council tax or housing benefit is calculated, and central Government have recognised that both types of compensation should be left untouched when the new universal credit is calculated for recipients who have served in the forces. Yet protecting that income for council tax and housing benefit will be in vain if the great majority of it is then lost to pay for social care. As I have said, Government guidelines only disregard £10 of the war pension, and in present circumstances local authorities have not been able to go much further, with only 12% of councils using discretionary funding fully to exempt those on the older scheme. That is completely inconsistent with the way that civilian personal injury compensation is treated in social care means-testing. When saved in a trust fund, that income is fully disregarded by local authorities as they calculate care costs. What is left appears to be a social care system that, however worthy its objectives, fails to meet two criteria of the armed forces covenant that Members from both sides of the House were proud to support.
Jim Shannon (Strangford) (DUP)
It is appropriate that the last Adjournment debate of this Parliament concerns our veterans and our soldiers, and I congratulate the hon. Gentleman on securing it. Many Members have a particular interest in the armed forces. In the years that I have been a Member of Parliament, we have had the chance to speak on behalf of our veterans. I know many veterans who suffer from post-traumatic stress disorder and their number, after Iraq and Afghanistan, has increased significantly in the past few years. Does the hon. Gentleman agree that the onus is on the Ministry of Defence, the Department of Health and local government to work together to address this issue? The Minister represents the Department of Health. Other Departments, which are not represented here tonight, need to work alongside her.
Mr Marsden
I agree with the hon. Gentleman, who is assiduous in covering veterans’ issues in this House. I pay tribute to the military from Northern Ireland for the sacrifices they have suffered over the years. He is absolutely right. We are pleased that the Minister is here tonight, but the issue can only be solved out of Government silos.
The covenant enshrines the principles of no disadvantage and special treatment. These, in turn, dictate that a person should experience no disadvantage as a result of military service and that it is appropriate in some cases for special treatment to be applied to those who are serving or have served. We have already seen that as a result of failing to disregard the war pension, Ministers are not providing any special treatment for veterans. More fundamentally, however, they end up failing the rule of no disadvantage, too, as the injuries incurred purely as a result of action in the armed forces receive little compensation when income such as the war pension is diverted into providing standard civilian social care.
I am pleased, therefore, that my colleagues in the Labour Front Bench team have pledged, under a future Labour Government, to review the compensation schemes to see where they might be improved. In particular, the focus should be to take a laser-like focus to existing and new rules that affect veterans through the prism of the armed forces covenant. We want to ensure that the principles of no disadvantage and special treatment are met by all arms of government.
All Members have, at one time or another, drawn attention to the strong feelings of many veterans and others about insufficient engagement with the concerns raised in relation to social care and military compensation. I welcome the reports from the Government, the Royal British Legion and Poppyscotland that talks are ongoing about how the two schemes might be aligned, but we need to see results. After all, every year, as more elderly veterans pass away, the group of people who could benefit from a change in the rules diminishes by 5%. Half that group are aged 70 or over. We are running out of time to offer these people the chance to navigate social care in far greater comfort, with access to the full deserts of their military compensation. With a change in the rules, we can put this right, but it needs real Government commitment. I have to say, however, that when we look at the Government’s stated objections so far, they seem to give the impression of delaying progress rather than accelerating it.
Ministers have claimed that some of those on the old war pension scheme also receive top-ups to their pension, which are designed to help to pay for care costs. Only 6% of war pensioners actually receive such care top-ups. More to the point, it is surely not beyond the wit of the Government to devise guidelines that will include those care top-ups in the payment for social care, but not include that part of their income that relates to the pain suffered through injuries received in the field of conflict. This is a position that the Royal British Legion accepts would be perfectly reasonable.
Ministers have also suggested that military compensation could be placed in a trust fund to protect it from social care means-testing. However, given how war pension works, only a small amount is provided as a lump sum. For the most severely injured veterans, most compensation is provided through regular payments that cannot be placed in a trust. It has also been suggested that the war pensions scheme was established before the modern understanding of personal injury compensation, yet it is clearly understood that way, as is evident, as much as anywhere, from the words of the veterans Minister, who said:
“The War Pensions Scheme provides no fault compensation to Service personnel disabled as a result of their service in HM Forces.”
In the discussion of all these disregards, different schemes and allowances, the human effects of these rules and their perceived injustices can too often be forgotten. In my area, the Royal British Legion estimates that 600 veterans in the pre-2005 group could see their war pension eaten up by care costs, and Members across the country will have service constituents who have told emotive tales of the effects of losing their compensation.
Keith Clarke, who is 43 years old, was left paraplegic while attempting to put out a fire on his submarine. He receives a large war pension for the most severe injuries, but £100 is lost every week to meet the cost of his care worker, who visits daily to help him dress and look after his two children, one of whom is also disabled. His only other benefit comes from statutory benefits. He told The Daily Telegraph:
“I feel angry and frustrated. It’s…an injustice to be treated as a second-class citizen.”
Fred Cannon, who fought on the Gold beach at Normandy on D-day when he was 19 years old, was the only survivor of the company to come home, but a severe bullet wound left him with one leg shorter than the other. Now in his 90s, like too many others, he is left with only £10 a week compensation. Then there is the 50-year-old Lancashire veteran who was diagnosed with osteoporosis from his time in the Army. He said:
“Unless the system changes, I’m concerned that I will lose a lot of my pension, which isn’t fair. People who receive AFCS don’t pay for their social care—and rightly so—but why should we pay just because we were injured before April 2005? It doesn’t make sense.”
Of the two principles of the armed forces covenant, it is ultimately not special treatment that veterans want; all they want is not to be put at a disadvantage: to have the injuries they suffered in the armed forces compensated for in their own right and then to make a contribution from their other income towards social care, just as any civilian would rightly do. They want fair treatment for all and a system that does not discriminate on the basis of an arbitrary date; they want to be treated the same in the different means tests that central and local government operate; and they want to be treated in the same way as civilians who receive compensation for personal injury.
Whatever the historical context of the creation of the war pension scheme or the complexities of its operation today, it is surely possible to design a system that will meet the requirements of the proper 21st century fairness that the veterans are asking for. The time has come to go beyond discussions and look for concrete solutions to the disparity between the two different military compensation schemes, rather than focusing on the obstacles to a more just system. I am pleased to note that Labour would review the fairness of military compensation in the light of the armed forces covenant, and I call on Ministers to show a similar political will and commitment.
Many Members will have the date of 7 May on their minds tonight, but many other people will have a possibly more important date—the next day—on their minds. That will be the 70th anniversary of VE-day. I feel honoured that both my late parents served in that conflict, and I am mindful of the debt we owe to those of that generation who remain with us. At this time, we must surely refocus our energies to ensure that we provide all the support that the brave men and women who have served in conflicts spanning the last 70 years deserve, particularly as they make their way through challenging periods of their lives in the social care system.
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
I am grateful to the hon. Member for Blackpool South (Mr Marsden) for bringing this important issue before the House. It provides me with an opportunity to clarify our current position. I hope the hon. Gentleman will allow me first to place the issue in the broader context, particularly the context of reforms in social care.
To make some sense of that broader context, at the turn of this century there were 25 times as many people aged 85 and over than there were at the turn of the last century. Although this is something to be celebrated, it also means there are more people needing care and support, and three quarters of us can expect to need long-term care.
Care and support is an issue that has, I think, been ignored for far too long, and I am proud to say that this Government have taken steps to put that right. The Care Act 2014 is a bold and historic piece of legislation that for the first time places adult care and support law in a single clear statute. The Act puts people at the heart of the system by enshrining the principle of individual well-being at its core. It will ensure that people themselves will be able to shape their care and support, focusing on what they want to achieve and the outcomes that matter to them, and it will support them to maintain their well-being and independence for longer.
The Care Act focuses on acting early to prevent people from reaching crisis points, and will ensure that everyone can access information and advice to help them understand the new system and what it means for them. This means services for the broader community—not just those with assessed needs—further supporting our aim to help people to stay independent for as long as possible. When we do need care, the Act provides for a single threshold for eligibility to care and support in England, ensuring transparency and consistency, irrespective of where we live. I am pleased that this historic legislation will come into force exactly one week from today.
We do not intend to stop there. How we pay for health care and support is just as important as the care we receive. Most people do not realise that care and support has never been free, unlike health, and we have always been asked to contribute what we can afford. Those who have the greatest needs and the longest care journeys risk losing nearly everything simply to meet that cost.
For all the other areas of life where we face such risks, we are protected by the welfare state or we can protect ourselves through insurance. When it comes to care, however, successive Governments have taken a different view. We are often left alone at the point when we are most vulnerable. That is clearly not good enough, and I am proud that we will be introducing the biggest reforms of how we pay for care in over 65 years. We do so through the cap on care costs, which will put an end to the risk of catastrophic costs, and we will provide greater financial help for those who need it most.
The detailed proposals of how the new system will work are currently out for consultation. With just under a week still to go, I am pleased that we have already had over 700 responses and have engaged with over 1,000 people through a series of events helping to ensure that we take account of a wide range of views. The new cap system will play a critical role in helping people to plan and prepare for the risk of needing care and support, and create the right conditions for the financial sector to create new products that could cover these costs.
When it comes to those who have served their country and have made a great sacrifice in the line of duty, this Government have given a very clear commitment to support members of the armed forces community, both serving personnel and veterans. The hon. Member for Blackpool South has illustrated exactly why that is the right thing to do. We have enshrined that commitment in legislation through the armed forces covenant.
As the hon. Gentleman outlined, for those who have been injured in the line of duty there are currently two different schemes that provide compensation, based on when the injury occurred. For those who were injured before the 6 April 2005, there is the war pension scheme; for those injured afterwards, there is the armed forces compensation scheme. While both schemes have the same goals—to offer financial support to those injured in the line of duty—they are ultimately both a product of their time and the social context in which they were developed. Under both schemes, personal injury compensation lump sums are disregarded when deciding how much someone can pay for care, provided the payments are placed in a trust—I noted the hon. Gentleman’s concerns about regular payments—but other sorts of payments may be taken into account.
The war pension scheme was created after the first world war in response to the large numbers whose lives had been irrevocably changed as a result of their service to their country. In 1918, however, there was no welfare state, no NHS and no benefits system. Most people did not have access to private pensions, meaning that for those needing care but without family or friends to support them, the outlook was often bleak. The scheme therefore provided for that. It provides a basic war disablement pension and a variety of supplementary allowances that would be equivalent to the modern benefits system, and it reflects the fact that people needed to pay for both health and care costs.
By contrast, the armed forces compensation scheme introduced in 2005 reflects the fact that we have an advanced welfare state. It therefore looks to the NHS and the benefits system to provide support, just as it would to anyone, ensuring the principle of “no disadvantage” enshrined in the armed forces covenant.
The scheme introduced a modern, fair and simple system that provides a strong basis for the future, but this is a difficult and complex issue. I note the hon. Gentleman’s frustration—as he said, there has been much discussion—but, as I have said, the issue is complex. Depending on the extent of their injuries, veterans can receive a number of different allowances under the war pension scheme, such as constant attendance allowance, an unemployability supplement, comforts allowance, age allowance, treatment allowance, mobility supplement, and medical expenses.
The Royal British Legion broadly accepts that the treatment of war pension scheme payments is complex. I am grateful to it for highlighting its concerns, and for continuing to working with departmental officials to help us to understand the issue better. It is vital for us to understand it fully before considering what is to be done next. We must understand how the two schemes work, and the implications of considering any changes, to ensure that there are no unintended consequences, and we must also understand any cost implications of change. I note what the hon. Gentleman said about the commitment of his party colleagues to reviewing the scheme, but that commitment to a review suggests that they too are cautious, and feel the same need to understand the possible implications.
Mr Marsden
I do not wish to intrude on the Minister’s time, and I agree that the process is complex. I recall Churchill’s observation that it was not the end or even the beginning of the end, but it might be the end of the beginning. Will the Minister tell us how far down the line we might be expected to be at this point, and what stage the Government think has been reached?
Jane Ellison
I will come to that, and will try to give the hon. Gentleman a bit of reassurance about the advanced and ongoing work that is taking place.
Social care is a priority for the Government, and, in the context of difficult spending decisions, we have taken steps to protect care and support services. For example, we have allocated extra funds for those services during the current Parliament. We have created a better care fund, which, next month, will introduce a £5.3 billion pooled budget for health and care that will provide much needed funding for care and support, and will break new ground in driving closer integration of services.
Although spending on care and support is ultimately a decision for local government, we must be mindful of the overall fiscal position. I think that Members on both sides of the House agree on that. We must ensure that if we change the charging rules nationally, the cost will be met. To that end, my officials are continuing to work with their counterparts at the Ministry of Defence—I hope that that gives the hon. Gentleman some sense of momentum, and deals with his concern about “silo” working—and with the Royal British Legion, with a view to considering the issue during the spending review that will take place after the election.
I hope that the hon. Gentleman—and, indeed, all hon. Members—will welcome the historic reforms that will come into force in just one week’s time. They are very significant in the context of the broader issue of care. This Government have been the first to prioritise care and support. I hope that Members in all parts of the House will feel able to welcome the clear plans that I have set out for the future. As for the specific issue that the hon. Gentleman has raised, I hope he recognises that this is ongoing work which is taken very seriously. His securing of what has turned out to be the last Adjournment debate of this Parliament has underlined the importance of the issue that he has raised. I think that, throughout the purdah period and beyond, the debate will give added momentum to the work that is being done.
Given that this has been the last Adjournment debate of the current Parliament, Madam Deputy Speaker—and you and I have shared a number Adjournment debates—let me take this opportunity to thank you and, through you, Mr Speaker and the other Deputy Speakers. I also thank all the staff of the House, and, in particular, those who have sat through some of our late-night health debates, of which there have been many. However, I especially thank the Chair, and all those who have supported the Chair during these important Adjournment debates, which give us a chance—as tonight’s debate has—to explore important issues in some detail, outside the heated atmosphere that the Chamber attracts on other occasions. I also thank Members in all parts of the House, some of whom are very regular attenders at these debates, for their attendance tonight, and for the interest that they have taken in these important matters.
Madam Deputy Speaker (Mrs Eleanor Laing)
I thank the hon. Lady for the gracious way she has thanked Officers of the House in respect of Adjournment debates. These debates are extremely important and she has taken part in many of them, as have I and the other Deputy Speakers and Mr Speaker, and we all appreciate how important they are. I also thank the hon. Member for Blackpool South (Mr Marsden) for introducing the final Adjournment debate of this Parliament.
Question put and agreed to.
Deferred Divisions
Ministerial Corrections
Health
(9 years ago)
Ministerial CorrectionsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
George Freeman
My point is that it is important to understand that the reforms mean that the PSA is funded by the nine regulatory bodies. How the bodies seek to cover that cost is up to them. In this case, the NMC has decided to apply it equally across all its members.
[Official Report, 23 March 2015, Vol. 594, c. 399WH.]
…I have looked at the salary figures, and the average, ending March 2014, for nurses, midwives and health visitors—the people we are talking about—is £31,000. They will get the 1% rise, which is an extra £800.
[Official Report, 23 March 2015, Vol. 594, c. 401WH.]
…The hon. Member for Blaydon raised several questions, including whether the NMC will review its guidelines on fitness to practise, and provide guidance on fitness to practise cases. Those are all matters for the NMC as an independent body, but new legislation means that nurses can pay fees in instalments, and that fees can reflect part-time work.
[Official Report, 23 March 2015, Vol. 594, c. 405WH.]
Letter of correction from Mr Freeman:
Errors have been identified in the responses I gave to the debate on fees paid by nurses and midwives in Westminster Hall on 23 March 2015.
The correct responses should have been:
George Freeman
My point is that it is important to understand that the reforms mean that the PSA is funded by the nine regulatory bodies. How the bodies seek to cover that cost is up to them. In this case, the NMC is proposing not to pass on the cost to its members this year.
…I have looked at the salary figures, and the average, ending March 2014, for nurses, midwives and health visitors—the people we are talking about—is £31,000. They will get the 1% rise, which is an extra £300.
…The hon. Member for Blaydon raised several questions, including whether the NMC will review its guidelines on fitness to practise, and provide guidance on fitness to practise cases. Those are all matters for the NMC as an independent body, but new legislation means that nurses can pay fees in instalments, and that will help those in part-time work by spreading the cost of the fee.
Protection of the wrecks of HMS Cressy, HMS Hogue and HMS Aboukir
Rough Close Post Office
Treatment for Morquio syndrome
Spread Co Limited
Westminster Hall
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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North Wales Economic Infrastructure
(9 years ago)
Westminster HallRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Mark Tami (Alyn and Deeside) (Lab)
It is a great pleasure to serve under your chairmanship, Sir Roger. I begin by expressing my sympathy to the family and friends of those who lost their lives in the dreadful air crash yesterday. Airbus wings are made in Broughton, and the thoughts of those at the factory will be with everyone who has been affected by the tragedy.
It is about a year and a half since we had a debate on a similar subject. In some areas, we have seen some big improvements, but in other areas, particularly rail, progress has been limited, to say the least. Despite the title of the debate, our economic region extends beyond north Wales and includes a big proportion of the north-west of England. I want to put on record my thanks to the Mersey Dee Alliance for all its work to campaign for and promote investment in our area.
Manufacturing is key to the region. North Wales and the north-west of England have a population of some 8 million and economic output of some £140 billion. It is the largest manufacturing area in the UK, with more than £25 billion of output. The area boasts some of the top manufacturers not only in the UK but in the world. In my area, for example, we have Airbus, Toyota, Tata, Raytheon, Convatec and many others. I could stand here for a long time naming all the companies that are so important to creating jobs and growth in our area. There are many more on the other side of the border, such as Vauxhall at Ellesmere Port. The patterns of travel show that workers criss-cross the border. Some Vauxhall employees live on the Welsh side of the border, and about 40% of the Airbus work force live in England but work in Wales. The border, to all intents and purposes, does not exist from an economic regional point of view.
The success of our region cannot be taken for granted. Experience has shown us that once-great industries can and do fail. Many companies are truly global, and they have a choice over where to site their operations. If circumstances dictate, as we have seen in many cases, they can up sticks and move elsewhere. We cannot ignore that reality, and it is a danger. Many years ago, Deeside was dominated by Shotton Steelworks, a maker of colour products, which remains an important employer. It is taking on apprentices, and when I visited recently I was pleased to hear about some of the investments and progress that are being made.
The steelworks holds the record for the largest number of job losses at a plant on a single day, when more than 8,000 people lost their jobs under the Thatcher Government. That devastated the whole area. I say that not to make a point about Tories destroying jobs—
Mark Tami
All right, then; I will make that point. That example illustrates the fact that no matter how big a company is or how long it has been there, if events turn against it, the impact can be devastating. More recently, UPM paper mill, which I consider to be a benchmark employer—I certainly would not have put it on a list of companies in difficulty—announced that it would be cutting 120 jobs from its 370-strong work force. Why? Because the demand for newsprint worldwide has declined. When the recession hit, people stopped buying newspapers and magazines. Even as we slowly come out of recession, people’s habits have changed and they use the internet more, so demand has not picked up again.
In 2001, Corning Optical Fibre, a high-tech firm on Deeside industrial park with more than 400 employees, closed virtually overnight when world demand for optical fibre suddenly collapsed. So sudden was the collapse that I remember seeing at the factory millions of pounds-worth of equipment that was still in its wrapping and was never fitted. The lesson is that we cannot rest on our laurels.
Chris Ruane (Vale of Clwyd) (Lab)
My hon. Friend speaks of the collapse of investment at Corning. What assessment has he made of the changes that the Conservatives made to the feed-in tariff when they came back into power in 2010? What impact did that have on Europe’s biggest solar panel factory in Wrexham?
Mark Tami
Wrexham is not in my constituency, but people who lived in my area worked at that plant, and I saw that it had a devastating impact. One of the worst aspects of the situation was that the company was, I believe, encouraged to take on a lot of employees because it saw growth, but that was cut from under it by the changes that the Government introduced. We cannot simply assume that everything will be good, and we must make sure that we give existing employers the support and encouragement that they need to invest and grow.
We must also look at what we can do to encourage new employers and companies to come to the area. I am not talking so much about financial assistance, but we can offer a high-quality, highly skilled work force and employers can look to grow their businesses. Large employers such as Airbus—with more than 6,500 employers on site, it is one of the largest manufacturing plants in western Europe—have a role in encouraging their suppliers to site themselves nearby. Airbus has been successful in doing so, and we now have about 2,000 employees who work for Airbus’s supply companies. That makes sense for the supplier and the prime, because it is much easier to sort out problems if people can walk or drive across from one company to another than it is if goods are brought in from a long way away or even from a different country.
Chris Ruane
I thank my hon. Friend for giving way yet again. He mentioned the fact that some 7,000 people work in the Airbus factory in his constituency. There is another factory in Filton, near Bristol, and 70,000 people are involved in the supply chain. What impact would withdrawal from the EU have on the 70,000 who work in the supply chain of the joint European Airbus?
Mark Tami
That would have a massive impact. If my hon. Friend can wait a little longer—I am sure that he can—I will address that point towards the end of my remarks.
I mentioned the importance of a quality work force in attracting new companies to the area. That does not happen by accident; it happens because we train the people who are needed. Coleg Cambria has an excellent record of doing such work. It works with employers to develop training packages that meet their needs, rather than offering, and only ever having offered, an off-the-shelf programme that people can take or leave; I believe that that has been a failing of some further education colleges. Coleg Cambria is good at looking to deliver what employers want. I have talked to companies such as Raytheon, and they are pleased with the arrangement, which includes work placements. The arrangement works well.
Mr David Jones (Clwyd West) (Con)
The hon. Gentleman rightly praises Coleg Cambria for its engagement with industry, but is it not the case that Glyndwr university in Wrexham has a similar relationship with, for example, Airbus and that such education links across north Wales give the region added value to prospective employers?
Mark Tami
It does indeed. I was just about to mention Glyndwr university, which is important. Both further education and higher education institutions have to be adaptable and have to consider how they can deliver the skill base that employers need, rather than just offering courses that have not changed for years. We need such flexibility, which is important.
There are still many hurdles to get over in changing attitudes, particularly towards apprenticeships, and we have to be honest about that. There is still a culture in this country that apprenticeships are done by people who do not go to university, and who perhaps do not have the skills to go to university. In many people’s minds, apprenticeships are a second-class thing to do. I do not hold that view—it is totally wrong—but we have to be honest and admit that people still hold it, and that we have to counter it.
We are light years behind Germany and some other countries where apprenticeships and university are on the same level, and people have the opportunity to take up an apprenticeship that can lead to a university education. Airbus, through the higher apprenticeship scheme, is doing that, but far more employers should be going down that route. It should not be an either/or; people should be able to move seamlessly through one to the other. We are a long way from that. It is no good just talking about the importance of apprenticeships. We have to deliver apprenticeships for people across the gamut of qualifications so that they can move. We will then change the attitude towards the importance of engineering, but we are a long way off that at the moment.
The Deeside enterprise zone established by the Labour Welsh Government offers a great opportunity to create thousands of jobs, but it also creates challenges. The northern gateway project is a major opportunity, and I am pleased that the Welsh Government announced that they will be funding a highway through the site, which will help to speed up growth. I also welcome the £2.2 million investment for flood defences, which are long overdue and are part and parcel of that new site.
There will be other road improvements. Work on the A483-A55 intersection is still ongoing. I recognise that there are major concerns about delays but, if we are honest, the time will never be right for making road changes, which will always cause problems. If someone has a magical solution for making those road changes without causing delays, I would love to hear it. The intersection is a pinch point that needs to be addressed, and I am pleased that is happening.
As I said at the beginning of my speech, rail is the major area in which a lot of work remains to be done. Cross-party colleagues and I recently attended a meeting of the North Wales economic ambition board, in which it presented its case for the electrification of the railway line from the north-west across north Wales. The board pointed out that north Wales has not received any major investment in rail since Queen Victoria was on the throne. My hon. Friend the Member for Vale of Clwyd (Chris Ruane) probably remembers those days, but most of us in this room do not.
The board estimates that electrification across north Wales to Holyhead would create some £400 million in economic growth, help to regenerate areas that have suffered for many years and promote inward investment. If electrification stops at Chester, the board’s evidence shows that there would be a negative impact on the economy of north Wales, and even on the economy in England, too. If the project is to go ahead, we clearly need joined-up thinking to extend electrification for the length of the route. For that to happen, the Department for Transport, the Welsh Government, local government and the train operators need to work together. Although electrification is on the list of infrastructure investment projects and priorities for Wales published by the Wales Office, there is no start date, and the status is “locally supported,” which I presume is code for there not being any money and the project not being on the blocks to go ahead—certainly not in the short or medium term.
I am sure we would all like the electrification to go ahead, but if the reality is that it will not go ahead in the short or medium term, we have to consider what we can achieve on a smaller scale, and whether we can perhaps deliver economic benefit without that massive injection; electrification would clearly be an extremely costly project. The reinstatement of the Halton curve with a more modest £10.4 million investment, which I welcome, will have a positive effect. My hobby-horse, and the hobby-horse of my hon. Friend the Member for Wrexham (Ian Lucas), is the Wrexham-Bidston line. It would be fair to say that we have been banging on about that for many years. It could offer real benefits, including an improved service with more trains running. Longer term, the line could be electrified and have a dedicated station for the Deeside enterprise zone. The line could make a real difference, because Flintshire has one of the country’s highest rates of people travelling to work by car, which probably tells us all we need to know about how well our rail routes, and probably bus routes, work.
Broadband coverage in the area is improving, although not where I live, but that is probably my fault as much as anything else. We still have a long way to go before we can say that we have cracked it. A number of companies and individuals have come to see me, and they have been told that they have good coverage in their area, but when they started operations they found out that the coverage was actually very poor. It is all very well for the Government to say that 90% or so of people are covered, but that is not the same as saying that 90% or so of the country is covered. Rural areas are particularly badly affected. Broadband is not an optional extra for businesses today; it is not something they can pick and choose. If they do not have broadband, their business will suffer. The way in which we all do business has changed, which is why we have to improve broadband coverage. This is not just about rural areas, because we have not-spots in our towns, too.
Energy infrastructure is extremely important. I do not want to go on a lot about that, because my hon. Friend the Member for Ynys Môn (Albert Owen) will have something to say on the subject, but I will mention my concern about the viability of Deeside and Connah’s Quay power stations in the longer term. They are older gas stations, but they play an important role in meeting peak demand. They can operate only if they receive the right support to make them viable.
House building is another issue, because if we are encouraging companies to site in north Wales, their employees have to live somewhere. We need more affordable housing, not just to buy but to rent. I applaud Flintshire county council for starting a council house building programme, which is an important step that will help a lot of people. Like many colleagues, I know a lot of families in which both adults are working but cannot get a first step on the ladder. Getting on that ladder is very important in encouraging people to site themselves in the area. We are moving in the right direction, but major concerns remain about our rail network. We are doing better than some areas, but there is room for improvement.
Finally—my hon. Friend the Member for Vale of Clwyd has been waiting for this moment—I worry that all that good work could be undone if we put everything at risk by exiting the European Union. That would have a devastating impact on companies in our area such as Airbus and Toyota, among many others. I do not think that they would shut up shop and go the following day, but I worry that we would not see further investment, and then we would see operations starting to go back the other way. Companies such as Airbus are European partnerships, which are a great example of how Europe can and should work. Our European partners—the Germans, the French and the Spanish—would love to have that wing work. Let us not kid ourselves: if we think that they would not push harder for that work and make the case about all the difficulties of us being outside the European Union, we are naive in the extreme.
To believe that we can leave the EU and then establish trade arrangements so that we can carry on exactly as before is as ludicrous. We are not Norway, and even it has to abide by the same rules and regulations to sell its goods, but it does not have a chair at the table when those rules and regulations are being made. The think-tank Open Europe published a report this week that warned that, in one scenario, UK GDP could be 2.2% lower by 2030 if Britain leaves the EU and fails to establish liberal trading arrangements.
Albert Owen
On Europe, it is worth pointing out that we have £200 million net going into Welsh coffers from Europe. The Welsh economy would suffer if we were to withdraw, or consider withdrawal, from the European Union.
Mark Tami
That is a good point. We hear a lot in the press about what we put into Europe, but we do not hear much about the important work done with money flowing out of Europe to Wales, and the real difference that that makes to people’s lives. That is a real threat, and we should not underestimate the damage that it could do.
Mr David Jones (Clwyd West) (Con)
It is a huge pleasure to serve under your chairmanship, Sir Roger. I congratulate the hon. Member for Alyn and Deeside (Mark Tami) on securing the debate. At the start of his remarks he made an important point when he identified north Wales as not so much a discrete region, as part of the much larger and important north-western economic region. That is extremely important, because I frequently feel that people in Whitehall and—dare I say it?—Cardiff do not understand north Wales’s relationship with the large cities of north-west England such as Liverpool and Manchester.
That is why I echo what the hon. Gentleman said in applauding the work of the Mersey Dee Alliance, an extremely important vehicle for cross-border co-operation. It should be given even more recognition and regarded as a statutory consultee by not only the Westminster Government but the Government in Cardiff on all aspects of economic development in north Wales.
I want to focus my brief remarks on rail transport in north Wales, because, as the hon. Gentleman rightly said, that is an important element of the north Wales economy. I am optimistic. Like him, I attended the event organised by the North Wales economic ambition board and I believe that Members of Parliament of all parties support working towards electrification of the north Wales main line.
The hon. Gentleman also mentioned what he called the Wrexham to Bidston line. He is right that hon. Members have debated that old chestnut in this House for many years. The economic case for electrification of that line is probably stronger than ever, but I think that, because we are Welsh, we tend to look at that through the Welsh prism: Wrexham to Bidston rather than Bidston back towards Wrexham.
What has changed over the past few years has been the establishment of two important enterprise zones: one, as the hon. Gentleman said, is in Deeside, but the other is at Wirral Waters in Birkenhead. The Wirral Waters enterprise zone is almost immediately adjacent to the station at Bidston, and those two zones could benefit immensely from being linked by a fast, electrified line, which would put Deeside within easy commuting distance of the centre of Liverpool.
Only a few weeks ago, Network Rail announced proposals to create a new hub at Shotton, which provides an enormous opportunity for hon. Members to press Network Rail and Merseyrail to look again at the prospect of electrifying that important line. That would effectively put those two enterprise zones within a 15-minute commute, which would create enormous synergy. Perhaps we could then speak in terms of extending electrification down as far as Wrexham, for which the hon. Member for Wrexham (Ian Lucas) has pressed for many years. However, if we take an incremental approach and initially think about improving that important stretch of line, we will lay the foundations for an enormous boost to the economy not only of north-east Wales but right across the region, from the River Conwy to Ellesmere Port and beyond. The Minister could do well to put that to Network Rail; the time is right. We need to do as much as we possibly can to integrate the north Wales economy even further into the Merseyside economy.
In the next Parliament there will be considerable debate about so-called English votes for English laws. When one has regard to the extent to which not only public services such as health in north Wales but the economic considerations we are debating today are bound up with those across the border and tapped into the north-west economy, one sees that it is essential that whatever arrangements are put in place should give proper recognition to the legitimate concerns of north Wales Members.
Chris Ruane
Does the right hon. Gentleman believe that Welsh Members should be able to vote in the British Parliament on health, education and transport issues?
Mr Jones
I have already said many times and I am quite happy to repeat—that is why I started by saying that frequently I think politicians in London and Cardiff do not fully understand the north Wales element—that whenever any such issues touch and concern the interests of the people of north Wales, their representatives should have the right to speak on those issues in this Parliament.
Mark Tami
I am very pleased to hear what the right hon. Gentleman has to say. He makes a very strong point, and one of the best examples of what he is talking about is the Countess of Chester hospital. It was absolutely established not as an English hospital but as an English and Welsh hospital, and its catchment area is Deeside and Chester; it serves Deeside as much as it serves Chester. It would not be viable without Welsh patients, so to look at it as purely an English hospital would be wrong, and he is absolutely right that people outside our area do not understand how that dynamic works.
Mr Jones
Yes, the hon. Gentleman is entirely right. In fact, that is a point that I put to my right hon. Friend the Leader of the House when he announced the proposed arrangements for so-called English votes for English laws.
We must have regard to the fact that people in north Wales rely on English services, not only health services but in so many other respects. Our people work across the border, and, as the hon. Gentleman rightly said, people from the north-west of England work in factories, such as Airbus, Toyota and so on, on the Welsh side of the border. It is essential that people in north Wales should have proper representation in this place whenever necessary.
Frankly, one of the other difficulties is that there has been an unfortunate tendency to equate Wales and Scotland. Wales is a very different place from Scotland. The border of north Wales is highly populated, whereas the border between England and Scotland is not. It is essential that Members from all parties should ensure that, whenever the concerns of people from Wales are debated in this place, their representatives have a full voice in those debates.
Mr David Hanson (Delyn) (Lab)
It is a pleasure to serve under your chairmanship today, Sir Roger.
I thank my hon. Friend the Member for Alyn and Deeside (Mark Tami) for putting this important issue on the agenda today. Like him, I recognise that the north Wales economy is both strong in itself and linked very much to Merseyside, Cheshire and the rest of north-west England. We have businesses such as Airbus, and I echo the condolences that my hon. Friend has expressed following the tragic accident in France yesterday.
We also have Toyota and the companies in the Deeside industrial belt, including the Deeside industrial zone as a whole. Those companies are extremely important, not only for the economy of north Wales but for the economy of north-west England. Potentially as many of my constituents work at Vauxhall’s Ellesmere Port factory as work at Toyota’s factory in Deeside, with both sites producing good-quality vehicles.
Large businesses and the commuting population, as well as those engaged in tourism, depend on strong economic infrastructure. I think you will find, Sir Roger, that there will be a great deal of consensus across the House today on some of the key issues on which the next Government—whoever forms that Government—will need to focus in the next five years.
Like my hon. Friend, I will concentrate on three particular areas: rail, broadband, and housing. I will also touch briefly on energy infrastructure.
First, there is rail. There is a compelling case to improve the rail links from north Wales to Merseyside. The right hon. Member for Clwyd West (Mr Jones) made a very powerful speech about the need to improve the Wrexham to Bidston line, and the need for the hub at the Deeside industrial park. That is one aspect of rail and the view on it is shared across the House. It is important that we consider pressing the case for those improvements, because they would not only provide a strong commuting link but meet the objective that my hon. Friend the Member for Alyn and Deeside mentioned, namely taking vehicles off the road. Currently we have congested roads going both into and out of north Wales, particularly at peak times.
It is important that we maximise the benefits to north Wales of High Speed 2 and the link to Crewe. I think that all of us in Westminster Hall today, including my hon. Friend the Member for Pontypridd (Owen Smith) who is on the Labour Front Bench, but with the exception of the Minister, met the Mersey Dee Alliance and the North Wales economic ambition board to consider how the next Parliament can maximise the benefits of HS2 for north Wales. The Minister, officials and the Wales Office, working with the Department for Transport and the National Assembly for Wales, need to look at that strategic vision for the next five years, to ensure that we are at the table when key decisions are discussed.
Regarding the link from Crewe, at the moment the Chancellor talks about a northern powerhouse. In my view, north Wales is part of that northern powerhouse, and as north Wales MPs we have to impress upon whoever forms the next Government that they have to engage strongly with proposals to ensure that there is electrification between Crewe and Chester, that there are improvements on the line between Crewe and Chester, and, crucially, that such improvements continue to be made right the way down to the constituency of my hon. Friend the Member for Ynys Môn (Albert Owen). That would improve access from Ireland through to Chester and the rest of north-west England, through to London, and across the north to Hull and the markets that access to that port would open up, which is extremely important.
My hon. Friend the Member for Alyn and Deeside touched on the issue of the Halton curve, which is a key link to Liverpool. I am pleased that the Government have invested more than £10 million in that link; we have been pressing for that investment for some months. Again, it is part of what we need to focus on. I share the view of both my hon. Friend and the right hon. Member for Clwyd West that we are intrinsically linked with north-west England in terms of our economy, and therefore improving the Halton curve link will improve access not only to Merseyside markets and employment but to Liverpool airport.
We also need to consider how we can maximise the links to Manchester airport. With due respect to my colleagues in the National Assembly, much play is made of Cardiff airport. However, I do not think that anybody from my constituency would ever fly from Cardiff airport, but they will fly from Manchester airport, which is only 40 miles away from where I live in north Wales, and from Liverpool airport, which is only 20 miles from where I live. Currently, the transport infrastructure—apart from my private vehicle—is extremely poor when it comes to accessing both those crucial hubs. We need to build on it. Also, with all these links we need to look not only for tourism benefits but business and commuting benefits.
Let me give one example of a proposal for further infrastructure that would be of great help in five years, on which Network Rail needs to focus. Now, for the first time in the past 12 or 13 years, Flint station has direct links to London, on the north Wales line, through Virgin Trains. Virgin Trains runs several trains an hour that stop at Flint; there is a very strong link. Currently, there are proposals to extend the length of Virgin Trains, to ensure that we can maximise the capacity, linked in to HS2. Flint station will not be big enough to take that extra capacity and in my view we need to press Virgin Trains and Network Rail to extend Flint station, which can be done on platform terms, to ensure that we do not lose out when that extra capacity comes on-stream.
There is a real agenda for rail, which I support and which I think the Government, the DFT, the Wales Office, the National Assembly for Wales, Network Rail and MPs, working on a cross-party basis, need to look at with the MDA and the North Wales economic ambition board.
Rail infrastructure is important but one of the things that we know about the 21st century is that individual businesses, wherever they operate from, depend on good, fast broadband services, and the attendant capacity, to ensure that their businesses grow. Businesses based in north Wales can trade with the world from north Wales if they have good broadband facilities.
Recently, I have received representations from businesses in the north Flintshire part of my constituency, from businesses based in Trelogan and from businesses in Bagillt, which is in the mid-part of my constituency, and they are saying quite clearly that broadband speeds are not up to scratch and need to be faster, and that connections need to be improved. I know that both the National Assembly and the Government have invested in broadband, but it is still the case that only 56% of my constituency has access to broadband and the average download speed is still only 13.1 megabits, which is not sufficient to meet the needs of a 21st-century economy.
Although a number of hubs have been put in place and there have been plans for Caerwys, Flint, Holywell, Mold West, Mostyn, Northop and Pontybodkin, which is in the constituency of my hon. Friend the Member for Alyn and Deeside, to link to the southern part of my constituency, where there are live exchanges, and Halkyn exchange will come on-stream shortly, there are still issues of speed and capacity, and the Government need to focus on them as a matter of urgency. I hope that the Government respond, not just providing figures about broadband, but saying what else is going to be done to increase the capacity and speed and ensure that the businesses in my area have access as a matter of some importance.
My hon. Friend mentioned housing, which might seem to be going off at a tangent in a debate about economic infrastructure, but it is crucial to the development of jobs and prosperity in our area. I join my hon. Friend in expressing great pleasure about Flintshire county council’s investing a record £20 million in the first council housing for many years. Over the next five years it will build 200 homes. The centre of Flint, in my constituency, is currently being redeveloped—200 homes will be put on that site shortly—but there is a need for more. To add a political note, that is why I welcome the national Labour party’s commitment to invest in social housing, if elected in May, with 200,000 homes for rent, because the Assembly will then have the capacity to ensure that Flintshire county council has additional homes to rent. That is an important mechanism to ensure that we have a strong local work force.
Public sector finance going into private sector housing—into social housing for rent—is putting money into the economy through local private sector building firms in north Wales. The firms currently building the properties in Flint are not public sector firms. Private sector firms are growing the economy and building houses, and they will be using bricks, wood, plaster, mortar and equipment made in the private sector in north Wales, which will help generate our economy and add valuable housing stock to make our area attractive and alleviate long housing lists.
Energy infrastructure is equally important. I am sure that my hon. Friend the Member for Vale of Clwyd (Chris Ruane) will talk about the tidal lagoon in his constituency, which will have a great impact, potentially, on my constituency. I have met individuals in north Wales who want to develop that tidal lagoon off the north Wales coast as part of our investment in energy.
It is also important that we encourage and develop the offshore wind industry in north Wales, although there may be some disagreement on part of this. We have a great ability to engender manufacturing and a strong offshore wind energy industry. As part of the economic infrastructure, we should be looking at how we integrate the energy sector in north Wales. For example, in the constituency of my hon. Friend the Member for Ynys Môn, there are developments in nuclear; in that of my hon. Friend the Member for Vale of Clwyd, tidal lagoons are being developed; and in my constituency wind farms, both onshore and offshore, are being developed with expertise in our area. Companies such as Kingspan have great expertise in solar panels and the development of that sector. That is all part of a Government partnership to help build, support and develop the alternative energy sector as a whole.
Whoever forms the next Government, there are real issues to consider in respect of rail, broadband and investment in housing, and regarding developing a sustainable alternative energy structure. North Wales is doing well and has a great deal to offer, but it can and should do better. Whoever forms the next Government will have the support of the area’s Members of Parliament, whom I hope will be returned after the election, to ensure that north Wales does better in the next five years.
Albert Owen (Ynys Môn) (Lab)
It is always a pleasure to serve under your chairmanship, Sir Roger.
I want to continue talking on themes raised by hon. Members, adding a north-west Wales dimension. I am not only the most western Member here but the only Member from north-west Wales, and indeed the only Member from the centre of north Wales and north-east Wales. I bring to the debate not just north Wales matters, but will mention the important links with the Republic of Ireland.
I want to create a north Wales powerhouse, along with members of my party with whom I have been working during the past few weeks. We want north-west Wales to be not just a place that people go through on the way to Ireland but a location where manufacturing, research and development and various other activities take place. We want north Wales to be the place to visit and the place to work and live.
The creation of a north Wales powerhouse has already begun. As my hon. Friend the Member for Alyn and Deeside (Mark Tami) said—I congratulate him on securing this debate—Airbus, which is based in north Wales, is one of the flagship companies, not just in north Wales and not just in Wales, but in the UK and Europe. We must be proud of that. The Horizon project on Anglesey at Wylfa Newydd, which began in 2009, is moving forward and is a business investment in north-west Wales equivalent to the London Olympics in terms of cash. We have heard about Gwynt y Môr, a successful offshore project, and the Deeside enterprise zone. All these projects are helping create what I consider to be a north Wales powerhouse.
We have made great progress on transportation, as has been said. 1997 was a good year for Anglesey, because it was the year the dualling of the A55 across the Isle of Anglesey began. I had one disagreement with the late Sir Wyn Roberts, an Anglesey man, about whether the previous Government had completed the A55 across north Wales. It stopped in Llan- fairpwllgwyngyllgogerychwyrndrobwllllantysiliogogogoch, in my constituency. It is the village with the biggest name, but it is also a village with a big heart and a pioneering area of the UK, where the first Women’s Institute was established 100 years ago this year. The Women’s Institute is an institution born and raised on Anglesey. I am proud of that. The serious point about the A55 not being dualled is that the economy of Anglesey, and the west of north-west Wales, was hampered for some 10 to 15 years until that road was linked.
The link to Ireland is important. Members of Parliament would not be here, and we would not have the infrastructure, if it was not for Irish Members of Parliament lobbying for the old A5 from Dublin to London. When I talk about transportation in this country, I talk about linking the great cities of Dublin and London via the north Wales corridor.
I want to concentrate on three big issues: transport, energy and tourism. These three big sectors of industry need a big, modern 21st-century infrastructure. Anglesey is a strategic location. I will not let anybody say we are on the periphery because, looking at the map of the UK, Anglesey is the heart of the British Isles. It is an equal distance from Anglesey to Scotland, Wales, northern England and Northern Ireland. We are at the centre of it. It is, as the hon. Member for Vale of Clwyd (Chris Ruane) said, a Cardiff-centric and London-centric view to suggest that north Wales is on the periphery. We are at the centre. However, we have to increase the investment in that area to make the north Wales powerhouse work.
I want to talk about road-rail being fully integrated and about sea and air, which are often regarded as Cinderella modes of transport when we talk about transport, but are hugely important to the UK.
The A55, which is now complete, is a victim of its own success. It is very crowded at times and has pinch points, not least across the Britannia bridge from Anglesey to the mainland. Having been at sea, I came home when the A55 was being built across Llanfair PG. Although the dual carriageway across north Wales was extended and expanded across Anglesey, there are only single lanes across the bridge. I cannot understand why this was not thought through by the then Welsh Office and the Government. This has been a big issue for a long time in respect of north Wales transport. We need ambition regarding a new crossing from the mainland, because, as I said, it is not just for local transport but for Irish transport. One of the biggest boosts to the economy in north Wales has been the Irish economy growing again, meaning that we have greater trade with the Republic of Ireland. I want to mention that later.
We have had some good news about roads. The Welsh Government are investing in a transport hub in my constituency—a lorry park—which will create 37 jobs immediately. With the trade with Ireland increasing, that will be an excellent facility for the port and for north Wales.
On rail, we have to have a vision. I echo what other Members have said about links with Liverpool and Manchester as well as with London and Cardiff. My family came from Liverpool to north Wales some time ago, and in those days people could travel directly from Holyhead to Liverpool without having to change trains. There was that link with Merseyside, predominantly with the seafaring communities and the Irish communities. We need to re-establish that direct link because, as my right hon. Friend the Member for Delyn (Mr Hanson) said, when our constituents go on holiday, many of them do not go to Heathrow and Gatwick; they go to John Lennon airport and Manchester airport. Those are important strategic airports to the whole of north Wales, and we must work together to ensure that we get that link back.
Arriva Trains and the franchise of Wales and Borders are creaking. They are running over capacity. In north Wales, too many people are travelling on too few trains that are too small, and we need to address that. The current franchise system simply is not working. We met Arriva, and it said, “That is all we had written into the franchise.” If we will have private operators and rail infrastructure heavily subsidised by taxpayers’ money, we want to see the companies showing some initiative and investing in the rolling stock. I hope that an incoming Labour Government will look seriously at that, because the franchise system is already outdated. We saw the debacle with the west coast main line and Virgin, where an error in the refranchising cost taxpayers millions of pounds. We need to look closely at that.
Transport on the sea is important; we are an island nation, and we trade with the rest of the European Union and the rest of the world. The port of Dublin is one of the fastest growing in Europe. I had the honour of launching a new vessel, the Superfast X, which will run between the ports of Holyhead and Dublin. It is owned by Stena. The port manager of Dublin and the family of Stena indicated to me that they want to see the link between Holyhead and Dublin as the new Dover-Calais. It has that potential to transport goods and people across the European Union through the north Wales corridor in both directions.
As a former seafarer, I pay tribute to the merchant navy and the merchant fleet that we have. They are a major employer for the future. The Superfast X is registered in Cardiff and flies not just the red ensign but the red dragon. Stena has made a huge commitment to invest in Wales and the port of Holyhead. We should be proud of the seafaring traditions of this country. I pay tribute to the coastguard and the Royal National Lifeboat Institution, of which I am vice president. We are a mercantile nation, and we should be investing more in cargo and passengers.
Tourism is a massive boost. A large number of people come and trade from Ireland as part of the European Union. My hon. Friend the Member for Alyn and Deeside is right: it would be harebrained to withdraw from the European Union when we have such established links with European nations on both sides, whether they are from Dover to France and the continent of Europe or to the Republic of Ireland.
Air links are important. We have an airport on Anglesey that is linked to the capital city of Wales, Cardiff, but we must have more ambition than that. We need the airport to be expanded. Looking not from the south-east of England or even from south Wales, but in a different direction, at the western corridor of the United Kingdom, we should have flights from Cardiff or Cornwall up to Belfast and tourist destinations so that people can link between the peripheral areas of this country. That is the ambition I hope we will have in the next Parliament.
I was laughed at when we talked about a link between Cardiff and Anglesey. I was told that it would not work, but it brings north-west Wales within 40 minutes of Cardiff. Fast flights to Dublin could be made in 15 minutes. That connection would mean that north-west Wales was 15 minutes from one capital and 40 minutes from another. The airport has that potential. Rather than having massive infrastructure projects and growing hubs in south Wales and the south of England, I encourage a future Government, which I hope will be of a different colour, to look at a different dimension so that we can move people through that western corridor.
In my remaining time, I want to touch on two other subjects. The first is tourism. If food and farming are included in tourism, it is one of the fastest-growing sectors of industry in the United Kingdom and the world. It is the fifth largest sector in the world, so we need to develop it. As we are talking about infrastructure, I say that we need rail, road, sea and air links to bring people to destinations. With my local authority, I have been promoting Anglesey as a destination within the United Kingdom. That is hugely important, but we need to have the infrastructure.
My right hon. Friend the Member for Delyn and my hon. Friend the Member for Alyn and Deeside mentioned broadband, but we also need to improve mobile phone coverage, because there is very little in some areas. In the past three years, we have been creating the big three in telecommunications. We must be worried about them investing solely in our large towns and cities and forgetting the rural areas, which do not have the strong economic case. I turn that argument on its head: my constituents and every Member of Parliament pay the same costs for mobile phones as those in cities and towns across the United Kingdom. We need to have universal services for the 21st century so that tourists, people working in rural areas and future investors have the telecommunications in rural areas that they deserve.
The second issue is energy. In my constituency, we have a massive proposal on nuclear power with Wylfa Newydd. That will create not only 6,000 to 8,000 construction jobs but 1,000 jobs for life in energy production. The supply chain and skills are absolutely essential for the future. In my constituency, Coleg Menai is training people for the construction phase and apprentices for high-quality engineering jobs in the energy sector. With the shadow Secretary of State, my right hon. Friend the Member for Don Valley (Caroline Flint), I recently visited Coleg Menai and saw young people with the aspiration of working in the area.
Mr David Jones
The hon. Gentleman politically cohabits with a Plaid Cymru Assembly Member. Can he tell us what the current policy of Plaid Cymru is on the development of Wylfa Newydd?
Albert Owen
I will stay away from the policies of other parties, because they will be developing their manifestos, but since no Plaid Cymru Member is here, I know that the leader of that party is on principle opposed to nuclear power. In the new alliance of the Green party, the Scottish National party and Plaid Cymru, all three leaders are opposed to nuclear power, which puts future nuclear power in this country at huge risk. I will leave it at that for the moment. I am sure I will have the opportunity to develop that argument over the next five weeks.
I do not only want to talk about nuclear power. A biomass eco park has been announced for my constituency. It will create 500 jobs and is starting next month. That is great for the area. It will bring food production and energy production together on one site. We need to move forward with the large projects. I make no apology for banging the drum for north-west Wales. It is an important area for the United Kingdom and links us with the Republic of Ireland. I am pro-Wales, pro-Anglesey, pro-British and pro-European. My party will be putting that forward at the general election, and I hope we will return a Labour Government to develop the projects.
Chris Ruane (Vale of Clwyd) (Lab)
It is a pleasure to serve under your chairmanship, Sir Roger. I congratulate my hon. Friend the Member for Alyn and Deeside (Mark Tami) on securing this important debate.
My proudest moment as an MP came in 1999, when I secured access to European objective 1 funding for Denbighshire and Conwy. The map was redrawn after I lobbied my right hon. Friend the Member for Neath (Mr Hain), who was a junior Minister in the Wales Office at the time. Since then, more than £200 million has been invested in economic infrastructure in my county alone. I believe that the same amount has been invested in the county of Conwy, which is represented by the right hon. Member for Clwyd West (Mr Jones).
That important injection of investment has helped the economies of Denbighshire, Conwy and the whole of north Wales. It has helped to fund projects such as the £10 million redevelopment of Rhyl harbour; the £4 million Drift Park development on Rhyl promenade; buildings in Prestatyn, such as the one colloquially known as Tango towers; and, 10 years ago, the best European regional development fund project in the whole European Union, the Opto-electronics Technology and Incubation Centre, or OpTIC. All that investment occurred because we are partners with Europe. It will disappear if we pull out.
We have another seven years of European funding to go; possibly another £100 million to £150 million could be pumped into my county and constituency, if we stay in the EU. We will not get that funding if we pull out. Since 2009, the economy of north Wales has benefited from £1.2 billion of European funding. That is a massive amount of money to inject into the economic infrastructure of north Wales. If we leave the EU, not only will we lose that funding, but companies such as Toyota have said that they will pull out. Airbus will not get its future investment. Seventy thousand jobs in the UK depend on Airbus—do we really want to lose them?
In north Wales, there is £800 million-worth of public procurement, what with the police, the fire service, the health authority and local authorities across the region. Public investment from the public sector, which Labour believes in, is helping to prime the north Wales economy. If public procurement is handled properly, the economic multiplier can be seven times what is put in. If public money goes to a local firm with local contracts, employing local people, that money stays in the local community; if it is given to a multinational company, it will disappear, or there will be no economic multiplier.
I am proud of Labour’s public investment and procurement record in Wales. I will give some examples from over the years. Labour invested in Rhyl college. In the past, people who lived in Rhyl had to travel 25 miles to and from Deeside college every day, or 20 miles to and from Llandrillo college—40 miles a day, or 200 miles a week. Labour founded the college in Rhyl, and then Denbigh college was founded, so local people could upgrade their skills locally.
That is in the past, but the Welsh Labour Government are currently investing £35 million in the refurbishment, redevelopment and rebuilding of schools in Denbighshire. Denbighshire county council is also investing £35 million, so that is £70 million overall. The £35 million that Denbighshire is investing is the result of excellent funding over the past 10 or 15 years. In my patch, local Conservatives have criticised that investment in their own local authority. In 1997, investment in Denbighshire local authority was £63 million; today it is £163 million. They have criticised Labour for the investment that is allowing us to build schools.
I recently visited Rhyl high school, which is under construction and set to cost £23 million. The builders, Willmott Dixon, told me that of that £23 million, 60% will be spent within a 30-mile radius of Rhyl. That will localise procurement and maximise jobs, skills and investment in our local economy. I congratulate Huw Lewis, the Education Minister in Wales, for going ahead with that excellent £70 million investment in our local economy.
Energy has been mentioned, and it is key in north Wales. The £20 billion investment in Wylfa is fantastic news—it will mean 8,000 jobs. The tidal lagoon going from Penrhyn bay to Prestatyn will be 28 km long and 11 times bigger than the Swansea bay lagoon. It is set for £5 billion of investment, of which 56% will be spent in Wales.
Mr David Jones
I agree entirely with the hon. Gentleman on the attractiveness of the tidal lagoon project. It is, of course, a private sector proposal, as he will know.
Chris Ruane
Absolutely. It is a private sector proposal, and that is good. I am not saying that private sector investment is bad; I am saying that to castigate the public sector, day in, day out, decade in, decade out, is wrong. The public sector has a vital part to play in providing essential services and priming our economy. If it goes ahead, the tidal lagoon project will bring £5 billion of investment, which will help to transform the economy of north Wales, especially alongside the £20 billion investment in Wylfa.
About 10 years ago, I switched on 30 turbines at North Hoyle off the coast of Rhyl. When he was at the Conservative party conference in Llandudno as Leader of the Opposition, the Prime Minister referred to those turbines as “giant bird blenders”; he then went back to Notting Hill and stuck a bird blender on his house. That shows the Conservative party’s lack of belief in renewable energy. Another indicator of that, from a north Wales perspective, was the changing of the feed-in tariff in 2010 so that the biggest solar panel factory in western Europe, in Wrexham, had to close down.
On transport, I agree entirely with my hon. Friend the Member for Ynys Môn (Albert Owen) that we have to see transport connections in north Wales not from a north Wales perspective but from a European perspective, linking Dublin, Holyhead, Manchester, Hull, the Baltic states, Crewe, London and the rest of Europe. We must invest in a strategic trans-European network. We cannot be left as a branch line when billions of pounds are being pumped into HS2, HS3, HS4 and whatever. We need to be a main artery linking Dublin to the rest of Europe via north Wales and Holyhead.
That is so important because £53 billion in trade flows each year back and forth between Ireland and the UK. The principal port is Holyhead, and we want to keep it that way. More trade is conducted between Britain and Ireland than between Britain and Russia and Britain and China put together. That is how important it is. That is how important the transport links are. We must also have electrification, and connections to Manchester and Liverpool airports are really valued—we need a connection right into those airports.
In this very Chamber about 18 months ago, I mentioned a hovercraft connection between Liverpool and Rhyl. We had one more than 50 years ago—the first hovercraft passenger connection in the whole world—and we want to see the project taken up again. We have had some support from a Conservative Transport Minister, and we are looking to the Welsh Government to support the project. A hovercraft connection could bring 200,000 visitors to north Wales each year.
The right hon. Member for Clwyd West mentioned private sector investment. I welcome the excellent work done by councillors and officers in Denbighshire to attract Neptune Developments from Liverpool to Rhyl to develop £30 million or £40 million-worth of tourism infrastructure. The news was reported in the Daily Post some six or seven weeks ago, and it is a fantastic development. We must ensure that the hovercraft lands exactly where the development is going to take place.
I have discussed hard infrastructure, but there is also soft infrastructure: people, and how we treat them. Under Labour, the future jobs fund put 420 young people back to work in my constituency. The first malicious and malign act of this Conservative Government in June 2010 was to end the future jobs fund. The Welsh Government took up the baton and developed Jobs Growth Wales, which has an 80% success rate at getting young people back to work or into training. That is excellent work.
In 2007, I established the Rhyl City Strategy, which has helped to put thousands of people back to work or into training. We need decent housing for local workers. The Welsh Government are pumping £28 billion into west Rhyl to create housing for people to buy. This is fantastic investment from the Welsh Labour Government, but it will all be put under threat if the Tories get in on 7 May.
Owen Smith (Pontypridd) (Lab)
It is a great pleasure to serve under your chairmanship this morning, Sir Roger. Also, given the north Wales connections with the aircraft industry, I add my words of condolence to those of my right hon. and hon. Friends on this sad day after the air crash in France.
I, too, congratulate my hon. Friend the Member for Alyn and Deeside (Mark Tami) on securing his second debate on the economic infrastructure of north Wales. I also congratulate all right hon. and hon. Friends on their contributions to the debate—a measure of their continued determination, as it is of all north Wales Members, to see north Wales prosper. We have heard excellent contributions from everyone.
My hon. Friend the Member for Ynys Môn (Albert Owen) said it was a shame that he is the only representative of north-west Wales present; no other parties from the north-west are represented in the Chamber. It is a shame that Plaid Cymru Members are not here—perhaps they have something else on of rather more importance.
That, however, is one of the lone party political points that I want to make today, because the debate has not been party political; it has been a constructive debate with an enormous amount of consensus—
Owen Smith
For all my hon. Friend’s attempts, we were largely consensual.
There was a huge amount of agreement in the Chamber about the challenges that face north Wales on the economy and its infrastructural links and what we need to do about energy, transport, rail, road, schools building, housing and so on. My hon. Friend the Member for Alyn and Deeside summed things up when he talked about north Wales as an industrial powerhouse. We have terrific, world-beating companies in all the constituencies represented in the Chamber today. We need to ensure that those companies are nurtured and grow, and that the certainty required in terms of investment is maintained by whoever wins the election in May. Any uncertainties such as those about the future involvement of the UK in Europe need to be eradicated.
Another point made with great force and vigour by my hon. Friend the Member for Alyn and Deeside was the need for investment in education and apprenticeships in north Wales and throughout the UK. The connections that have already been made between companies such as Toyota and Airbus and the local colleges, Coleg Cambria and Glyndwr university, are exemplars for the whole of the UK. We need to ensure that we maintain those connections.
The former Secretary of State for Wales, the right hon. Member for Clwyd West (Mr Jones), made an extremely positive contribution on two key points, first, on the vital cross-border links. I agree that too often in all parties our public dialogue on Wales concentrates on the border. We need to get past that. The next phases of devolution must be about greater partnership and integration, acknowledging the fact that companies do not recognise the border in the way in which public policy often does.
The right hon. Gentleman’s points about connecting the two enterprise zones through the Wrexham to Bidston line, making it a 15-minute journey, and about the benefits that can be derived from thinking more holistically about the whole of Deeside and north-west England as an economic powerhouse and zone were extremely well made, as was his contribution about English votes for English laws. I agree with him wholeheartedly that we must carefully guard against short-term political expediency for some parties getting in the way of the vital need for our constituents, in particular in north Wales, to have a say on services and decisions that affect them as much as they affect people in England.
Those points were well made by the right hon. Gentleman and were reflected in the contribution of my right hon. Friend the Member for Delyn (Mr Hanson). He, too, highlighted the interconnection of our north Wales economy with that of the north-west. For example, on HS2, my right hon. Friend made it clear that in order to derive the full benefits for north Wales we need the Crewe interchange to be delivered and real investment in and understanding of the benefits. Crucially, he made a point about the recent rhetoric from the Chancellor about the northern powerhouse—welcome rhetoric and welcome emphasis on the north of England from a Tory Chancellor.
However, recent comments by Ministers in the Wales Office about creating a north Wales powerhouse are perhaps a bit muddleheaded. We need to think more along the lines of what my right hon. Friend the Member for Delyn said, that north Wales is in many respects connected inextricably to the north-west and the north of England. When we talk about the northern powerhouse, as I suggest whoever succeeds in May must continue to do, we should be thinking about north Wales as an integral part of it; we should not talk simply about something within Wales, of north Wales versus the south.
My right hon. Friend also made some excellent practical suggestions about the need for better transport links between his constituency and north Wales generally and the airports that serve north Wales—not Cardiff Wales airport, but Liverpool and Manchester. Such points of connection are vital. Other practical suggestions included extending Flint train station in order to allow the new trains to continue stopping there.
My hon. Friend the Member for Ynys Môn made a characteristically ebullient and passionate defence of his island, describing it as being at the heart of the whole of the British isles. I would not dare contradict him. He also challenged the Hansard reporters with his excellent pronunciation of Llanfairpwllgwyngyllgogerychwyrn- drobwllllantysiliogogogoch—they can do it twice now, if they would, please. He, too, spoke about the three key challenges: energy, transport—rail and road—and tourism. The Horizon project on Anglesey is supported throughout the House and it will be an enormous benefit to Wales, with 6,000 to 8,000 jobs in construction, as he said, and a further 1,000 jobs to maintain it. Cross-party consensus in support of nuclear energy in Britain is vital, to the benefit of not only north Wales but the whole of the UK and our energy security in insecure times.
My hon. Friend made two unique points in his contribution, one about our ports, and Holyhead to Dublin becoming as important a connection as Dover to Calais. That is a vision to which we should all subscribe. Cross-party consensus on devolving power over ports to the Welsh Assembly Government is important. I anticipate and hope that his suggestion will be picked up. He was also the only one to mention mobile phone coverage, which is enormously important to modern business. Coverage remains far too patchy in Wales, and north Wales is one of the areas in which we must do more.
My hon. Friend the Member for Vale of Clwyd (Chris Ruane) made an excellent contribution. In particular I highlight his description of the benefits to Wales of our continued membership of the European Union. He mentioned Rhyl harbour, Rhyl promenade and the OpTIC research and incubation unit, which are only three examples of the £1.2 billion of investment in Wales as a result of our membership of the EU. He emphasised the risk to the great companies in north Wales—I have mentioned some, such as Toyota and Airbus. As my hon. Friend the Member for Alyn and Deeside said, they would not leave overnight were we to leave the EU, but their continued investment in north Wales and in Britain would inevitably be in jeopardy. The risks to our constituents in north Wales in respect of their security and to the long-term prospects for the economic health of north Wales should be clear to all of us.
My hon. Friend the Member for Vale of Clwyd also highlighted the excellent work of the Welsh Government in recent years in the teeth of big cuts to their budget— £1.5 billion less and 30% of the capital budget removed. That is part of the picture under the UK Government: according to the National Audit Office, there has been a £15 billion reduction in infrastructure investment. However, despite such problems, as my hon. Friend said, £70 million has been invested in schools in Denbighshire. He could also have mentioned the £64 million invested by the Welsh Government and local government in schools in Flintshire or the £30 million invested in schools on Ynys Môn by the Welsh Government. Such schools are also a vital piece of economic infrastructure investment for our future—perhaps more vital than some of the road and rail projects that we have discussed. The schools projects are a testament to the continued dedication of the Welsh Labour Government to investing in the future of our children in Wales, in contrast to—a final party political point—how the Building Schools for the Future programme was cancelled in England.
I shall bring my remarks to a conclusion with a brief reminder that we have an election just 40-odd days away now; in case Members had not noticed, this Parliament is coming to an end. There is a vast amount of agreement that north Wales requires further investment. Whoever wins on 7 May, Welsh Members across the House should put their shoulders to the wheel. I am confident that if, as I hope and believe, we have a Labour Government, we will see proper partnership once more between Wales and Westminster—in contrast to the war on Wales over the past few years under this Tory Government—and a proper contribution to delivering economic success and prosperity for the people of north Wales.
The Parliamentary Under-Secretary of State for Wales (Alun Cairns)
It is a pleasure to serve under your chairmanship, Sir Roger. I congratulate the hon. Member for Alyn and Deeside (Mark Tami) on securing this debate. I echo the sympathies expressed by him and others towards those involved in the tragic accident in Europe yesterday.
This has been an excellent debate, which has demonstrated cross-party ambition, hope and optimism for north Wales and its people, public services and economic prosperity. By and large, as the shadow Minister mentioned, it has not been party political; I am pleased about that, because the issue is how to secure the right outcomes for north Wales.
The story of north Wales over the past five years has been quite remarkable. We all know that the UK has the fastest growing economy in the G7, and Wales is the fastest growing part of the United Kingdom. Since 2010—I hope that everyone will recognise this—gross value added growth for the UK has been 6.8%. In Wales, the figure is 8.4%, but it has been remarkably strong in north Wales, at 13.3%. That is a fantastic demonstration of the efforts of everyone in north Wales—the individuals, the private sector, the public sector and the entrepreneurs who are delivering growth have all achieved that quite remarkable figure of 13.3%.
Chris Ruane
Is the Minister including the Welsh Government in his list of people to congratulate?
Alun Cairns
Of course—I said the public sector. Everyone has played a part in delivering that 13.3% growth in north Wales. Of course, it needed a stable financial settlement and stable economic platform from which to build it. North Wales has prospered remarkably from those conditions.
The debate has focused on a range of issues, but without question there is absolute agreement among all Members on the interdependence of north Wales and the north of England in general and the north-west in particular. That is key to the area’s future prosperity. The hon. Member for Alyn and Deeside picked up on that idea at the outset and focused on the Mersey Dee Alliance. I pay tribute to that organisation; I have met its representatives in my role as Minister and have been hugely impressed with its case. I also pay tribute to the local authorities in north Wales, whichever party runs them; their relationship with the Wales Office is probably stronger than that of the local authorities in south Wales because of their co-ordinated activity and determination to forge a relationship with Whitehall.
Coleg Cambria has been mentioned, and my right hon. Friend the Member for Clwyd West (Mr Jones) mentioned Glyndwr university. Those are both excellent examples of using the strength of the private sector in north-east Wales to deliver skills.
Alun Cairns
Yes, Coleg Menai as well, although the particular focus was on Coleg Cambria and on Glyndwr university. The university has been through some difficult times over the past year or so. I pay tribute to Mike Scott for his role during that period. He has moved on now, but I recognise his efforts.
Several hon. Members mentioned rail, an issue to which I will return, along with broadband, housing, on which the right hon. Member for Delyn (Mr Hanson) reflected, and energy. The hon. Member for Ynys Môn (Albert Owen) mentioned the importance of tourism, referring to Llanfairpwllgwyngyllgogerychwyrn- drobwllllantysiliogogogoch, a place famous not only for having the longest place name in Britain but for the founding of the Women’s Institute, an important reason to celebrate it. I will also return to mobile communication.
The common theme, on which I will focus, has been our relationship with Europe. Members have presented doubts and questions about the future of many companies and organisations, and so the continuing prosperity of north Wales, because of the commitment to a referendum on the UK’s future membership of the European Union.
I simply do not accept the Opposition’s arguments on that issue. The evidence is strong and pretty overwhelming. In February, the British Chambers of Commerce said:
“A new settlement for Britain in Europe is essential to achieving our economic ambitions—helping our businesses succeed here at home, and across the world.”
Inward investment to the UK is quite remarkable. According to the World Investment Report published by the United Nations Conference on Trade and Development, the UK is the No. 1 country for foreign direct investment stock in Europe and is second only to the United States in the world.
Albert Owen
I am sure it is not intentional, but the Minister has misunderstood our case. The case is for staying in the European Union. Businesses are telling me that they invested here—Hitachi is one example; its headquarters are here in the UK—because we are part of the European Union. There is a net benefit for us from being in the EU. We want that to continue and are proud to beat the drum for it.
Alun Cairns
That is a respectable point, but the argument was being made that businesses were not investing because of the EU question. The hon. Gentleman will be able to make his point in the campaign when we have the referendum in 2017, and then people will have the choice.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (James Duddridge)
Let the people decide!
Alun Cairns
Absolutely, let the people decide. Industries and businesses invest for the long term and would not be investing now if, as the Opposition say, the position of the UK Government was undermining their future plans. That clearly is not the case. Britain is getting 50% more inward investment than either France or Germany, the next two biggest recipients of foreign direct investment. The hon. Member for Vale of Clwyd (Chris Ruane) specifically mentioned Airbus, but Tom Enders has said:
“Regardless of which decision the UK will make, we are strongly committed to our operations in the UK, which are key to the long-term future of our group.”
The evidence is quite clear, from statements from the chief executive of Airbus to the record amount of inward investment coming to north Wales. Putting doubt about the UK’s role in Europe in the minds of potential investors does not support the economic growth of the area.
Mark Tami
Does the Minister not accept that many companies, big and small, will not speak publicly about or get involved in politics—probably rightly—but will have concerns that they raise in private? My hon. Friend the Member for Ynys Môn has mentioned some of those concerns this morning. It is incredibly naive to dismiss this issue as if it is not a fear or a threat when it is. It is a serious problem that we have to address.
Alun Cairns
The hon. Gentleman makes an important point, but even if I accepted it, quite obviously businesses would not be spending and investing sums of money if they had the doubts that the hon. Member for Ynys Môn has shared.
I am sorry that the time has gone in which I could have focused on rail investment. Important points have been made about the Halton curve, the Wrexham to Bidston line and the Deeside and Wirral Waters relationship, which was raised by my right hon. Friend the Member for Clwyd West. Those are really important issues. We must focus on the economic value released by railway investments rather than purely on passenger numbers or environmental benefits. Economic benefits are important, and I was delighted that my hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones) focused on releasing economic potential in the report to the Department for Transport by the North of England Electrification Task Force.
Democratic Republic of the Congo (Human Rights)
(9 years ago)
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Jeremy Corbyn (Islington North) (Lab)
I am pleased that we are having this half-hour debate on the situation facing the Democratic Republic of the Congo. It is an interest of mine as the vice-chair of the all-party group on human rights and as a member of the all-party group on the African great lakes region, to which I pay tribute for the work it has done over many years to increase many Members’ interest in the DRC. In particular, I pay tribute to our excellent worker, Carole Velasquez, who does a great deal to support the group and to ensure that we are effective in raising issues in the House.
I also have a constituency interest, because a considerable number of people from all parts of the DRC have made their home in my constituency. They make a great contribution to the local community and the local economy. They have family connections to the DRC, and they have real-life experience of not only its joys and cultural wonders but the horrors of war and conflict, which have so disfigured the country for so long.
Sadly, the horrors of the Congo are not new. From the time of slavery and occupation, when the Congo was the personal fiefdom of King Leopold of the Belgians, the abuse of human rights and the environment, and the exploitation of the place, have been second to none in the litany of one human’s abuse of another. The European’s sheer racism towards the Congo throughout the 19th and early 20th centuries, and the slavery that went with it, are legendary. If anyone has any doubts about that, I urge them to read the wonderful work by American writer Adam Hochschild on the Congo.
However, we should also recognise the wonderful work done by many people. E.D. Morel exposed the slave trade in the Congo while working as a shipping clerk in Liverpool. The British consul in the area, Roger Casement, was later executed for his part in the Easter rising, but he nevertheless did a great deal to expose what was going on in the Congo.
When independence came in 1961, and Patrice Lumumba became the first Prime Minister, the break-up of the Congo was threatened and military coups took place. Patrice Lumumba was assassinated shortly after taking office, and there has been political instability ever since, with coups and military Governments. However, a great deal of wealth has also been made out of the Congo by international mining companies and timber companies and by some of the world’s biggest agribusinesses. The country has therefore enriched the rest of the world, providing uranium, gold, diamonds and many other minerals; indeed, every one of us who has a mobile phone will, at some point, probably have had one with coltan in it from the DRC. This is a place where the world has made wealth, but that wealth has not, unfortunately, been extended to the people of the DRC. It is important to put these things in a slightly historical context.
I want now to raise four related issues: the conflict in the east of the country; political violence and instability; governance; and what the international community, the UN and particularly the UK can do to improve the situation.
To give an example of how awful the situation is, let me quote Amnesty International’s 2014 annual report on the DRC:
“The security situation in eastern Democratic Republic of the Congo…remained dire and an upsurge in violence by armed groups claimed the lives of thousands of civilians and forced more than a million people to leave their homes. Human rights abuses, including killings and mass rapes, were committed by both government security forces and armed groups. Violence against women and girls was prevalent throughout the country. Plans to amend the Constitution to allow President Kabila to stay in office beyond 2016 prompted protests. Human rights defenders, journalists and members of the political opposition were threatened, harassed and arbitrarily arrested by armed groups and by government security forces…More than 170,000 DRC nationals were expelled from the Republic of Congo”—
Congo-Brazzaville, as it was formerly called—
“to the DRC between 4 April and early September. Among them were refugees and asylum-seekers. Some of the expelled were allegedly arrested and detained incommunicado in Kinshasa.
Little assistance was provided by the DRC government, and as of September, more than 100 families were living on the streets of Kinshasa without tents, health care, food or any assistance.”
The situation and the way people are having to survive are terrible by any stretch of the imagination.
The violence is awful, and we have to look at what the international community is doing. MONUSCO—the United Nations Organisation Stabilisation Mission in the Democratic Republic of the Congo—is one of the UN’s biggest, most expensive missions, and its performance, activity and governance are extremely controversial. I have visited the DRC twice, I have spent time with MONUSCO officials and officers and I have heard what people think of MONUSCO. At its best, it can be very helpful and effective. When I was in Goma there was a plane crash, and the MONUSCO officials from India and Pakistan were extremely helpful, effective and good at assisting the victims. At other levels, however, the complaints about harassment and abuse by UN soldiers and about the lack of control over them are very damaging to the UN’s image and to ordinary people’s confidence in the UN.
As time has gone on, MONUSCO’s mandate has changed. The mission has become much more assertive militarily, and many people in the Congo find it a bit hard to distinguish between the UN and anybody else taking on rebel and guerrilla forces such as the March 23 movement. I hope the Minister will be able to give us some indication of the direction in which MONUSCO is moving. I do not underestimate the security difficulties and problems, but there must be an understanding that the UN’s role is not to fight wars on behalf of other people but to bring about peace, security and above all development, so that people can live reasonable and decent lives.
The Catholic Fund for Overseas Development is very active in the Congo and very knowledgeable about it. In a research paper, it recommends that the new MONUSCO mandate should include
“the need to prioritize civilian approaches to protection of civilians”
and
“improved communication between the civilian and military sections of the mission”;
emphasise
“the need for improved contingency planning which focuses on the prevention of civilian harm in both the immediate and the longer term”;
request
“that the Secretary General’s…reporting on the mission includes key indicators against which the impact of protection efforts can be evaluated”;
ensure
“that any military operation is accompanied by concrete actions addressing security sector reform…and demobilization, disarmament and reintegration”;
strengthen
“mechanisms for holding the DRC Government to account for human rights abuses committed by their personnel”,
committing
“additional resources to this end”;
and stress
“that consolidation of state authority in eastern DRC must deliver effective protection”.
Those are all sensible, reasonable proposals, and the Minister is well aware of the situation.
Jim Shannon (Strangford) (DUP)
I thank the hon. Gentleman for outlining the issues so clearly. It is said that 4 million people died in the civil war, of whom 20% were targeted for their Christian beliefs. The hon. Gentleman has outlined the situation as it affects everyone, but does he agree that the DRC Government and the UN should take every action necessary to protect the Christians in the country, and their religious freedom, and is he aware of what discussions our Government have had on their behalf?
Jeremy Corbyn
Absolutely. Religious freedom is, to me, a basis of normal, decent civilian life, which I think is what my hon. Friend, if I may call him that, was saying. That must be correct. On one of my visits to the DRC I stayed in a Catholic mission, and was impressed with what the people there were doing, and with its ecumenical nature. They extended their hand to other faiths and groups. There is a huge variety of religious persuasions in the DRC, including evangelical Christians as well as the perhaps more traditional Catholic Church and very big Churches such as the Simon Kimbangu foundation. It is an interesting place, and the hon. Gentleman has made an important and valid point.
I had a useful meeting and discussion last week with a representative of the International Committee of the Red Cross, Markus Geisser. He helpfully sent some information about what it is doing. The ICRC first went to the Congo in 1960 and had a permanent mission from 1978 onwards. It has a great deal of experience and is well respected. Because it is the ICRC it manages effectively to reach all parts. Its budget is 63 million Swiss francs, of which 13 million Swiss francs are spent on protection, 41 million Swiss francs on assistance, 5 million Swiss francs on prevention and 2 million Swiss francs on co-operation with civil society. It has a considerable local staff and has issued an emergency appeal for 2015 to help fund its activities in the DRC. I hope that the British Government will respond positively.
I want to draw attention to the question of violence against the individual. I have talked about the number of people killed and forced into exile, and the horrors that go with that. There is a disproportionate impact on women and girls, and to quote again from the Amnesty International report:
“Rape and other forms of sexual violence against women and girls remained endemic, not only in areas of conflict, but also in parts of the country not affected by armed hostilities. Acts of sexual violence were committed by armed groups, by members of the security forces and by unarmed civilians. The perpetrators of rape and other sexual violence enjoyed virtually total impunity.
Mass rapes, in which dozens of women and girls were sexually assaulted with extreme brutality, were committed by armed groups and by members of the security forces during attacks on villages in remote areas, particularly in North Kivu and Katanga. Such attacks often also involved other forms of torture, killings and looting.”
What can the UK and the Department for International Development do? The DFID programme is welcome; it is £162 million for 2013-14, and I hope it will rise in the future. Our programme includes support for such things as the political framework at a national level; key reform processes; work on tangible peace dividends and benefits to communities, particularly in the east; and progress in addressing grievances, perceptions and community tensions. Much of that is valuable and it is important to pursue it. Without the development of civil society, little can be achieved.
I was once on a visit with a delegation in Goma; we had travelled for a long time from Rwanda. When we arrived we visited a women’s centre. It was humbling, to say the least, to be asked to address—in the dark, because we arrived after nightfall, but they wanted to see us anyway—a meeting of 300 to 400 women, every one of whom had been a victim of rape, or multiple rape, and violence. They were doing their best to rebuild their lives. They were trying to get to a place of security and were at least in the centre in Goma. I also visited refugee camps and spoke to a lot of women about what had happened to them there. The violence that had happened to them was indeed rape as a weapon of war.
The former Foreign Secretary, now the Leader of the House, took the issue up at an international summit, and I was pleased that he did and that far more publicity has been given to the fact that rape is used as a weapon of war. I support any funding that we can give to women’s organisations and centres in Goma and other parts of Congo—particularly if that is used to support women to go back to villages and develop economic life, recognising that women are crucial to the peace process. They are, essentially, the builders of communities, and they have a special place in Africa because of their huge contribution to agriculture.
Education is the key—and that includes the education of boys. In Kinshasa I visited what euphemistically passed for children’s homes but were really houses where boys slept at night; they went off in the day to do whatever they wanted, because they had nothing else to do. They had little education or support and hardly any role models. If we do not give the next generation of boys, and the one after that, education and opportunity, the horrors of the abuse of women, and the arrogance of male behaviour in the Congo, will simply continue and get worse. Investment in education is key.
As I said when I began, Britain has made a big contribution through DFID. We have sent support and election observers, and I hope that we will send observers to the forthcoming elections. However, I hope that we will take action in this country as well. Coltan does not come from nowhere. Okay, it is a conflict mineral and it is not supposed to be imported because of that. I have deep suspicions that it gets in through Rwanda and possibly Uganda. I have deep suspicions about the export of many minerals from conflict zones, particularly in the DRC. The Congo is theoretically signed up to the extractive industries transparency initiative. It should be held to account on that because mining companies based in Switzerland and London make a great deal of money out of the resources of the Congo, which should go to its people. Oxfam, the ICRC and many others have made enormous contributions to the effort to bring about some sort of peace and justice. CAFOD has made some valuable contributions as to the way MONUSCO should develop in future. It is up to us to take political action.
Finally, I ask the Minister to give what support he can in the case of the imprisonment of one Member of Parliament—not just because he is a Member of Parliament but because he represents something about democracy and freedom in the country. The MP is the hon. Vano Kiboko, who has now been in prison for nearly 100 days. His crime was apparently to raise criticisms of President Kabila, which many journalists and others have done. If we want a free and democratic Congo to develop, it is not up to us to occupy and invade; it is up to us to recognise the appalling loss of life, the horror of many individuals’ lives, and the contribution that the rest of the world could make if instead of taking the profits of the Congo it tried to ensure that they were invested in the people of the DRC.
The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (James Duddridge)
This is my first time serving under your chairmanship as a Minister, Sir Roger, and it is a pleasure to do so, just as it was when I was a Back Bencher.
I thank the hon. Member for Islington North (Jeremy Corbyn) for securing the debate and setting out some of the challenges that the Democratic Republic of the Congo faces. He clearly has a deep-rooted understanding of that country through his constituents, his visits and his ongoing, passionate work on its geography and human rights. He rightly emphasised the historical conflicts and the country’s great riches and opportunities, which have not been fairly used, and have certainly not been used universally for the benefit of all citizens of the DRC. I commend him for his work on the all-party group on the African great lakes region, and the secretariat which, as he mentioned, does a great job in working with Members of Parliament in the Commons and the Lords to ensure that the issues it highlights are at the forefront of what we do.
By virtue of its size, population, geography and economic potential, the DRC is important not only as an individual country; it is important to the entire great lakes region and to Africa overall. If it succeeds, it will have a positive impact on the region. Conversely, if it fails, its tragic problems will infect the surrounding areas. Today’s debate covers a number of issues, which I will address, including the political violence in eastern DRC, governance and what the UK and the international community can do. I will also try to address the issue of educating young boys and men on the issue of rape, which the hon. Gentleman mentioned, and the issue of the Member of Parliament who has been imprisoned for an unacceptable time.
The hon. Gentleman spoke about the United Nations Organisation Stabilisation Mission in the Democratic Republic of the Congo— MONUSCO—which is the UN’s largest and most expensive mission, and one of its longest-standing missions. We hold UN soldiers to the same high standards as British soldiers—standards that are applied by international law. Unfortunately, soldiers sometimes do not meet those high standards, so the British Government should be firm in insisting that they are met. There are education, training and, ultimately, courts of law to enforce them.
It is particularly important that the DRC’s neighbours play a constructive role in the DRC. We continue to urge the region to work towards a full implementation of the peace, security and co-operation framework that was established in 2011. It has been useful in enabling us to see the DRC through the prism of the region, rather than simply through the bilateral relationships with countries such as Rwanda, which the hon. Gentleman mentioned.
Central to security in eastern DRC—and, indeed, the whole region—is the disarmament of the FDLR, following the work with the M23. We are disappointed that the vast majority of the FDLR has chosen not to disarm voluntarily. The international community estimates that 1,200 members of the FDLR still exist in eastern DRC. Those members have chosen not to surrender, renounce violence or submit to disarmament or demobilisation, and at the moment they are not involved in the reintegration process. We must push the Congolese army and MONUSCO to encourage them in whatever way is needed.
The hon. Gentleman asked to what degree the UN forces should be proactive. Some of the threats of proactive activity against the M23 and the FDLR have been effective. It is right that MONUSCO carries out proactive, kinetic activity, rather than just sitting in camp and reacting to situations; that is in line with its mandate to neutralise armed groups, as set out in Security Council resolution 2147.
In January, the Government of the DRC announced that they had started military action against the FDLR. However, the British Government’s assessment is that comprehensive operations are yet to commence. We have reiterated to the Government of the DRC that international expectations remain high. The threat posed to civilians is high, and the threat to the security and stability of the region simply must be tackled. We have emphasised that the FARDC—the DRC army—and MONUSCO must ensure that efforts are made to minimise any impact on civilians; that should be at the forefront of military planning.
The hon. Gentleman mentioned the political space and governance. Elections and the democratic transition of power are integral parts of our efforts to build a secure and prosperous DRC. President Kabila has an opportunity to leave a significant and positive legacy. Presidential and parliamentary elections need to be credible, inclusive and peaceful. Crucially, they must respect the will of all the Congolese people. The constitution and the African Union charter on democracy, elections and governance must form a key part of that legacy. The Prime Minister has been keen to put governance at the centre of everything we do through the Foreign Office, the Department for International Development, the UN, the golden thread, the high-level partnership, and the open working group on the sustainable development goals, which will lead to a successor to the millennium development goals.
On the issue of governance, the hon. Member for Strangford (Jim Shannon) rightly highlighted the issue of Christian groups. Our work on human rights includes the protection of everyone’s right to hold their beliefs. We strongly condemn any violence or attacks on Christian groups in the DRC. As and when evidence of those attacks is brought forward, I will be happy to raise that in the strongest possible terms, as the hon. Gentleman would want me to.
Our human rights objectives in the DRC focus on preventing sexual and gender-based violence and protecting children caught up in violence. The global summit to end sexual violence, held in London in June, showcased the steps made in the DRC to date. I welcome the comments about my right hon. Friend the Member for Richmond (Yorks) (Mr Hague) and his leadership on that issue. He has led on that issue not only in the UK but internationally. When I was at the UN General Assembly last year, people were disappointed that he was moving on from the post of Foreign Secretary, but glad that he retains responsibility for those issues. He has passed the baton, and, from a Foreign Office perspective, I continue to monitor those issues. I am sure they will remain central, whatever Government we have after the general election.
The hon. Member for Islington North spoke about rape. We often talk of rape as a weapon of war, but sadly in the DRC it is also a political weapon. Women who are politically active are often raped multiple times over a period of time and gang-raped as punishment for their involvement in politics. Clearly, that is unacceptable. He talked about the longer term. It is a challenge to look at the long term when so many things are happening in the short term. However, social change and changing social attitudes towards rape and sexual violence is the right way forward. We cannot just respond to crimes. The UK has therefore funded the campaign “Silent No More”—if the hon. Gentleman is not familiar with it, I can send him details of it—which is a very good project and a good example of what the UK is doing to address that issue. It focuses on working with community leaders to help change perceptions and challenge attitudes about sexual violence. It particularly focuses on men and boys. There are a number of other programmes, such as those run by War Child, to help child soldiers who may have been perpetrators of rape in the past to reintegrate into the community and adopt new norms.
There are still accusations that the army, police and security agencies are complicit in killings, rapes and the ill-treatment of detainees. That is clearly unacceptable, and it is one of the key reasons why the DRC is in the formal “country of concern” category, and why a whole chapter in the FCO’s human rights and democracy report, which I am sure the hon. Gentleman has seen, is focused on the DRC.
In conclusion, I would like to reiterate how seriously the Government take the region. More than 5 million people have been killed there over the past 20 years and, although the DRC has the potential for economic prosperity and opportunity, its GDP is little more than $1 a day. In my few remaining seconds, I want to return to the issue of political detainees, particularly those detained after the January problems. I am very concerned about the narrowing of the political space in the DRC, and about the fact that a number of Opposition MPs have been detained and harassed. I am happy to take up individual cases, if I can co-ordinate with the hon. Gentleman, in addition to what we are already doing. We must do all we can to protect the DRC’s political space, particularly in the run-up to the election, when the constitution must be protected. We must continue to do what we can to end poverty in that area and improve human rights. The DRC should be a strong and prosperous country.
High Speed 2
(9 years ago)
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Mrs Cheryl Gillan (Chesham and Amersham) (Con)
It is a pleasure to serve under your chairmanship, Mr Betts. You may have liked to have been down in this part of the Chamber to speak not exactly in favour of High Speed 2, but I welcome you to the Chair. I also welcome all my colleagues, and I am delighted that so many of them, particularly my Buckinghamshire colleagues and ministerial colleagues, have turned up to listen and contribute to today’s debate on behalf of their constituents, particularly in light of the achievement of having secured this debate. I think I am the last person to secure a debate on HS2 in this Parliament, although I am very pleased that my hon. Friend the Member for Wycombe (Steve Baker) is also in the room, as he was the first person in this Parliament to do so.
Tomorrow, the Commons will prorogue, after all Bills have received Royal Assent. However, one Bill will not have received Royal Assent and, uniquely, will be carried over to the next Parliament—the High Speed Rail (London-West Midlands) Bill. This project is so large—so gargantuan—that it is being carried over into the next Parliament. It is the largest peacetime infrastructure project that we have seen in this country, and it cannot be dealt with in just one Parliament. Unless an incoming Government think again, it will continue very much as it is currently planned. However, I want the Government to think again, no matter what political complexion inherits the government of this country after the election on 7 May.
After six years of opposing this project, the comment I hear most is, “Surely HS2 cannot be going ahead.” That is always followed by a Victor Meldrew moment for constituents, or anybody who learns about HS2, and they say, “I don’t believe it!” What they cannot believe are the justifications claimed by Government and officials for spending such a large sum on a project with such doubtful merits for most of the population and in the vested interests of the few who stand to benefit, particularly those who stand to benefit financially.
Andrew Bridgen (North West Leicestershire) (Con)
I congratulate my right hon. Friend on securing a debate on this very thorny issue for many of our constituents. Does she agree with my assessment that if whoever forms the next Government wish to carry on with this white elephant project, they will have to come back to this House of Parliament and ask for another huge increase in the budget for HS2?
Mrs Gillan
That certainly is a possibility, which I shall refer to later, because this morning we had another adverse report, this time from the House of Lords Economic Affairs Committee. If this project goes ahead as proposed, I think many people will have to suspend disbelief, and the Government’s pockets will have to be even deeper.
Chris White (Warwick and Leamington) (Con)
I thank my right hon. Friend for giving way so early in the debate, and I congratulate her on her long-standing campaign on this issue. Does she agree that the £50 billion so far earmarked for HS2 could be spent on infrastructure projects right across the country to everyone’s benefit—to the nation’s benefit—and not solely on HS2, which as she says, has again been scrutinised unfavourably this week?
Mrs Gillan
That is absolutely right. Many of our local organisations got together in Buckinghamshire and named their organisation 51m, because had the money been spent in another way, it could have resulted in £51 million being available in each and everybody’s constituency to spend on our constituents. I believe that on current pricing, it should be renamed 87m, because it is looking more like £87 million per constituency, but I will come to that later.
Thanks to the brilliant economic management of a Conservative Chancellor of the Exchequer, who has rescued our economy, we have—it is no joke—a solid, long-term economic plan, which is providing the foundations for continuous growth. We need investment in infrastructure and public services, and economic stability against which our private sector can develop and our public services improve.
Steve Baker (Wycombe) (Con)
I hope my right hon. Friend will join me in congratulating the Economic Secretary to the Treasury, who has joined us in the Chamber and has created these excellent conditions. Will my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan) join me in recognising that things will be very difficult for a number of colleagues in government when they face this project going ahead at great cost to their constituents, with cross-party support? It has a distinctly anti-democratic flavour at times.
Mrs Gillan
I am proud of my colleagues who are in government—and should remain in government—who have spoken up and pointed out the failings of this project from within Government, as I did when I was part of the Government. I have had the good fortune of being liberated on the Back Benches, and am able to speak out freely in public. That is not always possible. However, I always observed Cabinet collective responsibility and only spoke on platforms in my constituency. I wish the same could be said of the Liberal Democrats, who seem to have cast Cabinet collective responsibility, and that sort of responsibility for being in government, to the wind. The politics of convenience are not my politics, so I am proud of the part that my colleagues have played. They have been stalwart compatriots in a very difficult subject area for all of us. None of us here is really naturally a rebel, and this is a difficult issue to grasp, as I hope people will appreciate.
By default, HS2 has been part of that long-term economic plan. As the doubts have been growing about it, I think we need to ask ourselves whether this is the best way forward for the honestly held ambitions of Conservatives for this country—or indeed, of any other party. There is only a small chance that the incoming Government will totally abandon the plans, and if they do, it may now only be because they are being held to ransom by a smaller party. Alex Salmond declared that one of his demands as the price for propping up a Labour Government would be to start the high-speed rail link from Scotland to England, before connecting Birmingham to London.
I like and admire many of my Labour colleagues. No prisoners are ever taken by them, and I am second to none in my admiration for the right hon. Member for Holborn and St Pancras (Frank Dobson), who has trodden this path with me over five years, but surely even the Labour party, should it be successful, would not want that sort of political blackmail as the hallmark of its term in government.
Mrs Gillan
I will, but my next sentence is that I do not want a Labour, or Labour-led, Government.
Kelvin Hopkins
I just say that if the Scottish National party is so keen, perhaps the Scottish Parliament could pay for it.
Mrs Gillan
There is a lot of support for that on this side of the House. I do not want a Labour-led Government, and certainly not one that will be blackmailed by a smaller party. I want an incoming Conservative Government with a healthy majority to rethink, refine and re-engineer this project before we are locked into the most expensive Procrustean bed in history.
I turn to some of the detail and the increasing problems. On the current plans for HS2 phase 1, there is still no confirmed connection to central London. The Euston proposals have gone back to the drawing board and Old Oak Common just might be the final terminus. That will connect with nowhere meaningful for many years.
Michael Fabricant (Lichfield) (Con)
My right hon. Friend has been a good friend since 1992 and a doughty fighter on this particular campaign. On the point that she just made, is she also aware that many people in the midlands, while having to put up with HS2 crashing through their constituencies and countryside, were at least offered the chance of going to a railway station, say, in Birmingham in the morning and waking up in the afternoon in Paris or Lille? However, not only does it not connect with London in the way in which we thought, but it does not even connect with the channel tunnel.
Mrs Gillan
That is absolutely correct. There is no direct connection to the channel tunnel, and people, particularly up in the north, have been sold a pup; they were told that they could get to Brussels or the continent much more easily, but that is not going to happen. Also, until we know the outcome of the Davies commission on airports, no connection to any future hub airport in the south-east will exist, and even the Heathrow link or spur has been cancelled. That might gladden the heart of my right hon. and learned Friend the Member for Beaconsfield (Mr Grieve), for whom I have a great deal of sympathy, but the fact is that the project is being developed in isolation.
Mrs Caroline Spelman (Meriden) (Con)
Does my right hon. Friend understand the disappointment at not having the regional high-speed trains through to the continent that were promised for Birmingham airport in my constituency? The concept was presented of clearing customs at Birmingham and being able to travel through to the continent, which is now not a possibility.
Mrs Gillan
I know. So many people have been marched up the garden path and marched down again. It is appalling that such deception could have gone on for so long and then gradually fallen away, yet the project still survives as currently envisaged. HS2 has been developed in isolation, with no reference to any strategic and integrated transport plan for future passenger and freight transport across all modes of transport. That is confirmed in the House of Lords report released today.
To derive many of HS2’s claimed benefits, large investments will have to be made even to connect it to the cities that it is supposed to serve. As you well know, Mr Betts, that is the case in Sheffield. The capacity problems that it is supposed to cure have been challenged repeatedly, with Government insisting that we are already full to capacity on the west coast main line, despite their own figures showing differently. I refer to page 46 of “The Economics of High Speed 2”, the report released today, which shows that quite clearly.
Jeremy Lefroy (Stafford) (Con)
I am most grateful to my right hon. Friend for calling the debate. As a regular traveller on the west coast main line, I can confirm that outside peak hours, most trains have many carriages, particularly first-class carriages, that are almost empty. Despite the welcome reduction in first-class carriages on the Pendolinos from four to three, that is still too much capacity that is unused and completely wasted.
Mrs Gillan
I know. A member of my team uses those trains, so I get regular reports and what I am hearing is not surprising. The House of Lords Committee finds the situation incredible, and so do I; and my hon. Friend has just confirmed the position to me, for which I am grateful. The business case has not been updated since 2013, and the cost-benefit analysis, now described by the Economic Affairs Committee as “unconvincing”, is based on an old, outdated set of facts and information.
Mr Dominic Grieve (Beaconsfield) (Con)
I am grateful to my right hon. Friend, because it seems to me that that goes to the heart of what this debate should be all about. I have some sympathy for the Government and, indeed, with the reasons that underpinned the launching of this project, because very often one can say that projects of this kind may be long term and one has to look beyond a basic economic case. However, the more it goes on, the more the evidence mounts up that there is in fact no economic case, yet we do not get a proper response.
Mrs Gillan
The economic case was dodgy in the first place and has been challenged by many economists and outside commentators. One of the basic problems was that it was assumed that no one did any meaningful work on a train. That was extraordinary to me. The argument has been fraught with holes since the beginning. I think that even at the current estimate, the Treasury will not be impressed, and in the final analysis it will be the Treasury that holds the purse strings.
Andrew Bridgen
Is not the single argument, the single fact, that repeatedly holes the Government’s economic case for HS2 below the waterline that if there were a genuine business case for HS2, we would not need to put in £50 billion of taxpayers’ money, because the City of London would be more than happy to fund it?
Mrs Gillan
The Government always go on about the Victorian railways, but they forget that it was private investors who built the Victorian railways. It will not be private investors that build HS2 or even HS3, as far as I can see. Also, the costings that are still being cited are at 2011 prices. The Department refused to update those figures for me or even for the Economic Affairs Committee in the other place, so the Economic Affairs Committee has recalculated the costs, using the movement in public sector construction contracts since 2011, and its new estimate is £56.6 billion at 2014 prices, because that is the year for which figures are available in order to make the calculation.
There is evidence that the Government did not give equal consideration to alternatives to HS2. The opportunity costs of spending £56.6 billion on one project have also escaped evaluation by the Government. As I said, 51m, so called because that is what each of us would have had to spend in our constituencies if HS2 had not gone ahead, should now be called 87m—£87 million for the constituency of each and every Member in this place. I am sure that if we gave that money to all our constituents, the first project that they came up with would not be HS2.
Mr Andrew Turner (Isle of Wight) (Con)
One thing that is noticeable to my constituents is that they live on an island and they have no benefit whatever from HS2.
Mrs Gillan
I suppose I could say that they are lucky they have no disbenefit from HS2, but that is one of the pertinent points. This railway is being built for the few, certainly not the many.
Even the claims of rebalancing the economy between the north and the south do not stack up. There is clear evidence pointing to London being the real gainer from the project as currently configured, and we are all forgetting the ill fated KPMG report that revealed that many parts of the country would lose millions of pounds from their local economies, because those economies would be hollowed out as businesses were attracted, like a bee to a honeypot, to the line of route.
I am sad to say this to my hon. Friend the Minister, whom I consider to be a friend and of whom I am very fond, but—[Laughter.] There is always a “but” with me. This project has been guilty of unsatisfactory and often callous public engagement with the people and communities affected, disrespect for opposing viewpoints, including those of elected representatives, failure to observe the basic rules of consultation, often perceived indifference towards the environment, and suppression of the reports on the deliverability of and risks posed by the project.
Mrs Gillan
That is not a great track record, if hon. Members will forgive the pun. I will certainly give way now that I have delivered my punchline.
Michael Fabricant
My right hon. Friend is very kind and very generous; she knows me of old. Is it not interesting that one reason why the present Government decided not to go with the original Arup proposal and follow the route, which would have been much cheaper, of an existing transport corridor was that they wanted to go at ultra-high speed, and ultra-high speed trains need to travel in straight lines? However, because of the work of the Department for Transport and the ongoing work of the parliamentary Committee, which has caused a number of changes in the route, we now know that in fact the trains will not be able to go at ultra-high speed, because there are so many changes to the route. They could have followed an existing transport corridor, saving money and the environment.
Mrs Gillan
That is a very valid point, but I have to say that, following the publication of a recent document, we know that HS2 will at least be well designed. The latest document from HS2 is “HS2 Design Vision”. It is not a very weighty document, but there is a long list of contributors, and I learn in it that we will be
“Celebrating the local within a coherent national narrative”.
It continues:
“Each place and space that is created as part of the system will contribute to HS2’s own identity.
The design challenge will be to develop a coherent approach, establishing uniformity where it is essential while encouraging one-off expression based on local context where appropriate. HS2 seeks to enhance national and civic pride, while also supporting its own brand to support its operational and commercial objectives. It will therefore include many local design stories within one compelling national narrative.”
I am a fellow of the Chartered Institute of Marketing and an old marketing director, and that takes even my breath away. I have to say that it is not worth the paper it is written on. My hon. Friend the Member for Lichfield (Michael Fabricant) is quite right. The design of the project is coming into question, because there were alternatives that have not, in my view, been properly considered. After six years of the project, since Andrew Adonis first announced it, we were supposed to have a fully integrated, connected railway smoothing northern access to the continent, whisking non-train-working businessmen along at speeds hitherto only dreamed of on a British railway and reducing air travel demand. We learn from recent press coverage that those passengers will be whisked along on luxury leather-upholstered seating in child and family-free carriages. The design vision has, for me, really put the icing on the cake. Is this really what people want? Certainly not the people who have contacted me, not only from my constituency but from up and down the country.
The list of detractors grows daily. In addition to the Lords report published today, we can count the Environmental Audit Committee, the National Audit Office, the Public Accounts Committee, the Institute of Directors, and numerous local authorities and outside commentators. Last week, I wrote to the chairman of the Office for Budget Responsibility to ask him, as part of his remit to assess the long-term sustainability of the public finances, to carry out a review of the impact of HS2 on budgeted capital expenditure and Department for Transport expenditure. Should I be fortunate enough to be returned to the House by the electors of Chesham and Amersham after 7 May, I hope that I will receive a detailed response from Mr Chote that may enlighten us more.
Many detailed questions are posed in the Lords report, all of which need to be answered before the project goes any further. I think that the Minister should consider some specifics, particularly if he is willing to rethink the project. The rebalancing of wealth between north and south is an admirable objective. With a family who came from a steel firm in Sheffield, I know that better than most, as do you, Mr Betts. However, would it not yield faster and more effective results, as I have often said, if cross-Pennine connections were prioritised before any London-Birmingham link? Before starting on any link from Birmingham southwards, should we not wait for the Davies report on airport capacity in the south-east and plan accordingly? More importantly, should we not commission a major strategic transport plan across all modes of transport, with particular reference to the modern and emerging technologies of smart motorways, driverless cars, driverless trains, super-Maglev and vacuum tube trains, to say nothing of the increasing power and use of high-speed broadband and satellite communications, which were raised by the Prime Minister today in a tremendous Prime Minister’s Question Time?
We in the line of the route have always had to make other plans. We could not simply oppose the project; we had to make contingency plans in case it went ahead. In this day and age of politicians outbidding each other to be greener than green, how can we plan for HS2 to destroy parts of 41 ancient woods and damage a further 42 that lie near the construction boundary, to say nothing of the destruction of the area of outstanding natural beauty and the historic sites that lie in the path of the monster?
Convinced, if the project goes ahead, that the destruction of the area of outstanding natural beauty in the Chilterns can be avoided—and with my support, and that of my right hon. Friend the Member for Aylesbury (Mr Lidington), the right hon. Member for Buckingham (John Bercow), my right hon. and learned Friend the Member for Beaconsfield and particularly my hon. Friend the Member for Wycombe—Chiltern district council, Buckinghamshire county council, the Chilterns conservation board and Aylesbury Vale district council commissioned a new, independent report to consider a better and viable alternative to the Government’s route through Buckinghamshire. The report will be published tomorrow and presented here, in Committee Room 19, at 4 o’clock, and I invite the Minister and other hon. Members to attend.
The main conclusion of that study is that a long tunnel for the transit of the Chilterns by HS2 is technically feasible and would protect the designated landscape of the Chilterns AONB and the green belt. The second conclusion is that that would offer a better alignment. The details have already been shared with HS2 Ltd to give it time to consider the study before the local authorities appear before the Select Committee, and I commend the report to the House. Accepting that option would save time and money, because such environmental protection would reduce the number of petitioners, lawyers’ fees and the time that people spend scrutinising the legislation. It would avoid some of the last-minute, knife-edge decisions that are being forced on people before they give evidence to the Select Committee. Giving evidence to a Select Committee is a daunting prospect even for a politician. It is really daunting for a layman who has an emotional investment in the proceedings, and who risks losing their home and habitat.
We should also question whether we should let HS2 Ltd continue to spend and enter long and expensive contracts when the project has not yet cleared all its parliamentary and political hurdles. The questions that I have had answered recently leave no doubt about the fact that HS2 Ltd is recruiting more and more people on higher and higher salaries. According to reports in the press, some 18 executives are paid more than the Prime Minister. I do not know whether that is true; I do not believe everything that I read in the press. However, it is alarming to think that such highly paid people are contracting on a regular basis—I have a list of the contracts—when they have not been given the clear say-so by this House or the other place.
I believe more than ever that a pause and a re-evaluation are necessary before the die is cast and we have no option but to plough ahead. I will conclude shortly, because I know that many other people want to speak. I hope that the Members who are allowed to speak will be those along the route who have a real interest in the matter because their constituencies will be particularly affected. I hope that the speakers will not simply be, as always seems to be the case, those who habitually support the project from afar. Before I conclude, I want to raise some compensation matters, because we have all had to make plans on the basis that the project would go ahead. As many hon. Members know, the lives, properties, businesses and futures of many of our constituents have been blighted by this project. They have lived through five years of sheer hell, or, as I have dubbed it, shire hell. Some—the lucky ones—have sold, and they have usually accepted offers of less than their properties are actually worth. Some have moved on. Some have had their health severely affected. Some have died. Some have taken the compensation on offer.
It was only this year, after five years, that the compensation for my constituents and “the need to sell” scheme were finally settled. People are still battling with complex bureaucracy, form-filling and unacceptable questioning. I have the distinct impression that lifestyle judgments are being made about people who apply for compensation. It should be none of the Department’s business what lifestyle anyone chooses to pursue. The decision should not really depend on what other assets they have, because it is the asset in question—usually their home—that is affected. The Department should accept the need to sell without making onerous demands for personal details.
Mr Nick Hurd (Ruislip, Northwood and Pinner) (Con)
I wholly endorse what my right hon. Friend is saying about the “need to sell” scheme. Do her constituents feel the frustration that is felt deeply in Ickenham and Harefield about the fact that the current compensation proposals take no account of blight associated with construction? When we are dealing with huge construction sites that will be in operation 24/7 for up to 10 years, that is a very real problem.
Mrs Gillan
I agree entirely. I have been talking for too long. I was hoping to finish earlier than this, but I have been generous in giving way, so I have not been able to cover all the points that I hope others will cover. When I did the fly-through, which is a bird’s-eye view of the whole line of the route, it showed clearly what would happen after the line had been built, but it failed to take into account what would happen in the wider swathe of agony that would be cut through our countryside. That has to be explored in far more detail.
I hope that the Minister will confirm when he responds that absolutely no lifestyle judgments will be made, and that no such extra hurdles will be placed in front of people who are quite rightly applying for compensation. We have a residents’ commissioner, Deborah Fazan, who has sat since 2011 on the exceptional hardship scheme committee. I have tried to meet her twice, but she has resisted. She says that she needs to play in on the wicket, talk to HS2 and so on. I would have thought that she probably knows enough about it, having sat for so many years on the exceptional hardship scheme. She is supposed to be independent, and I hope the Minister will clarify her role because she is paid by HS2 Ltd and has not yet met me. I do not know how my residents access her or bring their points to her, and I certainly do not know how to access her, so will the Minister help? There is an old expression, “He who pays the piper calls the tune,” and I hope that her being paid through HS2 Ltd and the Department for Transport does not compromise her independence. I have argued for an independent ombudsman, which should have been put in place and would have provided a better service.
HS2 has taken over many lives, and none more so than those of our colleagues who serve on the Select Committee. I praise the Committee’s work. My hon. Friend the Member for Poole (Mr Syms) and all members of the Committee have worked assiduously and, like my hon. Friend the Member for South Northamptonshire (Andrea Leadsom), I am keen that the Committee’s recommendations are upheld. If there is an unsatisfactory response from HS2 Ltd to the Committee’s assurances and recommendations, they should be followed up, with the possibility of petitioners reappearing before the Committee, if necessary. I do not want the Minister to pass the buck to the Committee, because that is not correct. The Department for Transport should retain a deep and detailed involvement in all matters.
As I am thanking people, I want to mention the Clerk, Neil Caulfield, and all the officials of the House who work with him and have given sterling service to us all. Without doubt, it is a difficult job at the best of times, and it is a terrible job when dealing with people who are so anxious, angry, aggressive and upset and who feel threatened. Those officials have done a fantastic job in liaising and perhaps repairing some of the damage done during the early contact between officials and people in our constituencies.
My Conservative district council, Chiltern district council, and my Conservative county council, Buckinghamshire county council, have been absolutely superb. I want every Conservative district councillor who has stood shoulder to shoulder with me on this to be re-elected on 7 May, rather than those Johnny-come-latelies who suddenly decided, after their manifesto contained three high-speed rail plans, that they were against this one. We are not falling for that, I am afraid.
As many hon. Members know, I also want to thank HS2 Action Alliance, including Emma Crane—she has provided me with valuable and excellent legal advice—Hilary Wharf and Bruce Weston, who are well known to everyone here. I also thank the Chiltern Ridges Action Group, the Residents’ Environmental Protection Association and, particularly, the Woodland Trust, which I first worked with in 1992 to save Penn wood in my constituency. Penn wood was the first substantial woodland bought by the Woodland Trust, which has stood full square with us on the environmental case throughout. I thank Conserve the Chilterns and Countryside and the Chilterns Conservation Board. I particularly pay tribute to Steve Rodrick, who has just left the Chilterns Conservation Board, but I hope he will come back to give evidence to the Select Committee on our behalf. I also thank the Chiltern Society, the Wildlife Trusts and, particularly, the Country Land and Business Association, which helped on some complex matters.
I pay particular tribute to my parliamentary colleagues, starting with the right hon. Member for Holborn and St Pancras. He will be a great loss to this House. He may not be of my political persuasion, but I have found him easy to work with. He has not veered from a difficult path, and he has been a steadfast companion on this route. I, for one, wish him and his wife very well. I hope we will see him again. I hope that he will not completely depart these buildings and that he has a further contribution to make.
I also pay tribute to my right hon. Friend the Member for Aylesbury, who, with the right hon. Member for Buckingham, has been the mainstay of trying to get some changes to this project. Having ministerial colleagues here today is important because it means they are as one with what is being said here and would like to see changes. I hope they will work again from inside the Government to get the changes to this project that we want—their working from outside the Government would serve no purpose whatever.
Any fool can spend money, and there is great appetite for what the Department proposes to spend on HS2, but as Conservatives we know that spending money wisely is what matters. On the penultimate day of this Parliament, in which the Conservative-led Government have shown that they have governed the country responsibly, restored our reputation for good governance and been the architect of our economic renaissance, will the Minister please listen to the many voices raised in good faith to question HS2? Will he not only fully publish all the information available to him but undertake a re-evaluation of the worth of this project? Saying, “We might not have got this absolutely right,” is the hardest thing to ask any Minister to do, but it would be the right thing to do before spending a king’s ransom on a white elephant.
Mr Clive Betts (in the Chair)
Before I call the first speaker, I will set a time limit of four minutes. Hopefully, most people who have indicated that they want to speak will be able to do so.
Helen Jones (Warrington North) (Lab)
I congratulate the right hon. Member for Chesham and Amersham (Mrs Gillan) on securing this debate. In the short time available to me, I will focus on an issue of great concern to my constituents. The Hoo Green to Bamfurlong spur would be the whitest of white elephants. Building it would destroy two villages in my constituency, Culcheth and Hollins Green, and inflict serious environemtnal damage.
The case for the spur has now been seriously undermined. The spur results from a perverse decision to join the west coast main line north of Warrington, rather than north of Crewe. The original cost of the spur was estimated to be £800 million, which has now risen to £1 billion. HS2 justified that cost, as opposed to the £750 million original estimate for joining the west coast main line south of Warrington, on the grounds that it would otherwise have to do a great deal of work to Crewe station. That has now fallen apart because, after the Government accepted the recommendations of the Higgins report, Crewe will now be the main transport hub for the area.
There is no justification for not joining the main line near Crewe. The costings given for that were, to say the very least, dubious. The average cost works out at £22.9 million a kilometre. That sounds a lot, but it is only 28.6% of the cost of building the line elsewhere, which includes building a huge viaduct over the Manchester ship canal, bridges over the motorways and big embankments running through the village of Hollins Green. The costings simply do not stack up.
The second part of the case against the spur is the economic damage that would be caused to the villages of Hollins Green and Culcheth. The line would destroy a business park just outside Culcheth, with the loss of 500 jobs. The knock-on effect would mean that the village of Culcheth and all its businesses not only lose business from those people but lose outside trade because three of the four main routes into the village would be closed during construction, possibly causing many businesses to fold. Culcheth is a large village that relies on trade from outside coming into its shops and restaurants.
Similarly, a viaduct on Hollins Green would bisect the ancient parish of Rixton-with-Glazebrook and destroy businesses in the area, and the prospect has blighted homes, yet the Government cannot give us the figures. In other words, the economic case is being made without making the case for the damage caused to the economy elsewhere. Warrington will not benefit from this part of the line because it will not get a station. Nor is there a knock-on effect elsewhere in the constituency, which, as one gentleman said to me, might have justified what is happening. We have the pain, but we do not have the gain. In fact, we would probably end up with a worse service from Warrington than we have now, given that we already have one train an hour to London and one train an hour to Glasgow. We can get to London in just under two hours on a direct train.
I say to the Minister that the case does not stack up. The Government have not looked at the whole economic benefit, and they need to save £1 billion of public money by abandoning the spur.
Mrs Caroline Spelman (Meriden) (Con)
My constituency has both the pain and the gain, having the first station outside London as the proposals stand.
I request again that the Minister look at a tunnel on the approach to the interchange station at Birmingham International airport. At present, a flyover will be needed over the west coast main line at the height of the tree line, which would be visually very intrusive in the village of Balsall Common. If a tunnel could be constructed under the existing airport terminus, there would be no need for an overhead railway, which would add significantly to the journey time of those coming from London to take an aircraft from the airport. A tunnel would leave the surface free of the rigidity of the railway tracks and, importantly, preserve some of the precious green belt around the villages in the Meriden gap.
Compensation for the construction works is important. Judging by the environmental statement, we shall be a building site for the next five years, but there is no compensation scheme for the construction works. The scheme relates to the tracks, but many of my constituents will be severely affected by the construction works, as will country lanes around villages in the area, including Diddington lane and Kelsey lane. Currently, however, there is no help with that.
Hon. Members who have used the M40 will know that junction 6 is a nightmare because of the combination of the airport, the national exhibition centre and the west coast main line. Just making some improvements to the junction will not be enough when we have a high-speed rail interchange. A two-junction solution is required. I urge the Minister to reject proposals for a motorway service area south of junction 6 to go ahead before the development of High Speed 2. If an interchange station is built north of the junction, it is obvious that the motorway service area should be incorporated there.
I could not deal with this subject without touching on the opportunity to do really good biodiversity offsetting. It is not good enough to plant a few trees along the track. As the Country Land and Business Association says, that is a poor solution for some of the best and most valued farmland. I recommend that the Minister look at the proposal from Birmingham university and Arup to significantly regenerate the Tame river valley in east Birmingham and the Blythe and Cole valleys in my constituency, in line with the Government’s natural environment White Paper and using the national ecosystem assessment and the work of the Natural Capital Committee. Then, at least, we would have a lasting legacy at landscape scale, which we would be able to tell our constituents was providing proper protection for the environment.
Mrs Gillan
I particularly wanted to commend the Chairman of the Environmental Audit Committee, the hon. Member for Stoke-on-Trent North (Joan Walley), who is leaving the House. She travelled to Brussels with me the other day to visit the environment directorate-general to look at what more we could do to protect the environment. I do not know whether my right hon. Friend would venture an opinion at this stage, but I think it is important that we look at perhaps declaring the Chilterns a Natura 2000 site.
Mrs Spelman
I also commend the work of the Chairman of the Environmental Audit Committee, as well as the Committee’s work in highlighting the weaknesses in the environmental compensation and in the analysis of HS2’s environmental impact. That has highlighted the opportunity we have to do things such as create Natura 2000 sites in some of the worst-affected places. We can never replace ancient woodland—that is a given—but we can calculate the value of our natural capital and do something sufficiently ambitious to compensate for its loss, even if the regeneration and restoration take some time.
I would like to finish by commending the work of the parish councils and residents’ associations in my constituency on the action they have taken to highlight the project’s impact on them—as I said, we have the pain and the gain. I also commend the work of Solihull council in drawing the Government’s attention to the need to rework the cost-benefit analysis of the tunnel from Berkswell to Birmingham International airport so that it takes full account of what could be achieved not only to benefit the environment and the community but to improve transport access and, therefore, to achieve a better outcome.
Frank Dobson (Holborn and St Pancras) (Lab)
I thank my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan) for her kind remarks about our co-operation and for thanking the various bodies concerned.
Today’s report from the House of Lords Economic Affairs Committee batters great lumps out of the case for HS2. The Committee did not ask any questions that we have not been asking for the last five years. HS2 had no satisfactory answers before, and it apparently still has none.
I want to draw attention to the situation in my constituency, which is the most affected by the proposals. The proposals involve the demolition of the homes of about 500 people and would leave about 5,000 people living next to Europe’s biggest building site for the best part of 15 years.
Under the original proposals, HS2 was going to knock down Euston station and rebuild it, incorporating a further 75 metres to the west to provide space for everything, including the new high-speed line. Originally, that was going to cost £1.2 billion. Eight months later, a revised estimate of £2 billion was put forward—the figure had gone up by just £100 million a month. Apparently, £2 billion was too much, so the scheme was cut back, which would have given us a rather elegant lean-to shed for HS2 at the west side of Euston station, at a cost of £1.4 billion. That is what was in the Bill that came to the House of Commons. By the time it got here, however, we were told that that was not going to be done any more and that we would go back to the vast new scheme. The detailed proposals for that scheme were supposed to be available in October last year. Recently, in meetings with local people, however, HS2 has admitted that it has no such proposals and that it is going back to the lean-to shed version, which will now cost £2.6 billion. Who would put £50 billion on a racing stable that produces rubbish like this?
We were told that a supposed connection to the channel tunnel link would bring all sorts of benefits: people would be able to get on a train in Manchester and go to Paris. We told HS2 that that was not a workable proposition, and even the Institution of Civil Engineers said it was not, but no, HS2 persisted—and then the connection was abandoned. One explanation was that HS2 had come across “unforeseen factors”, including the need to “widen the route”. Now, anybody who starts an engineering project without realising that they will need to widen the route if they add some lines really is not fit to be put in charge of spending £50 billion.
Michael Fabricant
Is my right hon. Friend—I will call him that—aware that the completion of Birmingham New Street, including a new department store, has been delayed by a year and a half because of construction problems? Who is doing the project? The selfsame people who are supposed to be designing the new Euston HS2 terminal.
Frank Dobson
I should add, Mr Betts, that the people who have been making those preposterous estimates, coming up with ludicrous proposals that will not work, are all very well-rewarded consultants. I believe that they have already had three quarters of a billion pounds in fees, so hard-working consultants are doing rather well. As far as I can see, the only train that has actually moved is the consultancy gravy train.
I advise people that if we want to benefit the cities of the north, the answer is to invest in the cities of the north and their immediate transport requirements, rather than spending what it is now believed will be £7 billion on a full-scale development of Euston. Will Sheffield, Leeds or Manchester benefit from an investment of £7 billion in Euston? Euston certainly will not benefit, and I do not think anywhere else will.
Helen Jones
On a point of order, Mr Betts. Would it be possible at this point, as this is possibly my right hon. Friend’s last speech in the House, to record our appreciation of his service over many years, particularly to his constituents, and his devoted service to the national health service, from which we have all benefited?
Mr Clive Betts (in the Chair)
Of course, that is not a point of order for the Chair, but the Chair’s inability to comment on it should not be taken as disagreement with it.
Sir John Randall (Uxbridge and South Ruislip) (Con)
This will be my last speech in Westminster Hall, but I hope to catch Mr Speaker’s eye tomorrow for a final time. It is fitting that my speech today should be about HS2, because it has been a core matter for many of my constituents and other Hillingdon residents for the past few years. We have experience in my constituency of another great project going through—Crossrail. We have not really had any confrontation or controversy on that, because it brings obvious benefits to the people involved.
To refer back to the comments of my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan), I want to mention that the Select Committee’s work is exemplary. It has been sorting out problems and has been helpful to petitioners; but it has been given a difficult task. I do not want to dwell on constituency points; I hope that my hon. Friend the Member for Ruislip, Northwood and Pinner (Mr Hurd) will have an opportunity to talk about them. I disagree with my right hon. Friend the Member for Chesham and Amersham about the process being undemocratic, because we have had a vote in the House. The problem is that only those of us who will be affected by the project have looked into it in detail and realise why it is so flawed. There are exceptions, but many other people have not had that benefit, and do not have to look at the issue. If we could get that message out to more people, more of them would realise that it is a waste of money.
Mrs Gillan
I shall miss my right hon. Friend in the House. He has made a fantastic contribution and has been a good friend on HS2. I was talking to his potential successor and exchanging views on HS2. The view is that, as with Crossrail, ’twas best put underground totally, across the piece; then there would be a lot less disruption and perhaps it would attract more love and affection, like Crossrail. May I also say that I did not say the process was undemocratic; I just said that the Bill has not gone through all its stages in the two Houses, and it is unwise to extend contracts before we have completed our scrutiny.
Sir John Randall
My right hon. Friend alluded to my putative successor—if the electorate are so inclined. I have had conversations with him, and although Mr Boris Johnson is a shy and retiring fellow he is keen to take up the cudgels on behalf of my constituents and Hillingdon residents, on fair compensation, tunnelling and many other things. I thank my hon. Friend the Member for Ruislip, Northwood and Pinner, who has been tireless in his work on HS2. It is a great shame that I will not be working with him any more in this place. However, I expect to be on the front line with my placard, as a latter-day Swampy.
The House of Lords report sums things up well:
“The cost-benefit analysis for HS2 relies on evidence that is out-of-date and unconvincing. The Government needs to provide fresh, compelling evidence that HS2 will deliver the benefits it claims.”
The Government must make the case, if they are so convinced, and give the evidence for it. Finally, as I have been encouraging the Government to dig tunnels in my constituency, and have had some success, I caution them not to dig a hole for themselves.
Graham Stringer (Blackley and Broughton) (Lab)
I believe that the case for HS2 is so overwhelming that it is not a question of why we are doing it, but why we are not doing it quicker, although I realise that people would not get that impression from the debate. I congratulate the right hon. Member for Chesham and Amersham (Mrs Gillan) on obtaining the debate. She is a doughty fighter for her constituents, and no doubt had she achieved her ambition to represent Manchester she would have been just as doughty a fighter for HS2 as she is against it now.
Reading the report of the House of Lords Economic Affairs Committee and listening to the debate have made it clear to me why this country is so appallingly bad at major infrastructure projects. How many new arterial routes have we had in this country in the past 40 years? The answer is one—leaving the country, as part of an international treaty: HS1. The real reason we need HS2, going both west and east of the country as it gets further north, is that the motorway system is clogged. The M1 and M6 are congested a great deal of the time. The west and east coast railways are often congested and are reaching their limits. There is not enough capacity on the rail system for freight. HS2, with the investment of possibly £50 billion, will free up capacity on all those systems. People say that alternatives have not been looked at, but do they believe that there is any possibility that we will build new motorways west and east of this country? There is simply no chance. HS2 is the only way to free up that capacity.
Certainly some things can be improved in this country. It is interesting, in terms of both cost and speed, that on the high-speed route from Tours to Bordeaux the civil engineering work on 200 km of line was achieved—started and finished—in two years. There is a lot we can learn, to lower the cost and improve the speed of what we do. The arguments are big.
Andrew Bridgen
Does the hon. Gentleman agree that given that London is the finest city in the world, or certainly in Europe, its gravitational pull—its social, economic and cultural traction—means that the faster people can get there, the quicker they will do so? It will just draw in talent and money from the regions. The big beneficiary of HS2, if it goes ahead, will be London.
Graham Stringer
The Transport Committee is in favour of HS2 and has not been quoted. The experience from French cities is that it depends on how much effort a city makes. I expect that the creativity of Leeds, Manchester and Sheffield will produce an experience much like that of Lille, where there has been real economic benefit.
Stephen Hammond (Wimbledon) (Con)
I want to support the hon. Gentleman’s point. The history of Japan presents a salient experience. Far from producing a gravitational pull to the centre, what it has done is create a gravitational pull to where the high-speed rail has been built, on parkway stations.
Graham Stringer
I agree with the hon. Gentleman. I will finish with two quick points. Hon. Members have said that we should focus on east-west links in the north of the country, but actually it is much more likely—this is already happening—that we will get those links if we have a strong north-south link.
Finally, people have quoted the cost-benefit analysis, but the House of Lords Committee did not look at its own evidence well. Professor Dieter Helm, professor of energy policy at Oxford, said:
“A moment’s reflection indicates how weak such techniques are when it comes to deciding how much infrastructure to provide. For infrastructure typically comes in systems, not discrete bits. Choosing what sort and level of infrastructure to supply is not a marginal decision. It is often about one system or another. Marginal analysis—as the core of cost-benefit analysis—has little obvious to offer.”
High Speed 2 has a great deal to offer to both the north and the south of the country.
Mr Clive Betts (in the Chair)
Order. For all the speakers before the Front-Bench Members come in, I will have to reduce the time limit to three minutes. I am sorry.
Mr Dominic Grieve (Beaconsfield) (Con)
Thank you, Mr Betts. I shall be as brief as I can. I have always recognised that infrastructure projects come at environmental cost. They cannot be done without that. My constituency has had the M4, the M25 and the M40 built through it, which has caused a lot of environmental damage, but ultimately, those roads are appreciated and used.
I also recognise that the fact that my own constituents may not directly benefit is not an argument for saying that the cost to build HS2 should not fall on them. However, the point that I have always been worried about is that the project is highly speculative. I have always given my colleagues in Government the benefit of the doubt. To work out a precise economic case is difficult and perhaps in 40 years’ time people might turn around and say, “This was an inspired choice.” However, I would have expected that, as the project proceeded, a greater volume of evidence would have emerged to support the Government’s economic case, yet the very contrary is the case.
Every passing month sees a new report come out that casts doubt on out-of-date figures and, indeed, on the basic premises on which the project is based. That troubles me very much. I hope that the Minister will be able to say what the Government will do to counter that argument, because that is what got them through Second Reading. Without that answer, it seems that their case is undermined.
I will turn to the detail. When the project was proposed, quite astonishingly the Colne valley, which lies in my constituency and that of my hon. Friend the Member for Ruislip, Northwood and Pinner (Mr Hurd) was described as an area of “dug gravel pits.” In fact, it is an essential amenity that is used by hundreds of thousands of people on the edge of London for recreational purposes. It includes: a number of sites of special scientific interest; wonderful water parks; leisure facilities; river walks; otters in the river; and just about everything that could possibly be wanted in terms of biodiversity within 15 miles of the centre of London.
Sir John Randall
Does my right hon. and learned Friend recognise that when the gravel pits were once mentioned in a discussion, I pointed out that in fact the Norfolk broads were man-made as well? Nobody would dispute that they are worth keeping.
Mr Grieve
I agree entirely with my right hon. Friend. Indeed, they are similar to the Norfolk broads in terms of recreational amenity.
I was told at the start of the project that it would never be possible or economically viable to tunnel under the River Colne because that would cost in the region of £1 billion more than a viaduct—I remember that figure being given. By last month, we were told that, because the viaduct will cost so much, the true differential is a mere £185 million. In the great scheme of the £50 billion- plus we are talking about for this project, that seems to be something that the Government really ought to consider, given the damage to the environment not just for the local community and residents but for all the other people who come to make use of this recreational area. That same point could be made about the tunnel under the area of outstanding natural beauty, but I will focus on the Colne valley because of its importance not just to the local community but to the residents.
I am very grateful that my right hon. Friend the Secretary of State for Transport announced that the Heathrow spur would effectively not go ahead. That removes a great deal of potential blight from my constituency and it is quite clear that it was not needed. However, parts of the bits of the junctions and other infrastructure still remain in the Bill, which worries me about the potential for blight. I hope that the Minister will reassure me that the necessary steps will be taken to ensure that such potential for blight is removed from the Bill.
The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)
I give my right hon. and learned Friend that reassurance now.
Mr Grieve
I am very grateful to my hon. Friend. That will be well received in my constituency.
Finally, we have heard a lot about compensation. The package has changed and been improved, but I still find something very odd about a situation in which we have a need-to-sell basis for getting a full market value for compensation for those people living outside the immediate areas close to the track, yet if they do not go through the paraphernalia of need to sell—I suspect that some cases will be done, I am afraid, by requests that may have a sleight of hand—they will not be adequately compensated. That cannot be right. I know the origin of the compensation system in this country, but it is antiquated and it is time that we moved away from it. We are actually forcing people to move, because otherwise they will not get the compensation that they need.
With those points in mind, I look forward to the Minister’s response. However, I come back to my original point. The Government really will have to counter the growing volume of evidence that the project has serious flaws in its concept.
Kelvin Hopkins (Luton North) (Lab)
It is a pleasure to serve under your chairmanship, Mr Betts, and to follow the right hon. Member for Chesham and Amersham (Mrs Gillan). I have spoken on HS2 on previous occasions in the House and I remain of the view—in fact, it has got stronger—that is wholly unnecessary and ridiculously expensive. The figure of £50 billion is talked about quite a bit, but Hansard on 5 March shows that my hon. Friend the Member for Huddersfield (Mr Sheerman) drew attention to evidence presented to the HS2 Committee that
“hidden costs will raise the overall cost of the HS2…to £138 billion”. —[Official Report, 5 March 2015; Vol. 593, c. 1062.]
That is a massively higher figure. My contacts in the industry suggest that that figure is perfectly justifiable and some say that the real figure would be even more.
Even if things are expensive, I would still support them if they are the right thing to do, but this project is not. I made a written submission to the House of Lords Committee to set out my views in more detail, which is available on the internet. I have spoken on them before, but let us get the first nonsense of HS2 out of the way first of all: that must be Euston. It is the wrong station in the wrong place. The last place that a business traveller from Birmingham or whatever who wants to get to the City or Canary Wharf wants to arrive is Euston. They would want to get to somewhere linked on to Crossrail to get through to those places, and not have to struggle with their laptop and wheelie case from Euston on to the tube and then the docklands light railway to get to Canary Wharf. That is a nonsense.
Michael Fabricant
The right hon. Gentleman is absolutely right. Is he also aware that a business traveller from the Birmingham area first has to get to Birmingham New Street and then, with all their baggage, has to walk across Birmingham to get to Curzon Street station, only to end up at the wrong station—Euston? As I said earlier on, any hope of getting directly to France has now evaporated.
Kelvin Hopkins
I am not yet a Privy Counsellor and I do not suppose that I ever will be, but the hon. Gentleman’s point about Curzon Street was absolutely right; I was coming to it myself. In my submission to the House of Lords Committee, which was titled, “Sensible alternatives to HS2”, I gave three specific alternatives that would cost a fraction of that amount but solve all the problems that HS2 might supposedly solve.
First, I suggested the electrification of the Birmingham Snow Hill line, via Banbury, to London. It currently goes to Marylebone or Paddington, but it could easily be linked—the tracks are already there, so all it needs is a bit of track work—to Crossrail going in both directions. If we had an electric train from Snow Hill in the middle of the Birmingham business district that went direct to Canary Wharf at 125 mph, someone could work on a laptop without changing trains and I bet that train would beat HS2 if otherwise that person had to get to Curzon Street and then get two tube trains at the London end. HS2 is a complete and total nonsense, but that suggestion would provide wonderful extra capacity.
That would also allow travel direct to Heathrow from the centre of Birmingham and it could be linked through from Leamington Spa on to the west coast main line, so we could have Birmingham airport linked to Heathrow airport with a direct, 125 mph, one-hour service. They could almost be hubs or satellites for each other. There could be trains from further north—from Manchester—coming down the west coast main line, joining the Banbury line and going directly from the centre of Manchester to Heathrow or Canary Wharf. It is possible for a tiny fraction of the cost of HS2.
Frank Dobson
Does my hon. Friend agree that it is the benefits that the alternatives to HS2 would bring to other parts of the country that probably explain why there is a majority against HS2 in every region of this country, according to the opinion polls, even in the north-west, where people are most enthusiastic about it? Even there, the divide is 43% to 39%.
Mr Clive Betts (in the Chair)
Will the hon. Gentleman bring his remarks to a conclusion, please, so the Front-Bench spokesmen can respond?
Kelvin Hopkins
Yes, indeed.
My second alternative to HS2 is to upgrade the east coast main line. It needs to be four-tracked at Welwyn with an extra viaduct, a flyover at Peterborough, a flyover at Newark and four-tracking in various places, so that there can be non-stop services from King’s Cross to Edinburgh in three and a half hours, which was done on a test run in 1990; indeed, that test run was slightly faster than is being proposed with HS2. [Interruption.] Not a problem.
Finally I will propose what I have proposed before, which is the GB Freight Route. That is a dedicated rail freight line, to carry lorries on trains from the channel tunnel to every major region of Britain, using old trackbed and under-utilised lines, without causing any environmental or planning problems. The details are included in my paper here, which I have submitted to others from time to time.
Those three alternatives together would cost a tiny fraction of what it is proposed HS2 will cost and would be infinitely more useful. Indeed, the freight line would pay for itself.
I will leave my case there. I would love to speak for longer; I can speak for another two hours unaided, if you wish, Mr Betts, but I have probably said enough.
Mr Clive Betts (in the Chair)
I will not aid the hon. Gentleman in that course.
I ask the hon. Gentleman—Nick Hurd—just to keep his remarks to two minutes. I am sorry, but the Minister needs to have time to reply to the debate.
Mr Nick Hurd (Ruislip, Northwood and Pinner) (Con)
I shall do my very best, Mr Betts.
I wholly endorse the view that we need more evidence and less assertion when considering the case for HS2. Like others, I come to bury HS2, not to praise it. My personal opposition to the current HS2 plans is based absolutely on the impact that HS2 will have on my constituency. The Minister is well aware of that impact. He is a good man. He has been good enough to come and see for himself that the disruption to thousands of residents in Ickenham, Harefield and west Ruislip will be immense, and these are places where people choose to live because of their relative tranquillity and semi-rural nature. There are no direct benefits to the area from HS2, and yet the future we are being asked to accept is one of major construction sites for 10 years, unbearable increases in the movement of heavy goods vehicles on key artery roads that are already clogged, huge soil dumps, a viaduct across the stunning Colne valley, electricity feeder stations, and the risk of losing Hillingdon Outdoor Activity Centre, which is known locally as HOAC and which is a superb facility enjoyed by 20,000 young people a year.
I could go on, but beneath those headlines is a dense thicket of problems, concerns and unanswered questions, and HS2 still does not have an answer to some of the biggest problems. The future of HOAC remains uncertain, as all relocation options are complicated. As for the chronic problem of traffic on Harefield road and access to the A40, we are just told that something will be worked out with the council at a future date. It is not good enough.
There is a solution and it is the “t” word. I began arguing for a tunnel extension back in 2012, alongside my right hon. Friends and neighbours: my right hon. and learned Friend the Member for Beaconsfield (Mr Grieve) and my right hon. Friend the Member for Uxbridge and South Ruislip (Sir John Randall); we will miss my good friend, the right hon. Member for Uxbridge and South Ruislip, dreadfully. Hillingdon council, residents and MPs are now all working alongside each other to make the case for a tunnel extension.
HS2 is unwilling to assess the viability of such an extension. Hillingdon council has produced a report that shows it is technically feasible and can be done for more or less the same price as other projects. This is my ask of the Minister: can we please pressure HS2 to give this report a serious response, which gives us a detailed breakdown of its costs for the viaduct and its estimate of the Hillingdon costs, so that the Transport Committee and the public can have a view on two reports and the case for extending the tunnel across the Colne valley, which would solve so many of the problems in my area? We must literally bury HS2 and protect the area, and if we do not, I am afraid that I cannot support HS2 in the future.
Lilian Greenwood (Nottingham South) (Lab)
I congratulate the right hon. Member for Chesham and Amersham (Mrs Gillan) on securing the debate. She has been a doughty opponent of High Speed 2 throughout this Parliament, and while we have found ourselves on opposite sides of that argument, the tone of these debates has been constructive. I hope to continue in that spirit today.
HS2 has been improved through this House’s scrutiny, and I am sure that process will continue after the election. I speak in this debate in support of HS2. The project was first announced under the last Labour Government, and, if anything, the case for HS2 has grown stronger since then. Record passenger growth has continued. Data from the Office of Rail Regulation have recently shown that there were 430 million journeys between October and December last year, an increase of almost 7% compared with the same quarter in 2013. That growth has continued through periods of disruption and even through a recession.
As a consequence, the railways are reaching the limits of their capacity, and nowhere is that more keenly felt than on the west coast main line, the busiest and perhaps the most complex mixed-use line in Europe. Network Rail has warned that its capacity will be exhausted by 2024, and as demand continues to grow, that day of reckoning could come even sooner.
We cannot forget the money that has already been invested in the line, whether for electrification, the ingenuity of tilting trains or the ill-fated and hugely disruptive £9 billion modernisation programme of recent years. Just a few years on, we have already exhausted all the additional capacity that that investment brought us and we are still no nearer to achieving speeds above 125 mph than we were 50 years ago, when British Rail started to plan the advanced passenger train. Once the Norton Bridge area works are completed, the scope for further infrastructure improvements is limited.
The consequences are simple: we cannot continue to force every grade of traffic to compete for scarce paths without impairing passenger services. We have only to look at the 2008 timetable changes, which enabled more fast trains to London at the expense of commuter services in the west midlands, to see that. I have visited places south of Stoke where services were withdrawn during the modernisation programme, and residents have been told that the stations cannot be reopened because paths have been reassigned. Although those capacity constraints are most acute on the west coast main line, they are also felt on other trunk routes, including the midland main line and the east coast main line.
Lilian Greenwood
I will not give way because I have very limited time; I am sorry.
It is sometimes said that we should just upgrade what we have, and of course we need to invest in the existing network, but the delayed and over-budget Great Western works are showing just how difficult such upgrading can be in practice. Opponents of HS2 are rightly concerned about costs and it is vital that taxpayers get the best value for their investment, so it should be a great concern to us all that the estimated cost of electrifying the Great Western main line has more than trebled, from £540 million in 2011 to more than £1.7 billion today, and the price is still rising. As Lord Adonis has said, it is like performing open heart surgery on a Victorian railway. Let there be no mistake: tracks may have been relayed and signals may have been upgraded since the Victorian railways were put down, but almost all our alignments are inherited from an age of slower traction, and almost 200 years later they have given us compromises.
It may be asked, “What is the alternative to HS2?” The truth is that the alternative, if it can be called that, is to prioritise the needs of one passenger against another. It is to make fast trains compete with commuter and freight services, and to spend even greater sums to extract diminishing returns from our eccentric and increasingly sclerotic network. To my mind, that is no alternative at all. It would lead to a meaner, less socially accessible and more London-centric railway. We urgently need new capacity and HS2 is the right project to provide it.
A number of concerns have been raised, both outside and inside this House. Much has been said about the project’s costs and it is certainly true that there was a loss of focus on costs after the election. That is why Labour successfully amended the High Speed Rail (Preparation) Act 2013 to enforce a much tougher scrutiny regime around the project’s budget. I will add that after the investment in High Speed 1, in Crossrail, in Thameslink and in Reading station, HS2 is a welcome commitment to building world-class infrastructure in the midlands and the north, and not just in London and the south-east.
Lilian Greenwood
I will not give way, because I have such limited time and I want the Minister to be able to respond to points.
We cannot and should not ignore environmental concerns, and I am grateful for the briefings and constructive dialogue that I have had with groups such as the Campaign to Protect Rural England and the Woodland Trust. Unlike the current Mayor of London, we do not dismiss legitimate environmental concerns raised by people who live along the proposed route of HS2, and we want the environmental benefits of HS2 to be enhanced through an early commitment to decarbonising the electricity market. We also want to ensure that the concerns of community groups are looked at, and that disruption is mitigated wherever possible.
Lilian Greenwood
I am so sorry, but I am not going to; there is limited time.
We need to make sure that we get the route right. I am sure that hon. Members of all parties will want to record their gratitude to our colleagues who sit on the phase 1 hybrid Bill Committee, who have approached their task in a spirit of fairness and determination. As the right hon. Lady said, we thank the Clerk, Neil Caulfield, and the other staff who support the Committee.
It has been said before that if HS2 is about capacity south of Birmingham, it is also about connectivity north of it. The reality is that many of our cities have relatively good links to London, but poor links to each other. For example, travelling from Nottingham to Leeds can take more than two hours at present, but with HS2 it could take as little as 40 minutes. Across the country, HS2 holds enormous potential to reinvent the quality of our connections between Birmingham and Manchester, the west and east midlands, the midlands and Yorkshire, and beyond, as high speed services run on to other lines. We will achieve those aims only if HS2 is planned as a fully integrated component of our existing network. I hope that that objective will be vigorously pursued in the next Parliament.
It has been a true honour and a privilege to serve in the shadow Transport team. HS2 is an important part of the brief and I am glad to have had the opportunity to make what I hope is a final contribution only in this Parliament in support of this essential project.
The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)
First, I congratulate my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan) on securing this debate on HS2, a scheme that affects a number of constituencies on its line of route, not least Kenilworth and Southam. I note that my right hon. and learned Friend the Member for Kenilworth and Southam (Jeremy Wright) is in the Chamber.
I am tempted to go as far as to endorse everything that the hon. Member for Nottingham South (Lilian Greenwood) said. Certainly, a project of this type, which is going to be constructed over a number of years, needs wide political support across the spectrum. Therefore it is good news that we have such a lot of agreement on it.
Of course, there has been considerable interest in HS2 throughout the country. When the scheme was last debated in Parliament, on Second Reading in April 2014, the support for it was clear: 452 votes in favour to 41 against. It is patently obvious that, with the west coast main line reaching capacity, something needed to be done. It is no good saying to those using this service that they must grin and bear it while we do nothing, watching our infrastructure grind to a halt and stifling economic growth.
Comments have been made about the report published yesterday by the Lords’ Economic Affairs Committee. Although I have enormous respect for our colleagues in the other place, I most heartily disagree with their report. The case for HS2 is crystal clear. It will have a transformational effect, supporting growth in the north by improving connectivity, freeing up space on our crowded rail network, promoting regeneration, boosting local skills, generating tens of thousands of jobs and helping secure the UK’s future prosperity.
Mr Goodwill
I am not going to give way. I have so many points to cover in a short time.
It is a vital part of the Government’s long-term economic plan, strongly supported by the northern and midlands cities, alongside our plans for better east-west rail links confirmed in the northern transport strategy last week.
We have been fully transparent about the project. HS2 will deliver more than £2 of benefits for every £1 invested, and the economic benefit of the project is clear. The strong support of MPs is shared by—
Mrs Gillan
I am grateful to the Minister. However, I do not know how he can say, “We have been fully transparent about the project”, when he has not published any of the Major Projects Authority’s reports and we cannot get up-to-date figures on the project.
Mr Goodwill
My right hon. Friend has tabled 355 parliamentary questions for the Department on HS2—
Mr Goodwill
And we have given her comprehensive replies to those questions. The report that she refers to is, of course, an historical report that is out of date. We are working on much more up-to-date information.
There is strong support from the Transport Committee, which backs the strategic business case and is confident that HS2 is the only practical way significantly to increase rail capacity. Indeed, the hon. Member for Blackley and Broughton (Graham Stringer) is a member of that Committee. One of its conclusions in a previous report states:
“Having reviewed the revised business case for HS2 and the KPMG report on regional economic benefits we remain convinced that the project is justified. Capacity constraints on the West Coast Main Line cannot be ignored and nor should demand be controlled by pricing people off the railway. Alternatives to building a new line will themselves be costly and disruptive and their benefits could be relatively short-lived if demand continues…as forecast. Only a new line can bring the step change in capacity which is required.”
The Committee agrees with the Government and the Opposition.
Demand for long distance rail travel has doubled in the past 15 years and without HS2 key rail routes connecting London, the midlands and the north will soon be overwhelmed, stifling growth in towns and cities across the country. There is also latent demand for more rail freight, for which no paths are currently available on the west coast main line. It is crucial that we press ahead with delivering HS2 on time and budget. We remain on track to start construction in 2017.
The Bill is now before the hybrid Bill Committee, ably chaired by my hon. Friend the Member for Poole (Mr Syms), which has already heard petitions relating to about half the route of phase 1. In the nine months it has sat, it has heard almost twice as many petitions as the Committee on Crossrail heard in its 21 months of sitting. Clearly, there are many petitions yet to hear, but I am sure the whole House would want to thank my hon. Friend and his Committee for the seriousness and diligence with which they have gone about their important role of ensuring that the project strikes the right balance between being sensitive to the needs of affected communities and the environment, and the long-term needs of the country as a whole.
Of course, the scheme has undergone particular scrutiny in the constituency of my right hon. Friend the Member for Chesham and Amersham. I take this opportunity to thank her for so assiduously ensuring that her constituents’ voices are heard. I note how much she has achieved, including helping to move the line of the route further south through the Chilterns area of outstanding natural beauty in 2011, to avoid an aquifer, and extending the tunnel in her constituency. The scheme now boasts over 13 km of tunnel under the Chilterns. Indeed, of the overall kilometerage in the Chiltern area—there is 20.8 km of line there—46% is in bored tunnel, 12% in green tunnel and 28% in cutting. Therefore 86% of the route in the AONB is below ground level or in a tunnel. I think my right hon. Friend has made a tremendous contribution to achieving that for her constituents. This demonstrates both the Government’s commitment to protect areas of outstanding natural beauty and the hard work of my right hon. Friend. This is an example of how passionate she has been in working hard for her constituents.
I will deal with some questions raised. I will not be able to respond to them all, so I will write to the hon. and right hon. Members I cannot reach. Hon. Members mentioned the independence of the residents’ commissioner and the residents’ charter. The commissioner will report findings directly to Sir David Higgins and will not be part of the standard staff structure. The direct link and the publication of the commissioner’s quarterly report will ensure that concerns and issues can be aired and addressed in a timely manner. The residents’ charter and residents’ commissioner’s report will be transparent. That transparency provides the best guarantee of independence.
The hon. Member for Warrington North (Helen Jones) raised a valid question about the phase 2 spur. We are currently reviewing and assessing those decisions. No decisions have been taken yet on either Crewe or the spur.
Mr Goodwill
I only have two minutes to go, so I really must come to a close.
I shall briefly talk about the economic impact and the fact that we are not taking money away from other infrastructure investment. We are investing £73 billion in transport from 2015-16 to 2020-21 and £57 billion in other projects.
In terms of the economic case, I draw the House’s attention to a report in The Times today, which states that HSBC—I do not think it is our favourite bank at the moment—is going to relocate 1,000 workers to Birmingham:
“The bank already has three sites there employing 2,500 people, and some of those will move to the new building that it has its eyes on, not yet erected, on a site near Centenary Square in the city centre.”
The article mentions the
“ever improving transport links”
in Birmingham,
“including the planned HS2 fast trains bolstering a road-rail network crowned by Spaghetti Junction on the M6”,
which it states has added to its appeal. So this is already having an effect on encouraging employers to come to the area.
In conclusion, HS2 is about helping Britain to thrive and prosper. Although tough decisions have to be taken, they will be responsible decisions in the interest of making a better, stronger Britain. We understand that a scheme of this magnitude cannot be built without having some effects on the environment or communities, but as I have set out here today, we are going to great lengths to ensure that the impacts are mitigated wherever practical, particularly in areas with ancient woodland. I repeat our pledge that there will be no net environmental loss. We will make sure that this is done in the most sustainable way for any major infrastructure ever built.
Homelessness (Crisis Report)
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Mr Brooks Newmark (Braintree) (Con)
I am delighted to serve under your chairmanship, Mr Betts, in this important debate. Homelessness remains a blight on our society. Its causes are complex, but it often happens due to a combination of family breakdown, mental ill health and substance abuse. Most people do not choose to be homeless, and society has a responsibility to care for the homeless, who are some of the most vulnerable individuals in our society.
In recent years, I have had the opportunity to visit, work with and support two homelessness charities in my constituency: New Direction and Braintree Foyer. Both are run by the Salvation Army, which does an incredible job across the country to provide support for the homeless. I also thank Braintree district council for its swift response in providing housing for those individuals who suddenly found themselves homeless following the tragic fire at the shelter at Ben’s Café in Braintree last month.
There are many excellent homelessness charities up and down the country, including Shelter, Centrepoint, Homeless Link, St Mungo’s, The Passage, Barnado’s and others. There is also the incredible generosity of the public at large, who donate time and money to support homelessness charities. I spent this past Christmas at Crisis and was especially impressed by the support it gave to London’s homeless. I was equally impressed by the thousands of volunteers who gave up their time to help out. Outside of the London Olympics, Crisis has the largest army of volunteers. Once I leave Parliament, I intend to focus my time on better understanding the issues surrounding homelessness by working with Crisis and other homelessness charities with a view to doing whatever I can to provide support, not only by working directly with the homeless, but by working with the leading homelessness charities to see how we can work with the Government to reduce, if not resolve, the blight of homelessness in our society.
Having spent some time with Crisis, I think it is worth outlining to the Minister and Members the state of homelessness in England by reviewing the issues outlined in Crisis’s “The homelessness monitor”, which was released recently. Notwithstanding a number of important initiatives by the Government and the Mayor’s office in London to tackle homelessness, the figures unfortunately continue to rise. Official figures indicate that 111,960 people in England made a homelessness application last year. However, according to recent research by Crisis and the Joseph Rowntree Foundation, the real figures are considerably larger—280,000 individuals approached their local authorities last year seeking homelessness assistance. Homelessness prevention activity alone constituted some 228,000 cases in 2013-14, which was 12% higher than in the previous year and 38% up on 2009-10.
The ending of an assured shorthold tenancy is now the leading cause of homelessness, accounting for 29% of cases. That is most pertinent in London, where it accounts for 38% of cases. The number of people rough sleeping has also risen. In London alone, 6,508 people slept rough at some point during 2013-14. That figure has doubled over the past six years. English street count figures for 2014-15 were 2,744, which is a 14% rise on the year before and a 55% increase over the past four years.
Sarah Newton (Truro and Falmouth) (Con)
I congratulate my hon. Friend on securing this debate on an important topic. It may surprise him to learn that Cornwall is second only to London in the number of people rough sleeping and in the number of people living without homes. Does he agree that we should praise the Government for how they changed the rough sleeper count? I have been involved with homelessness charities for a great deal of my life, and I saw that the old system under the previous Government precluded people from having an accurate measure of the number of people rough sleeping. At least we now have a much better handle on and understanding of the numbers. That will enable us to make appropriate resources available, so that local authorities and others can help those people into homes.
Mr Newmark
My hon. Friend makes a good point. Later in my speech, I will come on to some of the good initiatives by the Government and the Mayor’s office to address homelessness, but first I will outline the numbers, and unfortunately the reality is that the numbers are rising.
“The homelessness monitor” noted that there has been a continued growth in returner rough sleepers in London, and that is a matter of concern. One possible factor in that is the cuts that many local authorities have made to their Supporting People budgets. Those cuts mean that people who leave the street do not get the support they need to sustain accommodation in the long term.
Turning to some of the key causes of homelessness, people become and stay homeless for a whole range of complex and overlapping reasons. Solving homelessness is about much more than putting a roof over people’s heads. Anyone can become homeless, but certain individual factors make it more likely, including relationship breakdown, leaving care, substance abuse and physical and mental health problems. A recent report for Crisis on the experience of single homeless people found that almost half of them had experienced mental ill health, drug dependency, or alcohol dependency, or had served a prison sentence.
Structural factors also play a major role. The continued shortage of housing and the ongoing effects of the economic recession are major drivers of homelessness. The welfare and housing systems have traditionally acted as a buffer between unemployment, poverty and homelessness. Government reforms, particularly cuts to housing benefit, are eroding that safety net. In particular, housing benefit has been cut by around £7 billion. Also, housing supply has not kept pace with demand for many decades. In total, almost 137,000 new houses were supplied in 2013-14—well below the estimated 232,000 required to keep up with demand. More and more people rely on housing benefit to pay their rent. Between 2008-09 and 2013-14, the proportion of renters in work and claiming housing benefit doubled from 7% to 14%.
Notwithstanding a very tough economic climate, the Government, much to their credit, have invested £20 million in the homelessness transition fund, which supports 175 voluntary sector projects for single homeless people. The fund also supported the national roll-out of the “No Second Night Out” initiative. Indeed, “No Second Night Out” has been successful in supporting many new rough sleepers in moving off the streets. Some 67% of the rough sleepers worked with were taken off the streets after the first night that they were found to be sleeping rough, and the majority of them did not return to the streets once helped.
Furthermore, the Department for Communities and Local Government introduced the gold standard programme, which is a set of best practice principles for local authorities to sign up to, designed to drive improvements in housing options services. DCLG also invested £13 million in the Crisis private rented access scheme. Since the creation of the scheme, 153 voluntary sector-led projects have helped 9,320 vulnerable people into accommodation, with more than 90% maintaining tenancies for at least six months. Much to their credit, the Government changed the methodology used for local authority rough sleeping counts to make them more accurate in tracking annual trends, which I believe is the point that my hon. Friend the Member for Truro and Falmouth (Sarah Newton) was making. The Greater London authority and the Government have invested £5 million in the world’s first homelessness social impact bond, which helped to deliver better outcomes for 831 of London’s most entrenched rough sleepers.
I praise the Mayor of London, Boris Johnson, and his team at City hall for their work on tackling rough sleeping in the capital. The Mayor’s rough sleeping group, which includes local authorities, DCLG, the Home Office, charities and the police, leads on and co-ordinates the wide-ranging work to tackle rough sleeping throughout our capital. The Mayor invests about £9 million in rough sleeping services every year. Launched in April 2011, the flagship “No Second Night Out” service has helped more than 6,000 new rough sleepers. Around three out of every four rough sleepers now spend only one night outside. The Chancellor and Mayor recently announced that £5 million will be made available to “No Second Night Out”, putting the initiative on a more permanent footing.
However, support for single homeless people remains a challenge. Single homeless people who are not considered to be in priority need for housing can be turned away when they approach their council, with little help and no solution to their housing needs. Single homeless people should be given advice and assistance, but Crisis’s experience and research shows that, too often, that does not happen.
Crisis recently conducted a mystery shopping exercise, in which eight formerly homeless people visited 16 local authorities to examine the quality of advice and assistance that they provide to single homeless people. In well over half the 87 visits, the help offered was inadequate. In 29 cases, they were simply turned away without any help or the opportunity to speak to a housing adviser, despite the mystery shoppers portraying individuals in very vulnerable situations, including someone who was forced to sleep rough after losing their job, a young person thrown out of the family home, a victim of domestic violence and a person with learning difficulties.
Crisis wants all political parties to make a manifesto commitment to reviewing the support given to single homeless people, so that no one is forced to sleep rough and all homeless people get the help that they need. I draw the Minster’s attention to the St Mungo’s Broadway manifesto for the 2015 general election, which identifies many of the key problems surrounding homelessness and the priorities for the next Government to address regarding homelessness.
Sarah Newton
My hon. Friend is being generous in giving way a second time. Is he aware of the Children’s Society’s work in this area? The Children’s Society looks after vulnerable 16 and 17-year-olds. It has told me that more than half the youngsters in that vulnerable age group who go along to local authorities are rejected. They are not properly assessed or given support, and some are labelled as intentionally homeless. In addition to the excellent work done by Crisis, the Children’s Society’s work draws us to conclude that there is a severe need for a proper review in the next Parliament of what local authorities are doing to implement their statutory responsibilities to conduct proper assessments.
Mr Newmark
Again, my hon. Friend makes an excellent point. Along with many homelessness charities, the Children’s Society has done a lot of work focused on young people. That 16-to-24 age bracket seems to feel the brunt of homelessness. They are the people who are not served enough. With a little more focus on and support for that age range, I hope that the next Government will commit the resources necessary to address the problem.
Beyond the issue of single-person homelessness, the Government must support individuals with complex and multiple needs. There needs to be an increase in the number and type of health services—including mental health and drug and alcohol services—available to homeless people at hostels and day centres. Tackling issues such as drug and alcohol use requires an holistic approach that considers the specific needs of homeless people. As well as treating addiction, recovery services should provide help with housing—stable accommodation is vital for treatment and recovery—skills and work.
On welfare reform, housing benefit acts as a vital safety net to keep people who fall on hard times in their homes. However, cuts to housing benefit have, unfortunately, been a contributory factor to recent increases in homelessness. As my hon. Friend said, there are particular problems for younger adults, who are limited to receiving the shared accommodation rate of housing benefit. The rate has always been calculated in such a way that it does not reflect the real cost of tenanting a shared property. Although the Government’s intention is that the lowest 30% of the private rented market should be available to people on housing benefit, research by Crisis showed that as little as 2% of shared accommodation was actually available and affordable to benefit recipients. The calculation of the shared accommodation rate should be reviewed to ensure that it meets the real cost of renting shared accommodation and does not leave young adults at risk of homelessness.
Furthermore, there are indications that the current sanctions regime is not working to support more vulnerable people into work. Instead, sanctions are increasing people’s risk of becoming homeless, leaving them struggling with debt and without enough money for food, rent or heating. Sanctions disproportionately affect homeless people, with many facing obstacles—including mental and physical health problems, a history of domestic violence and poor literacy and IT skills—that make it harder for them to meet their work-related conditions. From November 2012 to March 2014, 13% of sanction decisions were overturned, which suggests that a large number of people are being sanctioned incorrectly. That must be addressed, and work should be undertaken to ensure that the right decisions are made first time.
Finally, there must be a significant increase in the number of genuinely affordable homes being supplied each year. Crisis is a core member of the Homes for Britain coalition, which is calling on all political parties to commit to ending the housing crisis within a generation and publishing a plan laying out how they will do so, within a year of taking office.
I end by thanking Crisis again for all the work that it does towards ending the blight of homelessness in our society. The crisis of homelessness is not just for Christmas; it is a problem that must be addressed 24/7, 365 days a year. When I leave the House at the end of the week, I look forward to beginning a new chapter in my life, working with Crisis and other homelessness charities to try to tackle this blight on our society once and for all.
The Parliamentary Under-Secretary of State for Communities and Local Government (Kris Hopkins)
It is a pleasure to serve under your chairmanship, Mr Betts. I am grateful to my hon. Friend the Member for Braintree (Mr Newmark) for securing this debate on such an important issue. I want to recognise his work, as well as that of my hon. Friend the Member for Truro and Falmouth (Sarah Newton), in support of local charities. Their contribution to the debate raises the profile of homelessness and ensures that it remains in the public’s consciousness. It is important to the Government, and tackling homelessness and rough sleeping remains a key priority for us. At the beginning of this Parliament, we made available some £500 million. As a direct consequence of that contribution to tackling homelessness, we managed to prevent some 700,000 people from becoming homeless.
There is no doubt that being homeless affects every aspect of a person’s life. No one should be in such a frightening situation, especially not some of society’s most vulnerable people. Quite often, individual life circumstances create the situation, so it is important that the Government put in place prevention measures and attempt to help such individuals and mitigate the situation.
A housing crisis could happen to anyone at any time. The lucky ones have the resilience to cope with it and, perhaps, the resources to get back on their feet. However, that is of course not always the case. Some vulnerable people struggle to find their way out and become trapped in the cycle of homelessness. As we have seen today, the consequences can be severe. I know that both my hon. Friends have dealt with cases as Members of Parliament and sought to help. I appreciate that. Every MP will have similar experience. Homelessness is not a partisan issue, and I would appreciate a cross-Government response to put in place the right resources to address these vulnerable people’s needs.
Sarah Newton
The Minister is right to talk about vulnerable people, young ones in particular, and to say that cross-governmental work is required. In the next Parliament further changes to housing benefit will be considered, especially on shared occupancy. Does he agree that just as we are exempting care leavers, because we understand their particular vulnerability, we should also consider exempting young 16, 17 or 18-year-olds who present to local authorities as homeless, so that they have the best chance of getting supported accommodation and the necessary support to get themselves back on their own two feet and participating fully in society?
Kris Hopkins
There has been great debate about some of the challenges we face on the benefits bill, and a future Government will deal with that, whichever party comes to power. My hon. Friend and I, and others, will make a powerful case on the grounds that she has just mentioned.
For those vulnerable people, the services provided by local authorities and voluntary sector partners are a lifeline. I recognise the hard work and dedication of so many people, for whom this is not just a job; it is a vocation. I have been to see individuals who give an enormous amount of time to provide support and care to those vulnerable people.
Housing supply is an important factor, and I reassure colleagues that that is another key priority. We should be proud of what we have done to deliver some 217,000 affordable homes in England since April 2010. That includes £19.5 billion of public and private investment through our affordable homes programme, which will deliver 170,000 new homes by the end of March this year, in a few days’ time. Over the next five years another £38 billion of public and private investment will provide a further 275,000 new affordable homes between 2015 and 2020. Over the next Parliament, we will therefore build more new affordable homes than during any equivalent period in the past 20 years. We should be proud that we have sought to ensure such provision. A lot remains to be done, but bearing in mind the economic circumstances, it is important that we have made that commitment.
I will say a few words about statutory and youth homelessness before coming on to Crisis, which my hon. Friend the Member for Braintree discussed. Despite the difficult economic circumstances, statutory homelessness is significantly lower than it was during its peak period under the previous Government. I do not want to paint an over-rosy picture—we should be realistic about where we are—but the Government have maintained the strong safety net, protected in law, to ensure that families and vulnerable people have a roof over their head. The Government have therefore increased investment in homelessness services over the lifetime of the Parliament, including the £500 million I mentioned.
We have done much to support homeless people. Recently I addressed and listened to members of the Youth Homeless Parliament, who met here in Westminster. Many spoke with passion about their circumstances. Such a dialogue between users of our services, charities and Members of Parliament can shape the services. As a direct consequence of engagement that I have had, a new £15 million fair chance fund will affect the lives of some 1,600 homeless and NEET—those not in education, employment or training—18 to 25-year-olds. It is about targeting money at specific groups.
Another vulnerable group that we wanted to help were those suffering from domestic violence. A £10 million package was initiated for them by the Prime Minister, who wanted to intervene to ensure that we had sufficient capacity to stop refuges closing, and adequate local authority provision to protect vulnerable victims of domestic abuse and their families. Some 148 areas across England will benefit from that resource, which will be rolled out over the next two years.
Mr Newmark
With violence and abuse, one of the issues for many young people, unfortunately, is that they are forced to return to the area where they are from in order to get housing, even though that is the very environment in which they suffered the abuse. It would be good if the Government had a little more flexibility, in particular when dealing with young people subjected to a violent upbringing. The authorities should not have to say to them, “The only place you can get your housing is back where you suffered abuse.”
Kris Hopkins
Our local authorities have an obligation to ensure that such children, very young people in particular, are safe. My hon. Friend is right: they should not be placed back where they might be vulnerable. He makes a good point, and I am sure that over the coming weeks and months he will continue to make the case, and that he will shape policy.
As the Minister with responsibility for homelessness, I believe that one area that was neglected for many years was single homelessness and rough sleeping. We should be proud of what we have done about rough sleepers through, for example, “No Second Night Out”, and to ensure that the public are involved. The public want to participate, and we have given them some of the mechanisms necessary to do so. They should be proud of their contribution and the amount of it.
Mr Newmark
I appreciate that time is running out, and all the responses that the Minister is giving. For a young male between 16 and 24, it is particularly difficult to get any form of housing. That is a challenge, and although I understand why it is challenging, we need to address that. If we do not find support and housing for that group, it might unfortunately lead to greater problems further along in their lives.
Kris Hopkins
I only have a few minutes left, so I will pick up on a couple of issues, the first of which is about breaking the cycle that single homeless people find themselves in. How do we get them into employment, if that is possible? How do we give them a stable home to build their lives on?
One of our interventions has been to work with Crisis, which my hon. Friend has mentioned several times. We provided some £14 million of funding to Crisis to enable it to run a project providing access to the private rented sector, which has been a real success. The idea is to help some 10,000 single homeless people to access and sustain privately rented accommodation by 2016. We know that 90% sustain such accommodation for at least six months. It is about giving continuity to those individuals. It is important that we get provision right, and that we give those people who have been trapped in a cycle the opportunity to get themselves away from abuse, drugs and alcohol, putting them in a safe environment so that they can build their lives again with support.
Only a minute or so is left, so I want to put on record my thanks to individuals in the Department for Communities and Local Government. We should not ignore the fact that in the DCLG we have a huge wealth of knowledge—and it is not isolated knowledge that simply sits inside the Department; it is about outreach and understanding the complex issues associated with rough sleeping and homelessness. The Department can be extremely proud.
We should also recognise what local authorities, including the Greater London authority, do. Westminster’s Councillor Robathan has been leading on homelessness and, bearing in mind the complex issues in the borough, she should be applauded, as should Richard Blakeway at the GLA, who has been leading on the issue for some time. We should also say, however, that some authorities are not getting it right. I look to the GLA and other strong local authorities to offer leadership and direction to the weaker authorities that have not always picked up their responsibilities.
I am sure that the Select Committee on Communities and Local Government will participate on the issue in future. I hope that Members will ensure that homelessness and rough sleeping stay in the public consciousness, and that the next Government provide an equally responsible response.
Princess Royal University Hospital
(9 years ago)
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Jim Dowd (Lewisham West and Penge) (Lab)
I am grateful both to you, Mr Betts, and to the Minister for agreeing to my proposition that I speak for 10 minutes and my hon. Friend the Member for Lewisham East (Heidi Alexander), who is equally concerned about these matters, may speak for five minutes; the Minister will have the prerogative of the usual arrangements for ministerial responses.
The reason I have raised this matter is that in south-east London generally and in Lewisham in particular we have been around this course before, and know exactly where it wound up then. I will be candid from the off: I am deeply suspicious of the whole process currently being embarked upon by Monitor and of the involvement of the Princess Royal university hospital at Orpington and King’s College hospital trust. I hope the Minister will be able to provide me with some assurances that will assuage my fears about this matter.
I will explain why. On Tuesday 24 July 2012—hardly a day that will live in infamy, but one that certainly remains clear in my mind—we had a meeting at the Department of Health with the then Secretary of State, the right hon. Member for South Cambridgeshire (Mr Lansley). My hon. Friend the Member for Lewisham East was there, as were Members for constituencies in the boroughs of Greenwich and Bromley, including the hon. and gallant Member for Beckenham (Bob Stewart). I see that the hon. Member for Bromley and Chislehurst (Robert Neill) is in his place today; I cannot remember whether he was also at the meeting, but other Members certainly were. The meeting concerned the future of the South London Healthcare NHS Trust, which then consisted effectively of the Queen Elizabeth hospital in Woolwich, the Princess Royal university hospital in Orpington, which I chose as the title for the debate today, and Queen Mary’s hospital in Sidcup.
Members for constituencies in the boroughs of Bexley, Bromley and Greenwich were quite rightly invited to that meeting. As I said, my hon. Friend the Member for Lewisham East and I were both invited, even though Lewisham hospital was not part of the South London Healthcare trust. No one else from south-east London—no Members for constituencies in Lambeth or Southwark—was invited or present, although, strangely enough, they were included in the later stages of the discussions by the current Secretary of State for Health after Mr Matthew Kershaw, the trust’s special administrator, had made an initial report. His report essentially looked at the considerable downgrading—some would say the destruction—of Lewisham hospital as the answer to the problems at the Princess Royal, Queen Elizabeth and Queen Mary’s hospitals.
Jim Dowd
I was talking about the fabled meeting in July 2012—two and a half years ago. When the Secretary of State and the trust special administrator said that the answers to the problems of the then South London Healthcare NHS Trust did not lie within its own boundaries, I knew that what they had in mind was effectively the evisceration of Lewisham hospital. For reasons that have eluded me for decades and more—I used to be on the health authority of Lambeth, Southwark and Lewisham, and the district health authority for Lewisham and north Southwark—various elements of NHS London have always had Lewisham hospital in their sights. There was once a plan for there to be only four accident and emergency and general hospitals in south-east London: St Thomas’, King’s, PRUH and Queen Elizabeth; there was no room for Lewisham. I do not know why the various NHS powers think Lewisham is such an encumbrance. The service it provides to its residents and the pressure it relieves from the other hospitals around south-east London are proof positive of its value.
The morning of 5 March dawned—I was quite delighted about that, because it was my birthday. At 9.25 am, I received an e-mail from Monitor, explaining that,
“Monitor is opening an investigation at King’s College Hospital NHS Foundation Trust to find a lasting solution to long-standing problems at the Princess Royal University Hospital…The regulator is concerned that some patients are waiting too long for A&E treatment”—
nothing unusual there. Not one of the hospitals in south-east London—not St Thomas’, over the river, not PRUH, not Queen Elizabeth, not Lewisham, not King’s—is currently meeting the 95% targets for seeing attendances at A and E, so that is not surprising. The e-mail went on to say,
“and routine operations…the trust is predicting a deficit of more than £40m this financial year. This deterioration in its operational and financial performance follows the unexpected costs of making urgent improvements to the quality of care at the PRUH.”
Well, Princess Royal was taken over by King’s College hospital as a consequence of the trust special administrator’s recommendations, and that is the problem it has run into.
When the trust special administrator was appointed, the Secretary of State said in a statement to the House:
“The trust is losing well over £1 million of taxpayers’ money a week, which means that vital resources are being diverted from other parts of the NHS.”—[Official Report, 29 October 2012; Vol. 552, c. 3WS.]
The difference between the £1 million a week then and the predicted £40 million a year at PRUH alone now clearly demonstrates that the trust’s special administration process did not address the right problems. Clearly, the problem was predominantly at Princess Royal.
Queen Elizabeth is now part of a very successful partnership with University hospital Lewisham, and it is doing quite well. It is not without difficulties, but that is the case for any organisations that come together under difficult circumstances. However, it is making progress in clinical and financial affairs, and is well on the way to building a solid and reliable NHS entity in our part of south-east London. That demonstrates that the entire TSA process was substantially illegal, because as we know, the High Court—and subsequently the Court of Appeal—found the trust special administrator’s recommendation with regard to Lewisham hospital, and the current Secretary of State’s stubborn refusal to accept anything other than those proposals, to be illegal. The Secretary of State did not have the powers he assumed he had and could not reorganise in the way that was suggested. He even had the hubris to try and test it at the Court of Appeal, which found similarly that that was the case. Thankfully, sense prevailed at that stage and he left it there, deciding not to waste any more taxpayers’ money by going to the Supreme Court.
However, the Government introduced an amendment to the Bill that became the Care Act 2014, giving them the power that they thought they originally had to do whatever they liked by appointing a trust special administrator. This is where we come to the key worry about the future of Princess Royal and King’s. It is not just about the services that are provided there, which are critically important to all the constituents of Members here today, but about the fear that Monitor, using the powers that the Government put into that Act, will try to engineer another back-door reorganisation involving Lewisham hospital. As I say, that was originally declared illegal, but Lewisham could be dragged into it by other means, so the Government can achieve what they originally meant to achieve and were stopped from so doing.
Robert Neill (Bromley and Chislehurst) (Con)
I understand the hon. Gentleman’s point. Do I gather that his principal concern is the impact on Lewisham, and not the fact that Monitor is looking at accepted issues at the Princess Royal and King’s? From his point of view, it is the Lewisham dimension, rather than what it is necessary to do at the Princess Royal. Am I right in that?
Bob Stewart (Beckenham) (Con)
I totally agree with everything that the hon. Gentleman has said. My worry is that the Secretary of State negated the bill. It was wiped clean, and £44 million is a huge amount of money in the very short time that King’s has apparently been mismanaging the PRUH.
Jim Dowd
I understand the hon. Gentleman’s point. I do not think that would be King’s view. I hold no particular brief for King’s college hospital, other than the fact that I had a heart bypass there a few years ago, so I owe them my life. However, beyond that, I have no particular indebtedness to them. I know that there is a strong feeling that it was misled about what taking on the PRUH would actually mean, and the operational and financial consequences.
Jim Dowd
That is very gracious—characteristically so—of the hon. Gentleman. I have four points to make briefly: three are questions, and I would also like an assurance from the Minister.
First, I would like an indication about the time scale. How long will Monitor take to report and what is the process following the report? Who will get to review it and how will it be taken beyond that? Secondly, what are the requirements/benefits and the consequences of what Monitor and the letter I received from King’s later that day—5 March—say, which is that the legal powers that Monitor possesses are needed to underpin the changes that are necessary to King’s foundation trust and the PRUH? Thirdly, how much consultation will there be with other providers and commissioners across south-east London outside King’s College Hospital NHS Foundation Trust? Finally, I want an absolute guarantee that University hospital Lewisham and Queen Elizabeth hospital Woolwich, now the Lewisham and Greenwich trust, will not be adversely affected by any decisions that Monitor makes.
Heidi Alexander (Lewisham East) (Lab)
I am very grateful for the opportunity to make a short contribution today, and I congratulate my hon. Friend the Member for Lewisham West and Penge (Jim Dowd) on securing the debate. I also thank him for sharing his time with me so that I can put on record my concerns about the challenges facing the Princess Royal and other hospitals in south-east London.
When I first learnt about the Monitor investigation into the PRUH a few weeks ago, I was worried, like my hon. Friend, that we might be witnessing the start of another process that would end up with Ministers or NHS officials wanting to close Lewisham’s full A and E. I was worried because, as he has said, we have been here before. Problems in a neighbouring hospital trust, of which the PRUH was then a part, resulted in NHS bureaucrats casting around, on the look-out for ways to save money.
It is understandable that my constituents might be suspicious about the latest investigation, given their experience a few years ago with the trust special administration process, which, as we all know, had at its heart an ill-judged and illegal attempt by the Government to close services at Lewisham in order to sort out problems at the PRUH and the Queen Elizabeth hospital.
The Minister may tell us today that this process is entirely different, but it would be helpful if she could set out exactly what the process is limited to, the time scale of the process and what change could come about as a result of the investigation. Is it about giving King’s and the PRUH more money to adequately provide the services that are needed? Is it about changing leadership at the hospital or providing specific types of support? When the investigation is concluded, how will local people know what has been proposed? Will we, as local Members of Parliament, get a copy of Monitor’s full report? Could another trust special administration process be triggered?
I am keen to get answers to those questions. Although we successfully fought the Government’s proposals for Lewisham hospital last time around, the Government have since changed the law. They can now use a rushed and chaotic process to force service closures at any hospital in the country as long as they deem the neighbouring hospital trust to be failing. Given that cynical move by the Government, it is little wonder that among my constituents there is considerable anxiety that the proposals to take services away from Lewisham will rear their head again.
I tell the Minister, for the sake of clarity if nothing else, that the people of Lewisham are adamant: no matter what the problems in neighbouring hospitals are, our full accident and emergency and maternity departments are essential local services that we cannot do without. I am not saying that everything is perfect, but when there are such huge pressures on the system, such as those we saw in the winter, my constituents are right when they say to me, “Just think how much worse it would have been if they had closed Lewisham.”
There are enormous pressures on London hospitals, and the situation is getting worse. At the PRUH, according to the chief executive’s January board report, one in four people who attended the A and E there in December were not seen within four hours. The latest weekly figures for both the PRUH and Lewisham hospital show a much lower percentage of patients seen within four hours than this time three years ago. We know that the PRUH is heavily reliant on nursing agency staff because of recruitment difficulties. That has resulted in an overspend on its staffing budget. I could list other problems, but time is short.
Suffice it to say, the system is under increasing pressure, and that has happened on this Government’s watch. When I first stood to be a Member of Parliament five years ago, the NHS hardly ever came up on the doorstep. It now comes up time and again. When I get an e-mail from a constituent telling me about their elderly neighbour being left waiting hours for an ambulance to turn up, waiting hours on a trolley to be seen in A and E and then waiting hours to be given a bed, I know that something is seriously wrong with our health service.
Will the Minister give us her honest assessment of the state of hospital services in south-east London? Will she set out exactly what her Government are doing to resolve the problems and give us categorical reassurance that the latest investigation into the Princess Royal hospital is not just another attempt to come after services in Lewisham?
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
I say now to colleagues who understandably are concerned about local health services and have rightly raised concerns on behalf of their constituents that if I cannot cover some of their questions in the next 12 minutes, I will undertake to write to them in the remaining days of this Parliament, or to ask someone else to write to them, so that we can try to give them some reassurance.
I congratulate the hon. Member for Lewisham West and Penge (Jim Dowd) on securing the debate and the hon. Member for Lewisham East (Heidi Alexander) on raising her concerns. Taking my cue from what was said previously, I start by paying tribute to all those working in London’s NHS—in those hon. Members’ constituencies, in mine and right across London—for their dedication and commitment to providing first-class services to those in their care at a time when we know that the system is, in places, under pressure.
As we have heard, after consulting with the trust, its commissioners and the London strategic health authority, the then Secretary of State instituted the special administration process at South London Healthcare NHS Trust in July 2012. He was guided in making that very difficult decision on the basis of the clinical interests of local patients, with advice from the NHS medical director, Sir Bruce Keogh. The decision was also based on the fact that there was no clear option for restoring the trust’s finances while maintaining the quality of services to patients. It was clear at the time that doing nothing was not an option. Not resolving the issues at the trust would have carried a high degree of risk. It would have meant that the trust would not meet the London-wide clinical quality standards and that £1 million a week would continue to be diverted from front-line patient care into funding an unsustainable deficit.
The trust special administrator looked extensively at whether there was an option within South London Healthcare NHS Trust to solve the problem. He invited expressions of interest from other people who might run the hospitals in the group, but no one was able to come forward with a proposal that would solve the problem within the existing footprint of the trust. Indeed, there were no proposals that would not have involved neighbouring health care economies.
The long-standing clinical, operational and financial problems at South London Healthcare NHS Trust led the trust special administrator to recommend that Princess Royal university hospital be acquired by King’s College Hospital NHS Foundation Trust. The associated hospital sites in Bromley—Beckenham Beacon and Orpington hospital—were part of that transaction. I must say for the record that the transaction agreement was signed by all parties and no information was withheld from any organisation.
At the time, South London Healthcare NHS Trust was the most financially challenged in the country, with a deficit of £65 million per annum. Repeated local attempts to resolve the financial crisis at the trust had failed. Millions of pounds were spent on paying for debt rather than improving patient care for the local community in south-east London. The trust special administrator was clear that long-standing problems at South London Healthcare NHS Trust must not be allowed to compromise patient care in the future. That is why, after careful consideration, the Secretary of State accepted his recommendations, including that the PRUH be transferred to King’s.
The new expanded trust is one of London’s largest and busiest teaching hospitals and plays a key role in the education and training of the next generation of medical, nursing and dental students. King’s has acknowledged that it has been facing a number of pressures that have had a bearing on its performance. The challenge of integrating and transforming the performance of the PRUH, combined with a significant increase in emergency in-patient activity, has, as the hon. Member for Lewisham West and Penge described, adversely affected the trust’s operational and financial performance. A key aim of the trust’s five-year strategy is to restore its traditional high levels of performance, in particular by returning to achieving its emergency department and referral to treatment waiting time targets.
Monitor has concerns that some patients are waiting too long for A and E treatment and routine operations and that the trust is predicting a deficit of more than £40 million in this financial year. The regulator is undertaking its investigation to find a lasting solution to long-standing problems at the PRUH. Monitor is concerned that the trust’s operational and financial performance issues post the acquisition of the PRUH have not improved in line with expectations. In particular, some long-standing financial and operational performance issues at the hospital have continued post acquisition.
Robert Neill
May I say this on behalf of my hon. Friend the Member for Orpington (Joseph Johnson), the Minister of State, Cabinet Office, who cannot be at the debate? He and I would want to put on the record the fact that there have been areas of improvement at the Princess Royal and at Orpington, particularly in terms of patient experience scores, which have picked up considerably. On the point that my hon. Friend the Minister just mentioned, we are especially concerned at the prospect that has been raised that the full financial picture may not become available to King’s until after the acquisition. It is very clear—I hope that the Minister can assure us on this—that the Monitor investigation is intended once and for all to get to the bottom of, the root of, the financial difficulties that this trust suffers. May I also say that I welcome the appointment of the noble Lord Kerslake as chairman of the King’s trust? He will bring considerable credibility and rigour to that process.
Jane Ellison
I thank my hon. Friend for that intervention. I will say more about Monitor’s role, but it is very much in line with what he said and I hope to give him the assurance that he seeks.
Monitor has been working with King’s, local clinical commissioning groups, the NHS Trust Development Authority and NHS England since the acquisition and has worked more closely with the trust recently to get a better picture of the challenges that it faces. However, Monitor has decided to take the new, formal action because King’s has not been able to tackle its challenges on its own. Monitor considers that continuing to work with the trust through more intensive and formal engagement will help to drive the necessary changes.
I want at this point to highlight the fact that, following a formal investigation into a suspected licence breach at a foundation trust, Monitor does not have the power to direct non-foundation trusts, nor does it have the power to direct neighbouring foundation trusts unless they themselves are in breach of their licence. The range of actions available to the regulator range from informal action—for example, requesting further information—to formal enforcement action, including the imposition of additional licence conditions.
Where appropriate, Monitor seeks to encourage the whole health economy to work together to reach a locally owned, consensual solution, which is very much in line with the NHS “Five Year Forward View”. Monitor has said that it recognises that King’s has been working hard, as my hon. Friend the Member for Bromley and Chislehurst (Robert Neill) has said, to improve the quality of care provided at the PRUH. However, through its close work with the trust, Monitor has discovered that achieving the necessary financial and operational turnaround at the PRUH will be a greater challenge than was initially anticipated. Therefore, the regulator has decided to open a formal investigation as part of the regulatory process, which will enable it to use its legal powers to underpin the changes that the trust needs to make. The investigation will help Monitor to decide what resources and support King’s needs to enable it to deal with its financial problems and reduce waiting times for patients. Monitor will announce in due course the outcome of the investigation and whether it will take any further action. There is no statutory time scale for the investigation, because it depends on the scale of the issues encountered. I am sure that all hon. Members would want those issues to be looked at thoroughly.
Bob Stewart
May I just confirm that that means that Lewisham hospital will not be touched by Monitor? Lewisham hospital was a successful hospital before the last investigation, and it appears to be a successful hospital now. If it ain’t broke, don’t fix it.
Jane Ellison
I have just made clear for the record what Monitor’s powers are and are not. I hope that that gives Members on both sides of the Chamber greater clarity than they had when we started. Monitor is in the process of concluding its investigation. It will announce in due course the outcome and whether it will take any further action. Key findings and any next steps will be announced by means of a press notice. Colleagues from Monitor are here in the House, and I would like to put them on notice that I expect—I am sure that they also expect this—Monitor to engage fully with local Members. Clearly, we are entering a more tricky period from that point of view, but on the other side of the election I expect there to be full engagement with local Members, particularly as the solution lies, as I think it will in other health economies that are challenged, in the whole local health economy coming together to understand how to work through the problems. That is laid out in NHS England’s “Five Year Forward View”.
Heidi Alexander
The Minister talks about further support that may be available to King’s and the PRUH when Monitor has concluded its investigation. Will she give some examples of the form that that support may take?
Jane Ellison
If it is acceptable to the hon. Lady, I will write to her to provide some clarity on that. It might be helpful, for example, for Monitor to give examples from other investigations of the sorts of things that it undertook and the changes that it requested through the formal process. I will write to her with some examples to give her a sense of that. I have sought to give a degree of reassurance to Members, and I hope that I have managed to do so.
Jim Dowd
I detect that the Minister has almost concluded her remarks, and I will not have the opportunity to intervene once she has sat down. I am grateful for what she has said, and I will look at the Official Report most carefully. I would be grateful to be copied in on any information that is sent to other Members.
I would like to make another point, out of courtesy, as much as anything else. The hon. Member for Bromley and Chislehurst welcomed the appointment of the new chair of King’s trust, Lord Kerslake. May I put on record a huge vote of gratitude to Sir George Alberti, who is standing down as the chair of the trust, for the service that he has given to King’s and the health service more generally?
Jane Ellison
That is entirely appropriate. I detect a desire among Members from all parts of the Chamber to work towards a better future for the health economy in their local areas. At the end of the process, we want sustainable, excellent services that offer the quality of care that we would wish for our constituents. Although there is not much time left in this Parliament, I undertake to look at the Hansard record of the questions asked by both hon. Members, because the topic is so important for their constituencies. If there is anything I can add to my remarks by way of clarity or response, I will get that to them. Monitor has heard me put on the record my desire for Members of Parliament to be kept fully involved and engaged with the process once we are through the small matter of the general election.
I believe that this is the last Westminster Hall sitting of this Parliament. In the minute that remains, I would like, on behalf of hon. Members who are present and the many hundreds of others who have spoken in and attended our second debating Chamber over the course of the Parliament, to thank you, Mr Betts, and, through you, all your colleagues who have chaired our debates. I thank all the staff of the House, the Doorkeepers and all who have attended and participated in those debates. I have apparently clocked up 50 debates while I have been a Health Minister, many of them in Westminster Hall. It is apparent to me that Westminster Hall serves an important purpose in allowing us to debate important matters, particularly those of the nature of the subject that we have discussed today. On behalf of all Members of Parliament, I thank all the staff and everyone who supports Westminster Hall in its duties.
Mr Clive Betts (in the Chair)
Order. For the last time this Parliament, the sitting stands adjourned.
Question put and agreed to.
Written Statements
National Measurement and Regulation Office
The Minister for Business and Enterprise (Matthew Hancock)
I have tasked the National Measurement and Regulation Office (NMRO) to simplify technical regulation for the benefit of British business.
I have agreed with the NMRO that their objectives for 2015-2016 will be to:
simplify the legislative framework for weights and measures and hallmarking to support well-functioning competitive markets, and use our strong international influence to shape new and existing EU legislation to ensure that burdens on UK business are minimised or eliminated and UK weights and measures protected;
provide the assurance businesses need to understand and apply legislative requirements and give them confidence that their investments in research and development are protected against unfair competition;
enforce technical regulations intelligently using the regulators’ code to achieve better outcomes for British businesses;
provide a legal metrology infrastructure to underpin trade measurement and confidence in the market, and certification services to enable businesses to export their products globally.
The performance targets I have set the agency are as follows:
identify an appropriate methodology to measure the benefit to UK business from simplifying technical regulation including guidance and enforcement, and achieve an upwards trend in benefit over the next three years;
generate a positive 3:1 net contribution to consumers and the environment as well as the low carbon economy, through enforcement team activities;
deliver enforcement services to meet the expectations of Government clients;
implement the new legal framework for EU measuring instruments legislation by the target date of April 2016;
support stakeholders by ensuring at least 95% of gas and electricity metering enquiries are answered within three business days of receipt of all necessary documentation;
achieve a satisfaction rating among certification service customers of at least 95% of customers scoring satisfied or above, with at least 60% scoring ‘very satisfied’;
achieve a 5% increase in income from the 2014-15 financial year;
reduce the per capita overhead rate from 2014-15;
ensure the smooth transition of finances and records of NMS activities from NMRO to BIS by the end of December 2015.
[HCWS475]
Environmental Taxes
(9 years ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Exchequer Secretary to the Treasury (Priti Patel)
Over the Parliament this Government have introduced reforms to the tax system to make it more competitive, simpler, fairer, and greener. As part of this, in May 2010 Government committed to increasing the proportion of tax revenue accounted for by environmental taxes.
In 2012, the Government published their definition of environmental taxes which set the baseline for achieving that commitment. This statement provides an annual update of the Government’s progress against that commitment, using the independent OBR forecasts published alongside the Budget.
The Government classify environmental taxes as those that meet the following three principles:
The tax is explicitly linked to the Government’s environmental objectives; and
The primary objective of the tax is to encourage environmentally positive behaviour change; and
The tax is structured in relation to environmental objectives—for example: the more polluting the behaviour, the greater the tax levied.
The Government have defined the following as environmental taxes based on these principles:
Climate change levy
Aggregates levy
Landfill tax
EU emissions trading system (EU ETS)
Carbon reduction commitment energy efficiency scheme
Carbon price floor
The OBR forecasts demonstrate that the coalition remains on track to achieve its commitment to increase the proportion of revenue accounted for by environmental taxes.
Tax | 2010-11 | 2011-12 | 2012-13 | 2013-14 | 2014-15 | 2015-16 | 2016-17 | 2017-18 | 2018-19 | 2019-20 |
|---|---|---|---|---|---|---|---|---|---|---|
Climate change levy and carbon price floor (£bn) | 0.7 | 0.7 | 0.6 | 1.1 | 1.5 | 2.0 | 2.0 | 1.9 | 1.7 | 1.5 |
Aggregates levy (£bn) | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 |
Landfill tax (£bn) | 1.1 | 1.1 | 1.1 | 1.2 | 1.1 | 1.1 | 1.0 | 1.0 | 1.0 | 1.1 |
EU ETS (£bn) | 0.4 | 0.2 | 0.3 | 0.4 | 0.3 | 0.4 | 0.4 | 0.5 | 0.6 | 0.8 |
Carbon reduction commitment (£bn) | 0.0 | 0.0 | 0.5 | 0.6 | 0.6 | 0.8 | 0.7 | 0.6 | 0.6 | 0.6 |
Total revenue from environmental taxes (£bn) | 2.5 | 2.3 | 2.7 | 3.5 | 3.9 | 4.6 | 4.5 | 4.3 | 4.3 | 4.3 |
Total current receipts forecast (£bn) | 572.5 | 593.4 | 601.4 | 624.1 | 646.9 | 667.4 | 700.9 | 731.2 | 764.5 | 804.3 |
Proportion of total tax receipts (£bn) | 0.4 | 0.4 | 0.5 | 0.6 | 0.6 | 0.7 | 0.6 | 0.6 | 0.6 | 0.5 |
[HCWS481]
Off-payroll Engagements (UK Export Finance)
(9 years ago)
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The Chief Secretary to the Treasury (Danny Alexander)
On 5 March 2015, I published the conclusions of HM Treasury’s second evaluation of Departments’ compliance with the rules governing off-payroll appointments in central Government.
The evaluation raised a number of concerns regarding implementation of the guidance at UK Export Finance. I stated that I had asked the Permanent Secretary to the Treasury to commission the Government Internal Audit Agency to carry out an independent audit of the implementation of the off-payroll guidance at UK Export Finance, following which further consideration would be given to the need for any sanction.
The independent audit is now complete and has identified that the off-payroll guidance was not properly implemented at UK Export Finance. As a result I shall be issuing a fine against UK Export Finance of £500,000 for breaches of the guidance which involve the failure to seek proper assurance regarding the tax arrangements of a number of individuals.
While the vast majority of off-payroll contracts are in place for legitimate reasons, I am committed to ensuring that the public sector demonstrates the highest standards of integrity in this area and that public sector employers meet all their tax obligations. The Treasury will continue to monitor compliance to ensure this is the case.
[HCWS485]
National Reform Programme
(9 years ago)
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The Financial Secretary to the Treasury (Mr David Gauke)
Under Council Recommendation 2010/410 of 13 July 2010, member states send National Reform Programmes each year, which report to the Commission on their structural reforms and plans.
The UK 2015 National Reform Programme reports on actions taken by the UK as a whole, including by the Government and by the devolved Administrations where policy responses are of a devolved competence.
The 2015 National Reform Programme:
puts the UK’s structural reforms in the context of deficit reduction, the 2014 autumn statement and Budget 2015;
reports on the broad macroeconomic context;
reports on policies to tackle the six country-specific recommendations addressed to the UK by the July 2014 Council of the European Union on: fiscal consolidation; housing market reforms; youth employment; low-income households, child poverty and child care; access to finance; and the national infrastructure plan;
and sets out the UK’s approach to national monitoring, in line with the five headline Europe 2020 targets agreed by the Council of the European Union in June 2010.
The National Reform Programme is based heavily on the announcements and forecasts of Budget 2015 and the autumn statement 2014. It is, furthermore, drawn entirely from information already in the public domain.
The UK’s National Reform Programme will be available electronically via HM Treasury’s website after it is sent to the European Commission.
[HCWS487]
Contingencies Fund
The Minister of State, Department for Communities and Local Government (Brandon Lewis)
I should like to make a statement about the Contingencies Fund.
Durham housing stock transfer
Durham county council proposes to transfer its housing stock of some 18,500 council and 180 leasehold dwellings to a new social landlord, known as the County Durham Housing Group. The transfer has the support of the council and council tenants, who have given a positive ballot result.
To facilitate this transfer, which is still subject to the necessary approvals and consents and which will require funding support of up to £214,000,000, the Department is seeking to increase its capital AME budget for 2015-16 by £120,000,000.
Parliamentary approval for the 2015-16 funding increase is being sought in the main supply estimates for the Department for Communities and Local Government. Pending that approval, urgent expenditure will be met principally from a repayable cash advance of £205,000,000 from the Contingencies Fund.
Ebbsfleet urban development corporation
At Budget 2014, the Chancellor set out plans for a new urban development corporation to deliver a garden city settlement of up to 15,000 homes at Ebbsfleet in Kent. This is being taken forward in consultation with local MPs, councils and residents.
Urban development corporations are established by means of a statutory instrument under section 135 of the Local Government, Planning and Land Act 1980. Our aim is to lay such a statutory instrument later this month with a view to establishing the Ebbsfleet urban development corporation in April 2015.
Parliamentary approval for additional resources for this new body will be sought in the main supply estimates for the Department for Communities and Local Government. Pending that approval, urgent expenditure estimated at £633,000 will be met by a repayable cash advance from the Contingencies Fund.
[HCWS486]
Planning Update
The Secretary of State for Communities and Local Government (Mr Eric Pickles)
I would like to update the House on further steps we are taking to streamline the planning system, protect the environment, support economic growth and assist locally led decision making.
Solar energy: protecting the local and global environment
Last year, the coalition Government published a comprehensive solar photovoltaic strategy setting out our ambitions for the technology as an important part of the United Kingdom’s energy mix. In doing so, the strategy underlines the importance of focusing growth on domestic and commercial roof space and previously developed land.
My Department supported this by consulting on reforms to permitted development rights which will encourage the take up of much larger scale solar power generation (solar photovoltaic) on non-domestic buildings and complement the existing flexibilities for home owners. These reforms allow for a twenty-fold increase in the amount of solar that can go onto the roofs of non-domestic buildings such as warehouses and offices without having to submit a full planning application, subject to strict safeguards to protect local amenity. The proposals have been widely welcomed by the solar industry, and the measure will come into force from 15 April.
The national planning policy framework includes strong protections for the natural and historic environment and is quite clear that local councils when considering development proposals should take into account the economic and other benefits of the best and most versatile agricultural land. Yet, some local communities have genuine concerns that when it comes to solar farms insufficient weight has been given to these protections and the benefits of high-quality agricultural land. As the solar strategy noted, public acceptability for solar energy is being eroded by the public response to large-scale solar farms which have sometimes been sited insensitively.
Meeting our energy goals should not be used to justify the wrong development in the wrong location and this includes the unnecessary use of high-quality agricultural land. Protecting the global environment is not an excuse to trash the local environment. When we published our new planning guidance in support of the framework, we set out the particular factors relating to large-scale ground mounted solar photovoltaic farms that a local council will need to consider. These include making effective use of previously developed land and, where a proposal involves agricultural land, being quite clear this is necessary and that poorer quality land is to be used in preference to land of a higher quality.
We are encouraged by the impact the guidance is having but do appreciate the continuing concerns, not least those raised in this House, about the unjustified use of high-quality agricultural land. In light of these concerns we want it to be clear that any proposal for a solar farm involving the best and most versatile agricultural land would need to be justified by the most compelling evidence. Of course, planning is a quasi-judicial process, and every application needs to be considered on its individual merits, with due process, in light of the relevant material considerations.
Brownfield land: increasing support for councils
We are clear that brownfield land that is suitable for housing has a vital role to play in meeting the need for new homes and have challenged local authorities to have local development orders in place on more than 90% of brownfield land suitable for new homes by 2020. We have agreed funding for those local authorities who successfully bid for funding to help deliver 200,000 new homes on brownfield sites across the country. These councils will deliver local development orders for housing on brownfield land which will help to speed up the delivery of housing on these sites.
Green belt: protecting against inappropriate development
The Government continue to attach great importance to safeguarding the green belt. The fundamental aim of green-belt policy is to prevent urban sprawl by keeping land permanently open; the essential characteristics of green belts are their openness and their permanence.
We remain concerned about harm to the green belt where there is unauthorised development of land in advance of obtaining planning permission. In such cases, there is no opportunity to appropriately limit or mitigate the harm that has already taken place.
For these reasons, we will be seeking to introduce a new evidenced-based planning and recovery policy for the green belt to introduce early in the next Parliament to strengthen protection against unauthorised development.
Unauthorised encampments: ensuring fair play in the planning system
My Department, in conjunction with the Home Office and Ministry of Justice, is publishing an updated guide for councils, police and crime commissioners and police forces on unauthorised encampments, and the powers that public bodies have. We are making very clear that public bodies should not gold-plate human rights and equality laws and turn a blind eye to breaches of the rules. The cause of equality is assisted by taking firm and fair action against anyone who breaches planning rules, and stopping the small number of cases which undermine community relations and hinder integration.
We are also revoking today the following guidance from the last Administration which is now redundant following previous changes to planning policy and planning legislation: DCLG, “Local authorities and Gypsies and Travellers: a guide to responsibilities and powers”, May 2007, and DCLG, “Preparing Regional Spatial Strategy reviews on Gypsies and Travellers by regional planning bodies”, May 2007.
Parking: helping local shops and preventing congestion
This Government are keen to ensure that there is adequate parking provision both in new residential developments and around our town centres and high streets.
The imposition of maximum parking standards under the last Administration led to blocked and congested streets and pavement parking. Arbitrarily restricting new off-street parking spaces does not reduce car use, it just leads to parking misery. It is for this reason that the Government abolished national maximum parking standards in 2011. The market is best placed to decide if additional parking spaces should be provided.
However, many councils have embedded the last Administration’s revoked policies. Following a consultation, we are now amending national planning policy to further support the provision of car parking spaces. Parking standards are covered in paragraph 39 of the national planning policy framework. The following text now needs to be read alongside that paragraph:
“Local Planning authorities should only impose local parking standards for residential and non-residential development where there is clear and compelling justification that it is necessary to manage their local road network.”
Building on the success of our previous guidance to help householders rent out underused car parking spaces, we have also updated planning guidance to local authorities to clarify that non-residential car parking space can be rented out. This will support the shared economy and increase the provision of competitively priced car parking spaces.
Planning applications: streamlining the process
As part of our commitment to streamline the planning application process, we have laid in Parliament a newly consolidated development management procedure order, to come into force on 15 April. The new order consolidates the 15 amendments made to the 2010 order in order to simplify and improve the planning process for all users of the system. It will also bring into force a number of important new measures including; changes to improve the process of statutory consultation and the introduction of a new “deemed discharge” of conditions to ensure that planning conditions are cleared on time so that homes and other development granted planning permission can start on site without delay.
Short-term lets: championing the shared economy
The Deregulation Bill takes forward our reforms to 1973 legislation which arbitrarily restricts the ability of Londoners to let out their homes on a short-term basis. The provisions in the Bill will commence two months after Royal Assent.
We set out our policy on short-term letting in London in a paper published on 9 February. The Bill allows for local authorities to request that the Secretary of State agrees to targeted localised exemptions from the new flexibility, where there is a strong amenity case to do so in exceptional circumstances.
Any application should be very localised—for example, specific properties or a specific street not for wider exemptions. Any local authority should consult with the public before making an application, and there should be clear evidence of specific harm once the new provisions have actually been introduced and operated. The Deregulation Bill contains provisions so that the flexibility can be withdrawn following a successful enforcement action against a statutory nuisance. We should be very clear that the broader goal of the policy is to deregulate, and to put London on a similar footing as the rest of the country.
Planning guidance: making the planning system more accessible
Alongside the consolidation of national policy through the national planning policy framework, my Department has also been working to streamline associated planning guidance and make it more accessible.
Following the 2014 review of the nationally significant infrastructure planning regime, we are updating guidance on the pre-application and examination stages. These changes clarify aspects of guidance, benefiting users of the regime.
Planning practice guidance on hazardous substances (“Seveso III”) is being updated to reflect changes to new regulations being introduced on 1 June 2015. My Department is producing draft guidance to help people understand and prepare for these changes. The guidance explains planning controls for storage of hazardous substances in England, which will streamline the current system and bring regulations in line with international standards. The guidance follows technical consultation last year on the role of land-use planning in preventing major accident hazards involving hazardous substances.
Planning practice guidance is also being updated to explain the changes to the environmental impact assessment screening thresholds which will come into effect on 6 April 2015. The changes will remove unnecessary gold-plating of a European directive, reduce costs for local planning authorities and developers and provide more certainty about when an assessment is required.
The Government are committed to tackling delays associated with section 106 planning obligation negotiations. We have today published our response to the “Section 106 Planning Obligations—speeding up negotiations” consultation which supports our view that Government should consider further strengthening the legislative framework for resolving delays in negotiating these agreements. Revised guidance will be published alongside this.
We have previously revised national policy on section 106 thresholds to help small builders and to encourage empty buildings to be brought back into use. Some councils have misinterpreted the written ministerial statement of 28 November 2014, Official Report, column 54WS, as just a change in guidance—to clarify, this was a change in national policy and we will be updating the online planning guidance/policy website to make this crystal clear. We are also publishing guidance tomorrow on the vacant building credit to assist in the delivery of the new policy.
We are also to publish guidance on the new social housing relief rules under the amended community infrastructure levy regulations which will help increase the delivery of affordable housing; on supporting the provision of dedicated student accommodation to take pressure off the private rented sector; on supporting the built to rent sector and increasing institutional investment in new build rented accommodation; on ensuring effective pre-application discussions; and improving awareness of the new homes bonus—taking forward recommendations from our new homes bonus evaluation.
In response to our commitment made during the passage of the Infrastructure Bill, 26 January 2015, Official Report, column 644, the Government are also updating planning guidance to make clear that up-to-date assessments of housing need should not normally need to be updated for a full 12 months, and that untested assessments of housing need are inevitably less robust than those which have been subject to examination.
Change of use: supporting brownfield regeneration
To further reduce unnecessary planning regulations, we have brought forward new permitted development rights in line with our “third way”, reducing the number of development types which are required to go through the full planning process.
We consulted in the technical consultation on planning on a range of measures to support housing, the high streets and growth. We have laid the Town and Country Planning (General Permitted Development) (England) Order 2015 to introduce new permitted development rights from 15 April 2015.
These permitted development rights allow more development to take place without the need for a planning application. Where appropriate, the development may require prior approval, allowing consideration by the local planning authority of specific planning matters. These new measures will benefit businesses and householders.
The changes we are announcing today include:
Supporting mixed and varied high streets by allowing more change of use between shops and financial and professional services, allowing the change of such uses to restaurants or leisure use, and allowing retailers to adapt their facilities more freely to support click and collect;
Increasing housing supply by allowing change of use from some business uses to residential and continuing to allow larger, rear domestic extensions; we have also clarified the wording on front extensions following requests by some local authorities.
Supporting growth by allowing commercial filming for longer periods, allowing larger capacity solar panels on non-domestic buildings, making permanent larger business extensions, allowing like-for-like replacements within waste management facilities and allowing equipment housings for sewerage undertakers;
Introducing this regulation also meets our red tape challenge commitment to simplify and reduce planning regulation, by consolidating the Town and Country Planning (General Permitted Development) Order 1995 and its 22 amendments; and
Delivering on our commitment in gambling protections and controls, we are also introducing a new requirement to enable local consideration of a planning application for any change of use to a betting shop or pay day loan shop.
The Government will further consider the case for extending the office to residential reforms, which are helping provided more new homes on brownfield land.
Zero-carbon homes: supporting small builders
We are committed to implementing the zero-carbon homes standard in 2016 and in addition to the future strengthening of minimum on-site energy performance requirements we have introduced in the Infrastructure Act 2015 the powers needed to enable off-site carbon abatement measures (Allowable Solutions) to contribute to achieving the zero-carbon standard. However we recognise that achieving the zero-carbon standard will be a challenge for home builders and in particular smaller home builders and so last year we consulted on how an exemption for small sites could operate and we will publish the Government’s response shortly.
We have decided there will be an exemption for small housing sites of 10 units or fewer, which are most commonly developed by small-scale home builders and can be more expensive to develop irrespective of the size of the builder, from the allowable solutions element of the zero-carbon homes target. This means that all new homes will be required to meet the strengthened on-site energy performance standard but those building on small sites will not be required to support any further off-site carbon abatement measures. We will also put in place legislation to ensure that this exemption is not abused.
Housing standards: streamlining the system
New homes need to be high-quality, accessible and sustainable. To achieve this, the Government have created a new approach for the setting of technical standards for new housing. This rationalises the many differing existing standards into a simpler, streamlined system which will reduce burdens and help bring forward much needed new homes.
The new system will comprise new additional optional building regulations on water and access, and a new national space standard—hereafter referred to as “the new national technical standards”. This system complements the existing set of building regulations, which are mandatory.
To implement this new regime, this written ministerial statement sets out the Government’s new national planning policy on the setting of technical standards for new dwellings. This statement should be taken into account in applying the national planning policy framework, and in particular the policies on local standards or requirements at paragraphs 95,174, and 177, in both plan making and decision taking.
Plan making
From the date the Deregulation Bill is given Royal Assent, local planning authorities and qualifying bodies preparing neighbourhood plans should not set in their emerging local plans, neighbourhood plans, or supplementary planning documents, any additional local technical standards or requirements relating to the construction, internal layout or performance of new dwellings. This includes any policy requiring any level of the code for sustainable homes to be achieved by new development; the Government have now withdrawn the code, aside from the management of legacy cases. Particular standards or requirements for energy performance are considered later in this statement.
Local planning authorities and qualifying bodies preparing neighbourhood plans should consider their existing plan policies on technical housing standards or requirements and update them as appropriate, for example through a partial local plan review, or a full neighbourhood plan replacement in due course. Local planning authorities may also need to review their local information requirements to ensure that technical detail that is no longer necessary is not requested to support planning applications.
The optional new national technical standards should only be required through any new local plan policies if they address a clearly evidenced need, and where their impact on viability has been considered, in accordance with the national planning policy framework and planning guidance. Neighbourhood plans should not be used to apply the new national technical standards.
For the specific issue of energy performance, local planning authorities will continue to be able to set and apply policies in their local plans which require compliance with energy performance standards that exceed the energy requirements of building regulations until commencement of amendments to the Planning and Energy Act 2008 in the Deregulation Bill. This is expected to happen alongside the introduction of zero-carbon homes policy in late 2016. The Government have stated that, from then, the energy performance requirements in building regulations will be set at a level equivalent to the (outgoing) code for sustainable homes level 4. Until the amendment is commenced, we would expect local planning authorities to take this statement of the Government’s intention into account in applying existing policies and not set conditions with requirements above a code level 4 equivalent. This statement does not modify the national planning policy framework policy allowing the connection of new housing development to low-carbon infrastructure such as district heating networks.
Measures relating to flood resilience and resistance and external noise will remain a matter to be dealt with through the planning process, in line with the existing national policy and guidance. In cases of very specific and clearly evidenced housing accessibility needs, where individual household requirements are clearly outside the new national technical standards, local planning authorities may ask for specific requirements outside of the access standard, subject to overall viability considerations.
Decision taking, transition and compliance
From the date the Deregulation Bill is given Royal Assent until 30 September 2015: The Government’s policy is that planning permissions should not be granted requiring, or subject to conditions requiring, compliance with any technical housing standards other than for those areas where authorities have existing policies on access, internal space, or water efficiency.
Planning permission may still be granted on the basis of existing local plan and neighbourhood plan policies on access, internal space, and water efficiency, even though they may have a degree of conflict with the new national technical standards.
Where there is an existing plan policy which references the code for sustainable homes, authorities may continue to apply a requirement for a water efficiency standard equivalent to the new national technical standard, or in the case of energy a standard consistent with the policy set out in the earlier paragraph in this statement, concerning energy performance.
From 1 October 2015: Existing local plan, neighbourhood plan, and supplementary planning document policies relating to water efficiency, access and internal space should be interpreted by reference to the nearest equivalent new national technical standard. Decision takers should only require compliance with the new national technical standards where there is a relevant current local plan policy.
Planning policies relating to technical security standards for new homes, such as door and window locks, will be unnecessary because all new homes will be subject to the new mandatory building regulation approved document on security (Part Q). Policies relating to the external design and layout of new development, which aim to reduce crime and disorder, remain unaffected by this statement.
Where policies relating to technical standards have yet to be revised, local planning authorities are advised to set out clearly how the existing policies will be applied in decision taking in light of this statement.
If, in the light of experience in implementing this policy statement, the Government consider that it is not being accorded sufficient weight by planning authorities, we will consider bringing forward new legislation to secure implementation.
Conclusion
This package of measures will help deliver more homes in a locally led planning system, protect the environment, provide certainty for local residents and business, and contribute to the Government’s long-term economic plan and economic growth.
We will be placing in the Library of the House copies of the documents associated with these announcements.
[HCWS488]
Armed Forces Pay Review: Medical and Dental Officers
(9 years ago)
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The Secretary of State for Defence (Michael Fallon)
The supplement to the 2015 report of the Armed Forces Pay Review Body (AFPRB) making recommendations on the pay of service medical and dental officers has been published today. I wish to express my thanks to the chairman and members of the review body for their report.
In line with the Government’s 2013 Budget statement, which announced that public sector pay awards would be increased by an average of up to 1% for 2015-16, the AFPRB has recommended an increase of 1% to base military salaries for all ranks within the medical and dental cadre for 2015-16. In addition, the AFPRB has recommended a 1% increase in general medical practitioner and general dental practitioner trainer pay and associate trainer pay, and the retention and expansion of the Golden Hello scheme for medical officers.
The AFPRB’s recommendations are accepted in full with implementation effective from 1 April 2015.
Copies of the AFPRB supplementary report are available in the Vote Office.
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Royal Navy Nuclear Reactor Prototype Review
(9 years ago)
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The Secretary of State for Defence (Michael Fallon)
On 6 March 2014, my predecessor announced his decision to refuel the nuclear reactor in HMS Vanguard, one of the UK’s four ballistic missile submarines, during its planned deep maintenance period. This was a prudent precaution following the discovery of a microscopic breach in the cladding around one of the fuel cells in the prototype reactor plant at our shore test facility at Dounreay in Scotland. My predecessor also asked the MOD Chief Scientific Adviser to review again the evidence on which the decision was taken not to prototype the next generation PWR3 reactor, due to be fitted in the Successor ballistic missile submarines.
The review was undertaken by three eminent nuclear experts, Professor Robin Grimes, Professor Dame Sue Ion and Professor Andrew Sherry. I have received the review panel’s report and am grateful for the panel’s efforts and insights.
The panel concluded that it was a valid decision not to prototype PWR3. They also agreed that there was no practical course of action that would have enabled a prototype facility to be built ahead of the first Successor submarine.
The panel have advised that, with no PWR3 shore test facility, far greater requirements will need to be placed on other elements of the submarine enterprise to provide data, experience and assurance to underpin safety and availability especially those elements that are unique to the UK. As such, I have agreed to their recommendation that the Department undertake a nuclear propulsion capability review to ensure the necessary capability and capacity is in place to sustain these requirements. This review will form part of the Department’s routine work to ensure that continuous at-sea deterrence can be sustained now and in the future.
The review confirms that the Vulcan Naval Reactor Test Establishment will not be required to support reactor core prototyping activity beyond 2015, as set out to Parliament on 2 November 2011, Official Record, column 37WS. It is anticipated that defueling and fuel management activities will continue at the site until 2022. The Vulcan defuel and decommissioning project is assessing detailed options which range from placing the prototype facilities into care and maintenance— while retaining the site’s strategic capabilities—to decommissioning the site and returning it to Nuclear Decommissioning Authority. Initial decisions on the future of the site are expected around 2016.
[HCWS482]
Voluntary and Community Sector National Prospectus Grants
(9 years ago)
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The Parliamentary Under-Secretary of State for Education (Mr Sam Gyimah)
I am pleased to announce, together with my colleague, the Under-Secretary of State for Education, the hon. Member for Crewe and Nantwich (Mr Timpson), the Minister responsible for children and families, that today we are publishing the results of the National Prospectus grants competition to fund voluntary organisations working with children and their families.
After a highly competitive application process we have chosen 94 projects that I believe will have a significant impact on children’s lives. This represents an investment of almost £25 million in 2015-16 across seven key priority areas. The money will be spread between organisations specialising in adoption, children in care, early education and child care, family advice and support, mental health, safeguarding and special educational needs and disabilities. The grants are additional to existing Government funding that supports these areas.
For the first time we identified mental health as a theme in the National Prospectus. I am very pleased to say that we received a number of high-quality bids under this theme, and will be funding 17 projects worth almost £5 million in total.
These projects will help children and young people, from the early years through to those making the transition to adulthood. We are also continuing to provide funding to the Young Minds helpline for parents worried about the emotional problems, behaviour or mental health of their children. Support will be given in a number of different ways including face-to-face, peer support, by telephone, online and through apps. They will also help specific groups of children who face particular issues: those who have suffered brain injury; homeless young people; bereaved children; and lesbian, gay, bisexual and transgender young people.
Many of these projects will make vital links to schools. To support this, we are today also issuing two pieces of guidance which will help schools to make themselves places where mental health issues can be learned about and discussed openly and safely, and where effective early support is given for mental health issues through high-quality counselling.
We have funded the Personal, Social and Health Education (PSHE) Association to produce guidance that will help schools provide age-appropriate teaching on mental health problems from anxiety and depression to eating disorders and self-harm. This will be supplemented by specific lesson plans over the coming months so that schools can use them to plan for teaching from September.
We are also providing a new blue-print for schools on counselling services––developed in conjunction with experts in the field––which provides head teachers with practical advice on how to secure high-quality school based counselling services that meet the needs of those it intends to support.
A list of all the organisations receiving funding through the National Prospectus grants are available online at: http://www.parliament.uk/writtenstatements.
[HCWS479]
Agriculture and Fisheries Council
(9 years ago)
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The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (George Eustice)
I represented the UK at the EU Agriculture and Fisheries Council on 16 March in Brussels. Rebecca Evans AM and Richard Lochhead MSP were also present.
There were only agriculture items on the agenda.
Organic production and labelling of organic products
The Council held an orientation debate on the proposal for a regulation on organic production and labelling of organic products. Most member states agreed that good progress had been made. Austria and the Netherlands, however, repeated their calls for the proposal to be withdrawn, arguing that it would hinder rather than support development of the organic sector. I, along with a number of other member states, argued for the removal of the requirement for annual physical inspections in favour of a risk-based approach. I also stressed that the Commission’s proposal to move to an import regime based on compliance with EU rules should not impact negatively on developing countries and that a significant transition period should be included. The presidency confirmed work on the proposal would continue with the aim of reaching a Council position in May.
Milk Sector: market situation, trends and EU measures
The Council discussed the milk sector focusing on the market situation, trends and EU measures. Poland stressed that its producers were finding the current market situation tough and France and Spain repeated their request for the Commission to consider stronger crisis management tools. I stressed that further work was needed to identify and develop new markets and urged the Commission to come forward with its feasibility study on dairy country of origin labelling as soon as possible. Commissioner Hogan acknowledged the difficulties in some parts of the sector but expressed optimism about global demand in the future. He also said he would consider suggestions for broadening the scope of the Milk Market Observatory.
CAP implementation and simplification
Commissioner Hogan opened the session on CAP by announcing that he would consider extending the 15 May deadline by when farmers had to submit their scheme applications given the administrative demands of the new regime. I supported Italy and other member states in calling for that extension and I stressed that it should be a minimum of a month. The Commissioner also confirmed that his services were examining all of the ideas submitted by member states in response to his simplification exercise. Ministers then proceeded to highlight a wide range of priorities for change, including the new greening requirements. I called for more realistic greening mapping and control regimes and argued that member states’ own interpretations and implementation should be respected. The presidency confirmed that they would seek to agree Council conclusions on CAP simplification at the May Council.
International agricultural trade issues
The Commission provided an update on EU agricultural imports and exports and the progress of a range of bilateral and multilateral trade negotiations during a Minister-only lunch session. I agreed with those member states who stressed that the EU’s high production standards and system of geographical indications should not be undermined. However, I underlined that global trade could boost economic growth across Europe and that significant opportunities were available to the EU, in particular in negotiations with the US and Japan.
AOB: Angora wool and fur from maltreated rabbits and furred animals
The Netherlands highlighted the issue, mainly in China, of plucking live angora rabbits for wool and furred animals being maltreated. I shared their concern and stated that UK officials would approach our textile and clothing industry to better understand their position. The Commission noted that the World Trade Organisation rules currently prevent the EU from imposing its animal welfare standards on third countries and agreed that a business to business approach would be best.
AOB: Xylella fastidiosa in southern Italy and risk of further spread in the EU
Commissioner Andriukaitis underlined the seriousness of the threat of the Xylella fastidiosa bacteria not only for olive trees but also potentially to the wider agriculture sector. Italy explained what measures had been taken and that the eradication of host plants was now under way. I supported the need for stronger EU emergency measures as well as updating the plant health directive, to provide better protection against all strains, from all countries and on all host plants.
[HCWS476]
Red Tape Challenge
(9 years ago)
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The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (George Eustice)
As part of the Government’s red tape challenge initiative, DEFRA will complete this Parliament an ambitious programme of reform to improve and simplify its regulation. These reforms will reduce regulatory costs to business by around £300 million per year, thus helping to promote growth, while maintaining our high standards of environmental, animal and plant health protection.
In total, 650 legislative reforms will have been made which will reduce the number of regulations in force by more than 20% compared to May 2010. I am today placing a full list of these legislative reforms in the Libraries of both Houses.
Reforming the amount of guidance that accumulated over many years has also been an important priority. In May, DEFRA and its regulator network will have reduced their guidance by more than 70,000 pages, which is a reduction of over 80%. I am placing in the Libraries of both Houses the current impact assessment to support this reform.
All DEFRA’s legislation in force is now accessible to the public via DEFRALex, an online portal on legislation.gov.uk/defralex. This is designed to make legislation more accessible and easier to locate by businesses and the public.
[HCWS477]
Health Services: East of England
(9 years ago)
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The Secretary of State for Health (Mr Jeremy Hunt)
In November 2011, Hinchingbrooke Health Care National Health Service Trust entered into a franchise management contract with Circle Hinchingbrooke Ltd. Circle Hinchingbrooke Ltd has issued a termination notice to the contract, and arrangements have been put in place for the trust to revert to operating independently again with effect from 1 April 2015.
Hinchingbrooke Health Care National Health Service Trust has always remained an NHS trust with all of the buildings and equipment owned by the trust, and all full-time staff apart from some of the executive leadership employed by the NHS. Responsibility for running the trust will return to the NHS as of 1 April. A new board has been appointed to run the trust, led by Alan Burns as the chair.
To ensure minimal disruption to services at the trust, Circle will continue to provide certain procurement services for a limited period to allow for a long-term plan to be put in place.
As for every provider of NHS services, the priority at Hinchingbrooke Health Care NHS Trust will continue to be the provision of safe, high-quality services to patients. To address the concerns raised by the chief inspector of hospitals in the CQC report, the NHS Trust Development Authority has appointed an improvement director as part of the special measures regime now in place at Hinchingbrooke Health Care Trust.
The trust will be supported to ensure a smooth transition to the new arrangements and to ensure continuity of all services provided by the trust, protecting care for patients and providing security for trust staff.
[HCWS484]
Infected Blood
(9 years ago)
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The Secretary of State for Health (Mr Jeremy Hunt)
In January 2011, my predecessor, my right hon. Friend the Member for South Cambridgeshire (Andrew Lansley), recalled with sadness how what happened during the 1970s and 1980s, when thousands of patients contracted hepatitis C and HIV from NHS blood and blood products, is one of the great tragedies of modern health care. I would like to say on behalf of this Government how sorry we are for what happened, and express my sympathy for the pain and grief suffered by many infected people and their families.
Since 1988, the Government have established a number of schemes to provide financial support to people affected by that tragedy. The system has evolved in an ad hoc and incremental manner, now comprising five infection-focused schemes that operate according to their own individual criteria. In January 2011, this Government acknowledged the system then had shortcomings and introduced a number of improvements. Despite these improvements, there have been continued criticisms of the system, as reflected in the reports produced earlier this year by my right hon. Friend the Member for North East Bedfordshire (Alistair Burt) and by the all-party parliamentary group (APPG) for haemophilia and contaminated blood, and described by hon. Friends and Members across the House during the Backbench Business Committee debate held on 15 January 2015.
From listening to a range of views on the current system, it is apparent that there might be some people who are experiencing significant ill health which may result from their infection(s) who feel they are not well supported by the existing system. However, it is important to recognise there are elements of the current system which do find favour among the beneficiary community. The challenge for any future Government will be to identify the most appropriate way of targeting financial assistance, while ensuring that any system can be responsive to medical advances and is sustainable for Government in financial terms.
I thank both my right hon. Friend the Member for North East Bedfordshire (Alistair Burt) and the APPG for their reports, both of which we are considering carefully. It is with frustration and sincere regret that our considerations on the design of a future system have been subject to postponement while we awaited publication of Lord Penrose’s final report of his inquiry in Scotland. We had hoped to consult during this Parliament on reforming the ex-gratia financial assistance schemes, considering, among other options, a system based on some form of individual assessment. However, I felt that it was important to consider fully Lord Penrose’s report before any such consultation. Given its publication today, we clearly are not in a position to launch a consultation, on one of the last sitting days of this Parliament.
However, Lord Penrose’s report has now been published. It can be found on the inquiry website at: http://www.penroseinquiry.org.uk. While it will be for the next Government to consider all of Lord Penrose’s findings, I would hope and fully expect proposals for improving the current complex payment system to be brought forward, with other UK health departments.
In the meantime I am pleased to announce that I will be allocating up to an additional one-off £25 million from the Department of Health’s 2015-16 budget allocation to support any transitional arrangements to a different payment system that might be necessary in responding fully to Lord Penrose’s recommendations. We intend this to provide assurances to those affected by these tragic events that we have heard their concerns and are making provision to reform the system.
Finally I can formally announce that, in line with our consistent policy of openness, we are now preparing for transfer to the National Archive remaining Department of Health documents relating to blood safety for the period from 1986 to 1995. These documents, which will be open for public scrutiny, will be followed by subsequent tranches of documents covering later years.
While I recognise that this statement does not immediately fulfil the desires of all who campaign on this matter, I hope that it signposts this Government’s positive direction on these matters.
[HCWS480]
IPSA: Estimate 2015-16
Mr Charles Walker
(Representing the Speaker’s Committee for the IPSA): The Speaker’s Committee for the IPSA is established under the Parliamentary Standards Act 2009. Under statute it must review IPSA’s estimate before it is laid before the House and decide whether it is satisfied that the estimate is consistent with the efficient and cost-effective discharge by the IPSA of its functions.
The Committee has approved IPSA’s draft estimate for 2015-16 without modification, in line with the advice provided to it under statute by HM Treasury.
[HCWS478]
Relationship Support
(9 years ago)
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The Minister for Pensions (Steve Webb)
We will be extending seven contracts with organisations delivering relationship support provision and related services. These services include preventive support for couples during key transition points in their relationships; targeted support for parents with complex needs; work to promote healthy relationships and encourage the take-up of support services; help for couples experiencing difficulties; training for health visitors to recognise and respond to the signs of relationship distress; training for relationship support specialists; and policy development work.
In addition, we will be launching a pilot to test the inclusion of relationship education in perinatal classes in eight areas of the country. The objectives of this pilot are to test the effectiveness of this approach in:
preparing couples for the impact having a baby will have on their relationship;
normalising the fact that relationship changes in this period are common; and
providing strategies on how to manage any differences/conflict.
These contracts will be worth just over £7.2 million with further funding earmarked to help local authorities develop strategies to help improve the quality of family relationships. This will bring total funding for 2015-16 to just under £8 million.
In addition, we will also be offering a six month extension to all of the 16 Help and Support for Separated Families Innovation Fund projects, which focus on helping parents going through separation to resolve conflict and work together in the interests of their children. The extending projects will share in a total of £2.5 million which will enable further work with families and the opportunity to gather more data to evaluate the success of these projects.
[HCWS474]
House of Lords
Devolution: England
Baroness Janke
To ask Her Majesty’s Government what progress has been made on devolution of services and powers in England; and what work has been done to provide a basis for a future Government to advance that agenda.
Baroness Williams of Trafford (Con)
My Lords, the Government are committed to devolving greater spending powers. We have created local enterprise partnerships giving power to local councils and businesses, agreed city deals with 27 cities and invested £7 billion in local areas through growth deals. Devolution deals have been agreed with Manchester and Sheffield and, looking ahead, the Government are open to discussing proposals with any area which would welcome increased powers and greater freedoms to maximise their economic growth.
Baroness Janke (LD)
I thank the Minister for her Answer and very much welcome these developments. However, given that the current arrangements that the Government have made fall short of fiscal devolution, is she aware that an additional £8 million could be added to national income if financial and other powers were devolved? Does she consider that a key priority of the new Government should be to move forward on fiscal devolution?
Baroness Williams of Trafford
My Lords, it will be for a future Government to decide whether they want to move forward with fiscal devolution. However, as regards business rates retention, £11 billion has been retained in local areas.
Lord Morgan (Lab)
My Lords, has not one of the problems with our arrangements been that our constitutional changes have been very piecemeal and haphazard? Should not the excellent suggestions of the noble Baroness be considered side by side with proposals for further devolution, fiscal and otherwise, for Scotland and Wales, preferably in a constitutional convention, as has been so wisely proposed by the leader of the Labour Party?
Baroness Williams of Trafford
My Lords, we have had a Silk commission, a McKay commission and a Calman commission. We are not currently contemplating a further convention. There is no particular demand for it—
Baroness Williams of Trafford
From the public, my Lords. We are moving to a more decentralised system within England through city deals and devolution deals. The devolution deals are confined not just to cities.
Baroness O'Neill of Bengarve (CB)
My Lords, is the noble Baroness aware that by doing separate bits of devolution for the separate devolved nations we do not make progress towards retaining the United Kingdom, we risk its dissolution?
Baroness Williams of Trafford
My Lords, this Question is around devolution in England rather than devolution to England and is confined purely to the local government aspect.
Lord Forsyth of Drumlean (Con)
Does my noble friend agree that, before embarking on further devolution in England/to England, it would be a good idea to have a system of fair funding throughout the United Kingdom, and to deal with Barnett and have funding based on need?
Baroness Williams of Trafford
My Lords, that is what this Government are working towards in terms of fair funding across the country and ensuring growth in those regions that have not previously had as much growth as we would wish.
Lord McKenzie of Luton (Lab)
My Lords, the Minister talks about empowering northern cities in particular and devolving responsibilities, but is it not the case that the Government have consistently hit areas such as Liverpool and Manchester, some of the most deprived parts of the country, with the largest cuts in funding? What is empowering about taking with one hand and giving back far less with the other?
Baroness Williams of Trafford
My Lords, after talking to local government leaders in both Liverpool and Manchester I know they are very pleased with what this Government have given them. If we just look back over the last 30 years we see that it was a Conservative Minister in the form of the then Michael Heseltine who did so much work in Liverpool. It was a Conservative Minister in the form of the then Michael Heseltine who led the regeneration of Hulme, who brought the Metrolink to Manchester and, indeed, who started the regeneration of Manchester after the bomb. I do not accept the noble Lord’s point.
Lord Tebbit (Con)
My Lords, I am extremely grateful to my noble friend for having drawn a distinction between decentralisation and devolution. Devolution we do not need—for who needs another layer of government, another load of paid politicians and another load of hangers-on, all swinging on the taxpayers’ wallets?
Baroness Williams of Trafford
My noble friend, as always, hits the nail on the head. I could not have put it more articulately.
Lord Elis-Thomas (PC)
My Lords, during my time spent in both Houses of Parliament campaigning for devolution in Wales, I always thought that devolution for England—especially the north of England, which I dearly love, being my nearest region—was part of the project. Therefore, has not the time come for all us devolutionists within this kingdom to recognise that without the liberation of England, there is no future for the United Kingdom?
Baroness Williams of Trafford
My Lords, as my noble friend Lord Tebbit said, this is about decentralisation rather than devolution to England. I would just reiterate my previous point.
Lord Richard (Lab)
My Lords, I thought I detected something in what the Minister said a little earlier. Can she assure the House that she meant it when she said that the Government were working towards the abolition of the Barnett formula and its replacement by one based on need? That is what she said. Did she mean it?
Baroness Williams of Trafford
My Lords, in terms of devolution in England—decentralisation in England—as local authorities and groups of local authorities take on their share of public funding, Barnett will actually change in terms of its distribution.
Lord Shutt of Greetland (LD)
My Lords, the noble Baroness has referred to various partnerships and deals. Is there not a gap, in terms of direct democracy, in dealing with that which is supposedly devolved in these areas?
Baroness Williams of Trafford
My Lords, in terms of the first devolution deal, which is in Greater Manchester, the arrangements and relationships between the local authorities have been well established for over three decades. In terms of local engagement, the election of a mayor as the person accountable to government will add clarity to it.
Baroness Farrington of Ribbleton (Lab)
My Lords, the noble Baroness has not explained fully her remark about the Barnett formula. The Barnett formula allocates public funds between the countries of the United Kingdom. The noble Baroness seemed to imply that allocation between different areas of this country would be revisited. Also, would she take it from me that those who welcome the decentralisation moves do not number among those who are happy with the Government’s formula for allocating resources? Speaking from the north-west, we need an answer.
Baroness Williams of Trafford
My Lords, this is a Question about England and the point I was making was that Barnett will become less relevant in the future.
Defence Review
(9 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Empey
To ask Her Majesty’s Government whether, in the light of the current security situation in Europe, they will bring forward the commencement date for the next defence review.
Lord Wallace of Saltaire (LD)
My Lords, the exact timing of the post-election strategic defence and security review is for the incoming Government to decide, but preparatory work is under way across Whitehall. Noble Lords will be aware of the latest edition of Global Strategic Trends, published by the Ministry of Defence. This and other papers feed into the confidential national security risk assessment, which will in turn inform the next national security strategy and the subsequent strategic defence and security review.
Lord Empey (UUP)
My Lords, the Minister will be aware of the widespread concern, both inside and outside Parliament, that, with the lack of defence capability, we face widespread political and security turbulence, not only in eastern Europe, but in other areas, such as the Middle East. I appeal for this process to be truncated. This is a matter of urgency because of the clear gaps in our capability. We cannot hide them or sweep them under the carpet: they are there. This review is the mechanism that can start the process of filling the gaps. I appeal to the Minister to ensure that his right honourable friends in the other place understand that that is the feeling I believe to be widespread throughout the United Kingdom and that this needs to be brought forward as a matter of urgency.
Lord Wallace of Saltaire
My Lords, I disagree with the noble Lord in a number of ways. It is important not to rush too far and too fast into this. The question of what forces we want for what ends remains relatively open. The noble Lord’s Question referred to the situation in Europe as the reason why we had to rush. The last time we were in a direct conflict with Russia we bombarded Helsinki and laid siege to Sevastopol. I do not think that is what we want to do this time.
Lord West of Spithead (Lab)
My Lords, the Minister will be aware that RUSI has calculated that next year, 2015-16, we will spend 1.88% of our GDP on defence. I also have from the House of Commons Library its post-Budget calculations, which show that we will be spending 1.5% of our GDP on defence by 2019. Does the Minister not think it a disgrace that, having lectured the whole of Europe about coming up to 2%, we are planning and working on a basis of not hitting 2% in future?
Lord Wallace of Saltaire
My Lords, we will hit 2% this year. My understanding is that, on current trends, we will hit 2% next year. What happens after that is a question for the SDSR and for the next comprehensive spending review, which the new Government will take through. I am sure that the question of the need for more frigates will be high on the agenda for any SDSR.
The Lord Privy Seal (Baroness Stowell of Beeston) (Con)
My Lords, as the noble Lords are not giving way to each other and the House was calling for my noble friend Lord Spicer, we will start with him.
Lord Spicer
My Lords, why are we so hooked on 2%? Surely we may want to spend more.
Lord Wallace of Saltaire
My Lords, I am sure that some will want to spend more but, as all noble Lords are aware, the number of calls on public expenditure is large and the amount of revenue available is relatively limited.
Lord Rosser (Lab)
The previous Government produced a Green Paper in early 2010 to promote discussion on future defence strategy and inform the work on a strategic defence review after the 2010 general election. Why have this Government not sought, in the same or a similar transparent way, to engage the public in general, and relevant stakeholders in particular, on the options and considerations to be taken into account in the strategic defence and security review, which is now scheduled to be finalised in just nine months’ time?
Lord Wallace of Saltaire
My Lords, as the noble Lord knows, there has been a great deal of discussion on preparations for the next SDSR. He will have seen the new House of Commons Defence Committee report. The Government have responded to various reports from the Joint Committee on the National Security Strategy, and there have been a number of conversations between officials, Ministers and various think tanks around London. I have certainly taken part in those and I think that the noble Lord has as well.
Lord Palmer of Childs Hill
My Lords, the report suggests that the departing part-time chairman of BAE Systems was paid £211,000, plus £5,000 for a chauffeur, for three and a half months after he ceased his board duties. Can the Minister confirm that the defence review will ensure that these obscene costs are not recharged to the taxpayer?
Lord Wallace of Saltaire
My Lords, I was not aware of the issue that the noble Lord has just raised. The next security and defence review will certainly look at how to squeeze the most out of the defence procurement process.
Lord Lexden (Con)
Returning to current spending, will the £25 million allocated in the Budget to military veterans be extended to former service men and women in Northern Ireland?
Lord Wallace of Saltaire
My Lords, I am assured that it will be extended to Northern Ireland and that the MoD is quite clear that this is a UK scheme and not just a Great Britain scheme.
Community Life
Lord Phillips of Sudbury
To ask Her Majesty’s Government whether they will establish a Royal Commission to investigate threats to community life in the United Kingdom and their effects; and to recommend counter-measures.
Baroness Williams of Trafford (Con)
My Lords, community life is alive and well. Strong communities are shaping their own destinies across England and we are supporting people in their efforts. The Government have given power to communities and they are seizing the opportunities offered. Fourteen hundred communities are shaping development in their area through neighbourhood planning, over 130,000 young people have delivered community projects through the National Citizen Service, and 800 multifaith Near Neighbours volunteering projects are happening across the country.
Lord Phillips of Sudbury (LD)
My Lords, I thank the Minister for her reply, but if I may say so the Answer was extremely complacent. Most of the indicia of a vibrant society and community life are giving rather the opposite impression. I think of things such as loneliness, a lack of civic engagement and an increasing individualisation of life. Therefore, are we not overdue in looking at admittedly elusive and complex issues in a national and interdisciplinary way before the trends that seem obvious to many of us engulf us?
Baroness Williams of Trafford
My Lords, my noble friend has a point about social capital, which has been in decline since the war, but this Government have been successful in many of their efforts to encourage people to engage in community life and indeed to combat the loneliness that afflicts so many people, particularly our elderly.
On planning and engaging with local government, communities are now far more involved in the destiny of neighbourhood planning. One hundred and thirty thousand young people are delivering community projects through the National Citizen Service, and this has resulted in 3 million volunteering hours. The Centre for Social Action has invested £40 million and has leveraged £27 million into 215 social action projects.
Lord McKenzie of Luton (Lab)
My Lords, I should like to ask about neighbourhood planning, but before I do that perhaps I may take the opportunity, on behalf of the Labour group, to pay tribute to the noble Lord, Lord Phillips of Sudbury, for his substantial input into our deliberations over a number of years. We wish him a long and happy retirement, doubtless in the company of some of his friends from the other end.
The noble Baroness referred to the new neighbourhood planning regime brought in by the Localism Act 2011. As regards the coverage of those neighbourhood plans, it is understood that three-quarters of them are concentrated in the south of England and only a third in urban areas. Little has been done to widen the remit of the plans and to encourage uptake in disadvantaged communities. What more do the Government propose to do to help disadvantaged communities to have their opportunities in this regard?
Baroness Williams of Trafford
My Lords, 1,400 communities have been involved in neighbourhood planning, but I am afraid that I will have to get back to the noble Lord on where those communities lie. There is no doubt that for community cohesion, when neighbourhoods are involved in their own destiny, for example in planning, it leads to happier communities.
The Lord Bishop of Peterborough
My Lords, community life struggles and suffers very much in rural areas as well as in urban areas. While welcoming the promise of a 95% rollout of superfast broadband, does the Minister appreciate that the other 5% represents more than 3 million people who are almost all in rural areas and will not have access to superfast broadband or, all too often, to post offices, gas supplies, public transport, local schools and so on? Is this not the time to have a royal commission?
Baroness Williams of Trafford
My Lords, the right reverend Prelate is correct when he says that some of the infrastructure in rural communities, such as shops, schools, and post offices in particular, is their lifeblood. I commend the rural communities in, for example, Cumbria that have done their own social action project to make sure that broadband gets to their communities. The right reverend Prelate is right that the remaining 5% of the population do not have superfast broadband, but the Government are working on that.
Baroness Afshar (CB)
My Lords, is it not right that we should move on from cohesion to the celebration of differences? The only way for many communities to feel included and not otherwise is if their different approaches are recognised, respected and accepted, rather than always trying to make a single society.
Baroness Williams of Trafford
The noble Baroness makes a very good point. As communities we should celebrate what unites us and not what divides us. We should celebrate our differences as well as our similarities. I thank her for bringing that point forward. The Government have launched a number of projects that help to celebrate the fact that we are one community and are not separated by faith and other things. I saw an example of the Near Neighbours project in Rochdale, which is a very good example of the Church of England working with the neighbouring mosque. People, particularly the elderly, in those communities feel altogether safer and that they are in a better neighbourhood.
Baroness Pitkeathley (Lab)
My Lords, I wonder whether other noble Lords find it as surprising as I do that the noble Baroness in her answers has not mentioned the big society, which was launched with such fanfare at the beginning of this Government and which promised to make the sort of contribution to community life that is contained in this Question.
Baroness Williams of Trafford
My Lords, the big society is alive and well and living in a community near you. It is now so integrated that perhaps I forgot to mention it. Since 2010, volunteering has increased hugely from 66% in our communities to 74%. Particular mention should be made of the legacy of the Olympics, which generated 100,000 volunteers. Their talents and help are being harnessed in the Join In project.
I, too, pay tribute to my noble friend Lord Phillips of Sudbury. I had not realised that it would be the last time he would be on his feet here.
Lord Cormack
My Lords, no Conservative has yet taken part in these exchanges. I echo the thanks to the noble Lord, Lord Phillips of Sudbury. Would it not help community cohesion if we enabled all our young people to go through a proper citizenship ceremony—I have advocated this many times before—where they acknowledge their rights and responsibilities as part of a united community, however disparate their faiths and other beliefs may be?
Baroness Williams of Trafford
My Lords, I pay tribute to our young people. I sometimes think that they get a very bad press. I certainly speak for my children’s friends’ generation when I say that they have a far better sense of community spirit and social action than, say, I ever had.
Israel: Elections
(9 years ago)
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Baroness Prosser
To ask Her Majesty’s Government what changes they plan to make to their policy in respect of the Middle East following the recent election result in Israel.
The Minister of State, Foreign and Commonwealth Office (Baroness Anelay of St Johns) (Con)
My Lords, the UK’s policy in the Middle East remains clear following the recent election in Israel. We look forward to good relations with the new Israeli Government, when formed, and to working closely together to address the vitally important task of building peace and stability between Israel and the Palestinians and the wider Middle East. Making progress towards the two-state solution remains a foreign policy priority for the United Kingdom.
Baroness Prosser (Lab)
I thank the Minister for that reply, but could she tell the House whether or not the Government will be developing a strategy to build a broad alliance of allies committed to persuading the Israeli Government that it is in their interests and the interests of the Israeli people to take more seriously the need for a two-state solution? Can she further tell us whether the Government propose to ensure that Mr Netanyahu takes that commitment more seriously?
Baroness Anelay of St Johns
My Lords, I welcome the narrative that the noble Baroness has set out. We are in close consultation with international partners, including the US, EU and Arab states, on how we should encourage both parties to make progress towards peace. The UK has already led EU efforts to set out a package of unprecedented support that Europe would offer both parties in the event of a final status agreement. That offer is still on the table. Through the Arab peace initiative, Arab states have offered Israel the normalisation of relations in the event of a comprehensive peace agreement. That signals the benefits that peace would bring to the entire region. It is important that both Netanyahu and the Palestinians understand the serious proposals on offer and take them up.
Baroness Falkner of Margravine (LD)
My Lords, does my noble friend accept that now may be the time to bring the United Nations back in? What discussions have the Government had with other EU Governments about a framework resolution on a peace settlement through the UN Security Council now that the United States is recalibrating its position?
Baroness Anelay of St Johns
My Lords, I am sure these matters will continue to be discussed within the United Nations. In particular, of course, we are still awaiting the opportunity to see what the commission of inquiry into Israel produces in its report. We are disappointed that Israel did not allow the commission access to specific places. As to EU co-operation, currently discussions are going ahead in the EU about what further sanctions might be required if progress on the peace initiative is not made.
Lord Leigh of Hurley (Con)
My Lords, on the subject of UN involvement in the Middle East, does my noble friend share the concerns expressed by the UN political affairs chief, Jeffrey Feltman? He has cited evidence of Hamas testing missiles and attempting to smuggle in materials that could be used for missile production. Does she share my concerns that Hamas might be preparing for another conflict against civilians?
Baroness Anelay of St Johns
My Lords, we have assessed that Hamas is seeking to rebuild infrastructure, including the tunnel network in Gaza, and we are indeed deeply concerned about the reports to which my noble friend has referred of militant groups rearming. Hamas faces a fundamental decision about whether it is prepared to accept the quartet principles and join in with the efforts for peace or whether it will continue to use violence and terror, with all the terrible consequences for the people of Gaza. Hamas needs to make that choice.
Lord Clarke of Hampstead (Lab)
My Lords, the election results in Israel show a clear concern for internal security and for the surrounding borders. Does the Minister agree that any future discussions about policy should take into account the developing nuclear programme in Iran, which poses a constant threat to the peace of the whole region? I hope that we will continue the work to stop Iran producing a nuclear bomb.
Baroness Anelay of St Johns
My Lords, discussions are currently under way with Iran about producing a political framework to resolve the issue of the potential development of its nuclear capability. As I say, those negotiations are currently under way and I would not wish to compromise them, but clearly a huge amount of effort has been put into them. We are of course aware of the implications for the whole region of getting that settlement right. We need a good deal and the right deal, and all our efforts are bent towards that. It is important not only for Israel and Palestine; it is important for the whole region and for us.
Lord Ashdown of Norton-sub-Hamdon (LD)
My Lords, there are of course many impediments to peace in the Middle East, but is not the greatest of these Israel’s flagrantly illegal occupation of Palestinian territory?
Baroness Anelay of St Johns
My Lords, I assume that my noble friend is referring to the way in which Israel has extended settlements against the original agreements rather than simply where Israel has its own territory as such under international law. Our position on settlements is clear. They are illegal under international law, they present an obstacle to peace and they take us further away from a two-state solution. We strongly urge the Government of Israel to reverse their policy on illegal settlements.
Lord Bach (Lab)
My Lords, the House will be pleased to hear that Her Majesty’s Government’s support for a two-state solution remains strong, and I should say that Her Majesty’s Opposition continue to support a two-state solution as the best way to end this tragic impasse. My question is this: will Her Majesty’s Government make it clear in the strongest possible terms to the new Israeli Government, when formed, that any move away from this principle will leave Israel more isolated from the international community and will make it more difficult for its friends around the world?
Baroness Anelay of St Johns
My Lords, I welcome the support of the Opposition which the noble Lord, Lord Bach, has just evinced, and I agree with every single word of his analysis.
Business of the House
(9 years ago)
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Baroness Stowell of Beeston
That, in the event of the Finance (No. 2) Bill being brought from the Commons, Standing Order 46 (No two stages of a Bill to be taken on one day) be dispensed with on Thursday 26 March to allow the Bill to be taken through its remaining stages that day.
Care Act 2014 and Children and Families Act 2014 (Consequential Amendments) Order 2015
(9 years ago)
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Earl Howe
That the draft order and regulations laid before the House on 5, 11 and 25 February be approved.
Relevant documents: 24th and 25th Reports from the Joint Committee on Statutory Instruments (Special attention drawn to an instrument). Considered in Grand Committee on 19 March.
Greater Manchester Combined Authority (Amendment) Order 2015
Baroness Williams of Trafford
That the draft orders laid before the House on 11 December 2014, 25 and 27 February and 4 March be approved.
Relevant documents: 25th and 26th Reports from the Joint Committee on Statutory Instruments (Special attention drawn to an instrument), 29th and 30th Reports from the Secondary Legislation Scrutiny Committee, 15th Report from the Delegated Powers and Regulatory Reform Committee. Considered in Grand Committee on 23 March.
Insolvency (Protection of Essential Supplies) Order 2015
Baroness Neville-Rolfe
That the draft order and regulations laid before the House on 9 and 23 February be approved.
Relevant documents: 23rd and 24th Reports from the Joint Committee on Statutory Instruments. Considered in Grand Committee on 23 March.
Local Government (Religious etc. Observances) Bill
Lord Avebury (LD)
My Lords, I take this opportunity to raise a couple of points which I took up with my noble friend Lord Cormack in Committee and to which I have not received the promised answers. Without going into all the questions that I put to him, the first was whether or not he had taken legal advice on the compatibility of the proposals in the Bill with the public sector equality duty. The answer to that is either yes or no. I also asked him, if he had taken legal advice on it, whether he would place a copy in the Library of the House.
The second question I put to him, which is equally important, was whether or not Section 111(1) of the Local Government Act already gave local authorities most of the powers that were purported to be given in new Section 138B, which is to be added to the statute book by the Bill. We always say that legislation should not duplicate Acts that are already on the statute book, and I asked my noble friend to say whether he checked this point. I would be most grateful if he could give me replies to both those questions.
Baroness Turner of Camden (Lab)
My Lords, I was not able to be present at the previous discussions on this Bill but I support what the noble Lord has just said. A number of us who are secularists feel that our views have been somewhat bypassed. It is one thing to have prayers, but it is quite another thing to have prayers as part of an actual meeting. If I had been present when the earlier part of the Bill was discussed, I certainly would have made that point quite strongly. A number of us do not have any particular religious views and are secularist in outlook and so on. A situation in which prayers are regarded as part of a meeting is quite different from having something additional to it, in line with what people may wish to have. I very much regret that I missed the opportunity to make this kind of statement earlier in the discussion of the Bill.
Lord Cormack (Con)
My Lords, if I may gently say so, the noble Baroness had two opportunities: first, on Second Reading, and secondly in a fairly extensive Committee stage, where critical amendments were moved by the noble Earl, Lord Clancarty, and by my noble friend Lord Avebury. Both graciously withdrew their amendments, but there was significant debate and the points the noble Baroness has made were discussed.
I will come to my noble friend in a moment, but in response to the noble Baroness, all I would say is that this is the most gentle and permissive of Bills. Her noble friend Lady Massey of Darwen allowed me to quote her in Committee when she said that, as a convinced humanist, she felt that there was no danger or threat in the Bill to anyone. It gives to local authorities and to other elected authorities the opportunity—if they wish—to decide, by a majority, to begin their meetings with prayers or silent contemplation. There is absolutely no compulsion on them to do it, nor is there any obligation that the prayers should be of a particular or specific faith or as to whether the reflections should be religious or secular. I honestly think that these points are met in this very permissive Bill.
In answer to my noble friend Lord Avebury, I would just say, first, that I am sorry if this did not reach him before. The Government took advice. The Bill was backed not only by the Government but by the Official Opposition, in the person of the noble Lord, Lord Kennedy, who spoke from the Dispatch Box twice in Committee and once on Second Reading. Advice was taken, consistent with the Bill, which judged that the Bill was in no way in conflict with the declaration of human rights.
In answer to my noble friend’s second question, which I did seek to answer earlier—clearly, without persuading him—following the High Court ruling in 2012 there was a degree of ambiguity. The right honourable Eric Pickles, the Secretary of State, invoked the appropriate provisions of the Localism Act to give freedom, which they had thought that they had, to larger parish councils and other elected local authorities. But other authorities were not covered—the majority of parish councils, single-purpose authorities, et cetera—so it was thought appropriate to introduce a Bill that would put beyond any doubt the freedom, if they so choose, to begin their meetings and to participate in such annual services as the act of remembrance.
I would be in conflict with the rules of your Lordships’ House if I sought to make a longer speech. I would just like to thank Mr Jake Berry, who took this Bill through another place with great skill; my noble friend Lord Ahmad of Wimbledon, who spoke very persuasively and movingly from the Front Bench; and the noble Lord, Lord Kennedy, and others who have taken part in these debates.
Health and Social Care (Safety and Quality) Bill
Health Service Commissioner for England (Complaint Handling) Bill
Modern Slavery Bill
(9 years ago)
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17:18 - Division on Motion A1 - Ayes: 196 / Noes: 285 - Motion A1 disagreed.
Lord Bates
That this House do not insist on its Amendment 72 and do agree with the Commons in their Amendments 72A, 72B and 72C in lieu.
“Protection from slavery for overseas domestic workers
All overseas domestic workers in the United Kingdom, including those working for staff of diplomatic missions, shall be entitled to—
(a) change their employer (but not work sector) while in the United Kingdom;
(b) renew their domestic worker or diplomatic domestic worker visa, each such renewal being for a period not exceeding twelve months, as long as they remain in employment and are able to support themselves without recourse to public funds;
(c) a three month temporary visa permitting them to live in the United Kingdom for the purposes of seeking alternative employment as an overseas domestic worker where there is evidence that the worker has been a victim of modern slavery.”
Commons disagreement and amendments in lieu
The Commons disagree to Lords Amendment 72 and propose Amendments 72A, 72B and 72C in lieu.
“Overseas domestic workers
(1) Immigration rules must make provision for leave to remain in the United Kingdom to be granted to an overseas domestic worker—
(a) who has been determined to be a victim of slavery or human trafficking, and
(b) in relation to whom such other requirements are met as may be provided for by the rules.
(2) Immigration rules must make provision as to the conditions on which such leave is to be granted, and must in particular provide—
(a) that the leave is to be for the purpose of working as a domestic worker in a private household;
(b) for a person who has such leave to be able to change employer (subject to paragraph (a)).
(3) Immigration rules may specify a maximum period for which a person may have leave to remain in the United Kingdom by virtue of subsection (1). If they do so, the specified maximum period must not be less than 6 months.
(4) For the purposes of this section an overseas domestic worker has been determined to be a victim of slavery or human trafficking if a public authority has determined that he or she is such a victim—
(a) under regulations made under section (Regulations about identifying and supporting victims)(2)(b), or
(b) where no such regulations apply, under arrangements identified in the immigration rules.
(5) The Secretary of State must issue guidance to persons having functions under the Immigration Acts about the exercise of those functions in relation to an overseas domestic worker who may be a victim of slavery or human trafficking.
(6) The guidance must provide for a period during which no enforcement action should be taken against such an overseas domestic worker in respect of his or her—
(a) remaining in the United Kingdom beyond the time limited by his or her leave to enter or remain, or
(b) breaching a condition of that leave relating to his or her employment, if he or she did so because of the matters relied on as slavery or human trafficking.
(7) In this section—
“immigration rules” has the same meaning as in the Immigration Act 1971;
“enforcement action” has the meaning given by section 24A of that Act;
“overseas domestic worker” means a person who, under the immigration rules, has (or last had) leave to enter or remain in the United Kingdom as—
(a) a domestic worker in a private household, or
(b) a private servant in a diplomatic household.”
The Parliamentary Under-Secretary of State, Home Office (Lord Bates) (Con)
My Lords, holding overseas domestic workers in modern slavery is totally unacceptable. This Bill will help stop such abuse. The Bill will mean that those who traffic overseas domestic workers or hold them in servitude can receive a life sentence. The Bill will mean that the slavery, servitude and forced or compulsory labour offence will reflect the circumstances of vulnerable victims, and it provides new protections for all victims of modern slavery, such as the statutory defence.
We began this Bill and we probably all feel a bit disappointed that at this stage—almost the 11th hour—we are discussing a key amendment to the Bill. Of course, we share broad agreement on the way in which this has been approached. The Bill was published in draft form. It was then put before a Joint Committee, on which many Members of your Lordships’ House served. The Joint Committee then put forward a series of recommendations and these were broadly accepted by the Government as the Bill moved through the Commons stages, which were—being generous to the other place—more thorough and more detailed than perhaps has been the case with some other legislation. It then arrived in your Lordships’ House.
In its journey through your Lordships’ House, the Bill attracted a further 100 amendments. There have been 262 further amendments to the Bill that we brought forward, including whole new clauses on areas such as the supply chain. We brought all those amendments forward because we recognised here that this is a great shame of modern-day British society and that, in the words of the seminal report by the Centre for Social Justice in March 2013, “it happens here”. In the estimate of the chief scientific adviser at the Home Office, some 12,000 people are held in modern slavery in Britain and we want to do something about it. We want to help the victims and we want to prosecute the perpetrators. One thing that I have appreciated is the way that we have worked on this with a cross-party focus. We have had many all-interested Peers meetings and bilateral meetings, and many exchanges of correspondence. We have worked with NGOs as well.
I say all that as a precursor to coming to the main substance of the amendments, because I think it is important that we put this amendment in that sort of context. I pay tribute to the noble Lord, Lord Hylton, for the work and passion that he has given to the issue, particularly to that of overseas domestic workers. It is recognised that he has a deep passion and concern for these people, which we share and which he champions and we respect. I want to say to him that I hope he can reflect on the process that we embarked on when the Bill first came here and see that we have been increasingly trying to respond to the concerns that he and other Members of your Lordships’ House have raised.
There was concern about the conditions that many people were facing when they came to this country and that they were not even being paid, let alone receiving the minimum wage. Therefore, we introduced the provision that the national minimum wage must be made clear to the individual. Now, the immigration officer who is making a judgment on an overseas domestic worker’s visa application must be satisfied that the employer, in addition to signing a contract to that effect, intends to pay the national minimum wage of £6.50 per hour. We now have a model contract. I know that we exchanged views on that and it has been amended in the light of the views expressed by the noble Lord, Lord Hylton, and others. That model contract is presented to employers to say that those who seek overseas domestic workers must make available to them those minimum employment criteria before they come to the UK and a visa is granted.
Next—I know that my noble friend Lady Hanham felt particularly strongly about this point—it is very important that we make it abundantly clear to employers that once the Bill receives Royal Assent, which we all want it to, the consequences of abusing an employee brought into this country under a visa will be a potential life sentence. This country is very strong in its commitment to that.
We want to make sure that we hear the views of the individual applying for the overseas domestic visa. As a result of the process of this Bill, we are piloting direct video interviews to check that people are aware of their rights. We are piloting at ports of entry a new card that has been introduced giving people details of what their rights are and, most crucially, telephone helpline numbers that they can call should they feel that they are in need. We are improving the national referral mechanism, following the view expressed by Jeremy Oppenheim that received broad support around the House, to say that this is not going to be adjudicated on by United Kingdom Visas and Immigration but by a multidisciplinary panel involving different groups and agencies focused on the welfare of the individual for whom the decision is being made using the national referral mechanism. We propose to improve the care and support for victims within that national referral mechanism on overseas domestic workers to make sure that they get the legal protection, access to health services and shelter that they need, and psychological support where that is needed.
Finally, in the course of the passage of the Bill through your Lordships’ House, when we were discussing the noble Lord’s amendment, we said that we would invite James Ewins, a widely respected barrister, who had worked for the International Justice Mission in the Bangalore office, was a deputy director of the Centre for Social Justice which produced a report, and was a legal adviser to the Joint Committee, to undertake a review of how the overseas domestic worker visa is operating and make recommendations as to how it should be improved, with the clear indication that the Government intend to act on them.
With all those points in place, the House none the less felt insistent—by a slender majority of seven, as I recall, but it is absolutely right that a majority is a majority—we failed to win that argument and the Bill went to the other place. Sometimes when that happens, the Government take the line of saying, “Well, your Lordships have spoken but the other place has also spoken”, and simply send the same message back up for us to consider. Not so here, because we were deeply conscious of the importance of the issue and the sincerity with which the noble Lord and others had spoken to the amendment.
We were aware that there were two issues of principal concern. The first was that often when an overseas domestic worker comes over here on a visa—we know this from the evidence that Kalayaan and other organisations working in the field have given us—their passport is withheld and they are told that if they dare to leave or to try to leave, they will be immediately removed from the country. That fear is imposed on them. In our amendment, we specifically state that under no circumstances will enforcement action be taken against anyone who is fleeing persecution on an overseas domestic worker visa.
The second concern was that people may be denied the opportunity to have a livelihood. We return to that debate time and again and the issue of the ability to switch employers. We have said that where someone who has come enters the national referral mechanism and achieves conclusive grounds under the new multidisciplinary panels, we will introduce a new six-month victim’s visa to enable them to work in the same sector as before.
In the rather long list that I have presented to the noble Lord, I want to communicate that he has moved the Government several steps—if I may say so, many steps—down the road to what he seeks to achieve. I suggest that those final steps may well be adjudged best to wait for the report of James Ewins in July, which the next Parliament will then be able to implement. It does not require primary legislation; the Immigration Rules can be changed at any time. Those changes can be made on the basis of those recommendations.
Some particular points need to be addressed by those who want to press the Motion at this stage. First, we desperately want to ensure that victims of abuse receive the help and support that they need. Therefore, to have a Motion that does not provide for the fact that they must go through the new and enhanced national referral mechanism—the vehicle by which all these additional helps of legal aid support, medical and psychological support and accommodation and hardship payments can be delivered to them—and skips that mechanism would mean that victims lose out in many ways.
Lord Hylton
As an amendment to Motion A, at end insert “but do propose Amendments 72D, 72E and 72F as amendments to Amendment 72A”.
(a) change their employer (but not work sector) while in the United Kingdom provided they notify the Secretary of State;(b) renew their domestic worker or diplomatic domestic worker visa, each such renewal being for a period not exceeding twelve months, as long as they remain in employment and are able to support themselves without recourse to public funds;(c) obtain a temporary visa permitting them to live in the United Kingdom for the purposes of seeking alternative employment as an overseas domestic worker where there is evidence that the worker has been a victim of modern slavery.”
Lord Hylton (CB)
My Lords, I offer a big bouquet to the Minister. I pay tribute to his sincere desire to improve the situation for the victims, of whom we have seen far too many over recent years. He has truly shown a listening ear: he has met me and others on many occasions; he has given us the national referral mechanism for domestic workers as well as for trafficked people; he has given us the Ewins review; and now he comes with a government amendment approved by the other place. I am also grateful to the Independent Anti-slavery Commissioner, who has given me time on these issues.
Some might think that I should be content with the Government’s moves, but I shall try to show why I am not. I seek to protect the incoming domestic workers from the first day of their arrival here. What I am proposing is a real improvement on the Government’s amendment, because that amendment takes effect only once the worker has found the national referral mechanism, from which there is no right of appeal. To do so, the worker must first endure a period of abuse and exploitation, then escape, and then find the national referral mechanism.
The government amendment restricts the person to working in a private household, whereas mine will allow him or her to work as a domestic in a hotel or embassy. The Government may say—indeed, the Minister made this point—that the workers will initially be protected by written contracts and information cards to be given to both employer and employee. I argue that all these pieces of paper may be withheld by the employer, just as passports have frequently been withheld up to now. The worst employers are likely just to disregard both contract and card. If my amendment is accepted, employees will know that they have an immediate remedy, just like any other worker. Employers will also know this and will, I believe, modify the worst of their past behaviour.
The Government further argue that the average visitor who brings a tied worker with them stays for only about 15 days. If that is right, then many, or possibly most, incoming workers will simply not be affected by my amendment. They will not seek to change jobs for such a very short period. They will suffer, if they have to, and they will go back with their employer. On the other hand, many employers stay for much longer than 15 days. When they apply for extensions of stay, as they often do, they easily obtain them. Their workers will therefore benefit from this new freedom, which is similar to that enjoyed between 1998 and 2012. I suggest to your Lordships that it is of great importance not to allow the kafala system, which ties the employee to a single named employer, to exist here because it has led to abuse and exploitation in the Gulf and nearby countries where trades unions are seldom allowed. I understand that our Government have sought to get it amended and improved in that part of the world. It should not be allowed to creep in here by the back door, even if the majority of visiting employers behave decently.
At first glance, it may appear that the amendment I am proposing is similar to the one approved by this House on Report on 25 February. In fact, it has been considerably changed to meet points raised by the Government. The first three lines of my amendment have been clarified and now look forward without retrospection. I put in that variation in order to try to meet the Government. Paragraph (a) of the proposed new clause states that workers must notify the Secretary of State if they change employer. This meets the point that they must not just disappear into the general labour pool. They must not expose themselves to being trafficked from one employer to another. They must also not claim state benefits. However, that does not mean that they must find their way to the front door of the Home Office and knock there. Any police station, citizens advice bureau, law centre, specialist NGO, councillor or Member of Parliament will do for the purpose of notification.
Paragraph (b) provides that the visa renewal shall be for not more than 12 months. This gives enough time to secure a reasonable job and bring a case for unpaid wages or damages against the first employer. It also prevents the growth of a pool of people who may eventually qualify for residence here. Paragraph (c) contains the word “evidence”. This means that workers changing employer and seeking to remain temporarily in this country must submit themselves to the national referral mechanism. That will produce a finding on the case and, more importantly—the point already mentioned by the Minister—it should give access to essential support and advice for those who need it. Amendments 72E and 72F are consequential.
My amendment is a compromise, which takes account of all that has been said in both Houses and of discussions with the Minister. It has been carefully crafted, with the best professional advice. I ask the Government to accept it, even at this late hour, and I commend it to your Lordships. If Britain is a “moral community”, as Edmund Burke might have defined it, we cannot condone domestic slavery in our midst. To do so immediately reduces our influence in the world and undermines our soft power. I beg to move.
Baroness Royall of Blaisdon (Lab)
My Lords, I support the amendments in the name of the noble Lord, Lord Hylton. I will say two things before I address the issues. First, my eyes are on the totality of the Bill. It is a fantastic Bill, and I warmly thank and congratulate the Minister on all the steps that have been taken throughout the process of the deliberations on it. The fact that I support these amendments does not detract from that in any way; I merely wish to make a terrific Bill even better.
Secondly, it is being said in the corridors that we are putting the Bill in danger with this amendment—much was made of that in the Commons. I have heard it said that civil servants have been saying that to some of your Lordships. I would not support an amendment if I thought that it was putting the Bill in danger. It is not doing so. There is ample time for us to discuss the amendment and for it to go back to the Commons, were it to be passed. What we are doing now feels like an anomaly only because of the Fixed-term Parliaments Act, which means that we have had a sort of protracted wash-up, and we are no longer used to the ping-pongs we used to have.
The substance of the amendment seeks to defend the important win that Members from around this House secured earlier this month. As we know, many overseas domestic workers are subject to appalling working conditions, long hours and little pay, and are sometimes at risk of mental, physical and sexual abuse. They must be entitled to the most basic rights to enable them to leave their abusive employer when they feel the need to, and they should know, as a matter of precaution, that a system is in place to protect them. That is the most crucial piece of the jigsaw, which is currently missing from the Government’s amendment. Without that, there is no bargaining power between an employee and an employer.
The workers must be able to challenge maltreatment and abuse, and be able to leave and change their employer without having to take a leap of faith. To make co-operation with the authorities a condition on securing leave to remain would only drive more domestic workers underground and lock them into a cycle of abuse. What incentive would they have in coming forward? Would the authorities believe them? What if the NRM decision was not positive? The NRM does not provide them with any access to legal aid or right of appeal. Even if they got a conclusive grounds decision, who would employ them for the mere six months they would be able to remain in this country?
In the three years during which migrant domestic workers have been tied to their employers, fewer have gone to the authorities. Understandably, they are reluctant to do so because they are afraid of people in authority. Of the 214 people who Kalayaan internally identified as trafficked since April 2012, only 63 have consented to a referral to the NRM. Therefore, can we rely on the NRM to deliver accurate decisions on the fate of these workers, when only a few months ago the independent review into the effectiveness of the NRM highlighted significant areas for improvement? I have no doubt that as a consequence of the review and the Bill there will be real changes in the NRM, and I welcome that. However, change takes time, during which overseas domestic workers will continue to suffer abuse. Moreover, as Kalayaan pointed out in its briefing, if forcing domestic workers into the NRM is a way of prosecuting employers, why have none been prosecuted during the three years of the tied visa? If we put ourselves in the shoes of such a worker, would we risk our livelihood on an uncertain decision or prefer to stay abused and exploited for the sake of our family, who are dependent on us in our home country? Could the Minister compare the system for spouse visas and overseas domestic workers visas? The Government provide a route for settlement to those who suffer domestic violence while in the UK on a spouse visa in the hope that this will be an incentive to people to leave the abusive relationship, not to stay in it because of fears about their immigration status. So why do the Government seek to create a system in which ODWs are treated differently?
Statistics from Kalayaan, which has done such a fine job in campaigning on this issue, show that in 1998, when the right to change employer was introduced, the numbers of those abused went down. Similarly, in 2012, when the restrictions on freedoms were put in and the right to change employer was removed, the numbers went up. This is not a coincidence. All the evidence that we have from NGOs and from the media coverage has shown that there is a link between tied visas and abuse of overseas domestic workers. Surely we can best facilitate the end of suffering on abuse for overseas domestic workers by listening to them, the charities that work with them and the independent expert groups that have looked at the issue. All of them are unanimous that to help to prevent the abuse happening in the first place, the overseas domestic worker visa must be untied.
I very much hope that this excellent listening and responsive Minister will, having answered the points made today, accept the amendments. In doing so, he will have made a very good Bill even better. More importantly, he will have helped and protected these most vulnerable of workers.
Lord Lea of Crondall (Lab)
I add in support of what my noble friend has said that it would be useful if the Minister could elucidate what sort of contract of employment we are normally talking about, because that would subsume many of the worries about the lack of rights that we are discussing.
Baroness Butler-Sloss (CB)
My Lords, I have been involved in this Bill before it even existed, because I was a member of a working party set up at the request of the Home Secretary which Frank Field chaired. Sir John Randall and I were the other two members. We started in October 2013, and it was as a result of our report in December 2013 that the first draft Bill came into existence.
There have been so many changes to the Bill that the current version is almost unrecognisable from the first draft given by the Government. As the noble Lord, Lord Hylton, said, the Government are greatly to be congratulated on listening—and not only that but on tabling a remarkable number of amendments, having listened to what we have all been saying. There are child advocates, which the noble Lord, Lord McColl, must feel is one the great triumphs of his recent time in the Lords. Then there is defence for victims and protection in court; the existence of a commissioner, even if he may not have all the powers that everybody wants him to have; and, perhaps most astonishingly of all, the supply chain. That was totally opposed at the beginning, but it now forms an integral part of the Bill. So this House and the other place should really be very proud of what we have done to make a good Bill.
Of course, the Bill is not perfect. The Minister accepts that—it is a starting point, and it could be better. But all parties support the Bill, as well as the Cross-Benchers. There are gaps, and those gaps can and should be filled under the next Government, whichever sort of Government they are, because no Government will not support the concept of the Bill when it becomes law—as I hope that it will—and I hope that they will be sympathetic to several amendments. I warn the Government that strategy and policy issues also need to be improved—but again that is for the next Government. But what is perhaps of supreme importance to your Lordships’ House as well as to the other place is to have the framework of the Bill as part of the law of England and Wales. That is absolutely crucial.
I, of course, recognise the plight of overseas domestic workers. This is something that we need to tackle and improve over a period. However, there were criticisms of the previous Government’s visa requirements. The commissioner-designate says that there were opportunities for traffickers to traffic people from one employer to another under the visa requirements that came in before this Government changed them. The Minister reminded us that James Ewins—a sensible, intelligent lawyer—is looking at how the present system of visas works and how the previous one worked, and will report on that. It seems to me very sad that we should be going in a sense to war at the last moment, the day before Parliament prorogues, on an issue which is now the subject of a review which I have no doubt will come up with excellent recommendations. As the Minister has already said, primary legislation is not required to make the changes that James Ewins may well recommend, and which the next Government may well accept; they could be done by regulation.
In addition, the Government have made strong concessions. There will be the opportunity for those deemed to be victims of slavery to stay in this country and to get another job. The noble Baroness, Lady Royall, said that that applied only for six months, but that is not what Amendment 72A says. It says,
“not … less than 6 months”.
I read that rather differently from just six months. That seems to me an important distinction that I make in disagreeing with the noble Baroness.
Why at this moment, with Prorogation of Parliament tomorrow, are we still fighting over this clause? With one day to go we are in danger of the best being the enemy of the good. That has been said before but I make no apology for saying it again. We may be fighting a Custer’s last stand if this House and the other place find themselves scrabbling around tonight and tomorrow morning, trying to get a second go on the second ping-pong. If the noble Lord, Lord Hylton, persists tomorrow, what will happen? If he is not going to persist tomorrow, will he tell us when he replies why he is persisting today? The Government have already gone a long way on this issue. When we are so close to the end of this Parliament, do we really expect them to give in to what is in a sense almost blackmail?
Baroness Butler-Sloss
That may be a very strong word but you need to look at what is happening to a good Bill, which is in some danger. It is not absolutely in danger because the other place can deal with it tonight, presumably, and we can deal with it tomorrow morning. However, I am looking at what will happen tomorrow if this House votes to support the amendment of the noble Lord, Lord Hylton.
Personally, I cannot bear to see this Bill at risk. I have lived with it for so long. The House is aware of my credentials with regard to modern slavery and human trafficking. I ask the House to support the Government and oppose the amendment of the noble Lord, Lord Hylton.
Baroness Hamwee (LD)
My Lords, on Report, I spoke forcefully in favour of the amendment of the noble Lord, Lord Hylton, because I thought it was essential to express the strength of my feeling, and for the House to be able to express the strength of its feeling. However, after that debate, I commented to a number of people that I did not think the amendment could stand because I believe that it contains inherent problems. I have in no way changed my view about the issue—having said that, it is inappropriate to refer to people as an “issue”; I mean the situation in which some people find themselves, for which few adjectives are adequate. I hope that those who thanked me at that point will not feel that I am breaking the faith. I am certainly not condoning the situation.
Lord Alton of Liverpool (CB)
My Lords, like the noble Baroness, Lady Hamwee, I would like to make a number of points about Motion A1, which my noble friend has laid before your Lordships’ House. In doing so, let me say first to my noble and learned friend Lady Butler-Sloss that she has been involved in the drafting of this legislation, as she said, even before it was presented as a Bill. However, on Report I passed an article to my noble friend Lord Hylton that he had written in 1996, and which I had kept, about the importance of safeguarding domestic migrant workers. No one has done more in your Lordships’ House than my noble friend Lord Hylton to champion their cause. That is why the noble Lord, Lord Bates, was right to pay tribute to him.
Although this risks becoming like a mutual admiration society, I join with the noble Baroness, Lady Royall, in congratulating the Minister on the exemplary way that he has handled the Bill. It has, throughout, been a bipartisan Bill—the Opposition have played a huge part in it, as have people from all Benches in your Lordships’ House—and a bicameral Bill, with a lot of interaction between both Houses. The right honourable Member for Birkenhead, Frank Field—we all wish him well as he recovers from his recent heart attack—chaired that important committee on the draft Bill. He is right to emphasise the totality of this Bill.
There is no one in your Lordships’ House, including my noble friend, who will put this Bill at risk in any way whatever, but making a good Bill even better is surely what Parliament is all about. We have made this provision better. I will come back to that in a moment, but it is worth pointing out that supply chain transparency, which my noble and learned friend referred to, was not even in the Bill after the pre-legislative scrutiny stage in another place; it was incorporated on the Floor of the House. Similarly, there was no provision in the Bill on domestic migrant labour when it began to go through its stages. We have been improving it as we have proceeded. The Minister will correct me, but I think in Committee and on Report—I was able to take part in all stages of the Bill—around 100 amendments, many of them emanating from the Government after the discussions we had in the meetings that the noble Lord organised for us, were incorporated into the Bill. That is why it is already so much better than when it began.
I take issue a little with my noble and learned friend. It is the job of parliamentarians to be here until Parliament is dissolved. We have not got to the last gasp; this is not Custer’s last stand, as she put it. I certainly do not regard people laying amendments before your Lordships’ House and giving them proper consideration, as we are doing, as blackmail. I think it unreasonable to suggest that. I ask the Government this in that context: why is it that an amendment that was incorporated on domestic migrant labour about a week ago in another place has taken so long to come back to your Lordships’ House? Why is it here on the penultimate day? Why could it not have been here on Monday, for instance, allowing for more consideration if time is really the issue?
As the noble Baroness, Lady Royall, rightly said, there is plenty of time for this to go to another place tonight. I have served in one or other of these Houses for the last 36 years. As the noble Baroness said, I remember the so-called wash-ups where we were here all night long dealing with things going between the two Houses until we got it right. Often, we got it much better as a consequence. I think back to the LASPO legislation. I moved an amendment concerning the legal aid provisions for people who had contracted mesothelioma. Your Lordships, across the House, were good enough to support it and it ping-ponged back and forth between both Houses. On the third time of asking, the Government relented and modified the legislation. That is our duty as parliamentarians: to seek as much as we can get and to recognise the moment when no more can be gained. I am sure that my noble friend, who has been in your Lordships’ House for a lot longer than I have been, will be able to remind your Lordships of plenty of such precedents. If we are here tomorrow again debating an amendment and the Commons decide that they do not wish to modify Motion A but wish to persist with it, then we will no doubt hear from the noble Lord what he wishes to do.
I turn briefly to the substance of the amendment. Until we incorporated this new clause, the Bill contained nothing whatever to address the tying of migrant domestic workers to their employers. On two occasions in the last three weeks I have met domestic migrant workers on Cromwell Green, and I know that other Members of your Lordships’ House have done so too. They were brought here by the Kalayaan charity, which the noble Baroness referred to. They told me that when news of the vote in your Lordships’ House on my noble friend’s amendment was announced, a young woman called Marissa Begonia, herself a domestic worker and co-ordinator of the self-help group Justice 4 Domestic Workers, described how she received texts from workers asking her, “Am I free now?”. Unfortunately, of course, the answer is “Not yet”. However, I recognise that the Minister has gone some way today, particularly in what he said about the review, but that review can now take place anyway, regardless of what we decide regarding this amendment. These things are not mutually exclusive.
In a nutshell, the government amendment does not provide additional protections against exploitation. Once someone is trafficked, it forces them to go to the police without any guarantee of protection before they do so. One employment agency told me that it would not place someone on a six-month visa with no hope of renewal. As the noble Baroness, Lady Royall, said, there is a real risk that it could drive people underground—again, with no access to things such as legal aid.
My noble friend’s amendment merely asks for the most basic of protections, and they are threefold: first, to change employer but remain restricted to domestic work in one household; secondly, if in full-time work as a migrant domestic worker in a private household, the option to apply to renew the visa; and, thirdly, in instances of slavery, a three-month visa to allow the workers to look for decent work. Without these kinds of provisions, we leave in place a system found repeatedly during almost three years to facilitate exploitation, including trafficking of migrant domestic workers.
Many workers coming to Kalayaan describe how they have “sacrificed” themselves for the well-being of their wider family. They do not self-protect in the way that someone with more choices would expect. Many explain that they are prepared to put up with practically any amount of mistreatment if they can provide for their children and ensure that the same will not happen to them.
In 2009, the Home Affairs Select Committee, in its inquiry into trafficking, said that the visa issue was,
“the single most important issue in preventing the forced labour and trafficking of such workers”.
No one is so naive—I agree with the noble Lord, Lord Bates—to suggest or imagine that the exploitation of domestic workers would be abolished by such minimal protections, but they would certainly be an improvement on the current situation. The Minister referred to the anti-slavery commissioner designate, Kevin Hyland, and said that he did not feel that this went far enough. Well, he is right about that, so let us at least go as far as these amendments and as far as we can by regulation in due course, but let us do as much as we can for the moment.
When the Minister comes to reply, can he say whether the measures might include provisions—maybe as a result of the review—for annual inspections, for checks with the Inland Revenue to ensure that employers have registered and are making reasonable levels of contributions, and for annual meetings between the worker and a trusted authority? All those will be crucial. I believe that my noble friend is right to have laid this amendment before your Lordships’ House and I do not think that it is a question of this being Custer’s last stand. I hope that, from my noble friend’s point of view and because of all the things that he has done in raising this issue in the past, we will continue to give him our support if he chooses to press the matter to a Division.
Lord Deben (Con)
My Lords, all my instincts lead me—I think Members of this House will recognise this—to being enormously sympathetic towards the amendment before us. However, I remind the noble Lord, Lord Alton, that it is not just a question of some people saying that they do not want an amendment because it will hold things up and might mean that we lose the Bill. The argument is that there are serious faults in this amendment which need to be considered.
The Lord Bishop of Derby
My Lords, I, too, pay tribute to the noble Lord, Lord Hylton, for his inspirational leadership on this issue. He has frequently expressed that this is a moral and a practical issue, which is why we take it so seriously. I am also grateful for the way that the Government have responded positively to the discussion around the noble Lord’s first amendment, for which I voted. However, I am afraid that I cannot support this amendment, for reasons much along the lines of the noble Lord, Lord Deben.
The issue is very complex. In the debate in the House of Commons, there were all sorts of complex strands, which are in the background of some of the statements being made in your Lordships’ House today. There is a discussion about the nature and the length of visas. There is also discussion about the scope and limitations of the national referral mechanism. We have heard today about the spouse’s visa and where that model fits in. There is discussion about the principles of domestic labour and employment law and about what particular provision should be made for overseas domestic workers. This is a complex issue.
I applaud the Government for appointing James Ewins to lead the review because all these issues need to be looked at in the round so that overseas domestic workers can be best supported and cared for. We need to let the review do its work and not foreguess it in the way that the amendment tries to do. I am batting for the review and trusting that it can be implemented by regulation. Therefore, I am with any future Government who are serious about this issue—as they should be on moral and practical grounds—and pursue it appropriately.
I am uneasy about the details of the amendment on two counts. There is a real danger, as the Minister alluded to, of separating the victim from the crime. It is important for future victims that any system of care and support for those caught up in this terrible crime, and oppressed and abused by it, can kick back into where the crime is coming from and how it is manipulated and engineered. There is a danger that this could encourage people to try to escape from it but not be invited to play a responsible part, if they can, in challenging the crime and seeking to stop it.
Again, I applaud the desire to offer other alternatives in terms of work—the James Ewins review could look at that—but we are talking about people who have come into this country on a particular and intimate relationship and who often have a particular dependency, as those of us who have had the harrowing experience of meeting overseas domestic workers who have been abused in this way will know. They are not migrant labourers who can easily get up and go and get another job. The situation is more complex than that and needs a more subtle and careful approach.
I cannot support the noble Lord on the amendment for those reasons. I hope that we will give James Ewins the opportunity to look at all the complex issues and to come up with a more joined-up approach that we can continue to gather round and support in the future.
Baroness Williams of Crosby (LD)
My Lords, we have had some remarkable contributions to this debate. I certainly do not wish to delay the outcome but I would like to ask two or three questions before we make a decision on the Motion of the noble Lord, Lord Hylton. Before I do so, I pay tribute to the 30 years of his life that the noble Lord has given to the effort to get social justice for this particularly badly treated group in society. I have absolutely no qualification in saying that. Of course, like everyone else, I thank the Minister for his endless persistence in trying to get answers that will satisfy the House.
My questions are very simple. The first is about access. Noble Lords have referred to the extreme risks that domestic workers in difficult situations may face in attempting to access the system we have now begun to establish, including the NRM. We need to make sure that they do have access. I ask the Minister whether access to, for example, the churches or non-governmental organisations can then be passed on by them on behalf of the person who is objecting and concerned. Is that a possibility? I ask this because the trust that overseas domestic workers—for example, Filipinos—have in a church or an NGO might be much greater, sadly, than the trust they might place in the authorities. I am sorry to have to say that, but it has been my experience in talking in particular to Filipino migrants, who are among the most helpful and forthcoming that we have in this country. They have deep concerns—from their own experience back home as much as anything—about whether the authorities will be fair in the way that they treat their complaint.
My second question concerns the issue raised by the noble Lord, Lord Hylton, as well as by the noble Lord, Lord Deben, and others, including my noble friend Lady Hamwee. There is a complete lack of any form of legal aid for this pathetically waged group in society. I am not sure whether they would get any money at all to pursue these issues, which is why it is of such great concern to me that access to employment tribunals and the civil courts is not made available in some form that would enable these people to bring their cases forward. There may be no answer to that, but we cannot pretend to ourselves that passing laws that cannot be implemented because the people they affect do not have the money to do so is a satisfactory outcome.
I have two more questions. The third is about the inquiry. The Minister said that the inquiry would be in July, but my impression is that that is not when it will be concluded, but when it will be started. As we know, an inquiry can be a very long process indeed, particularly when it comes—as this one will—between the end of a Parliament and a general election that will be followed by the creation of an effective Government. Is the Minister telling us that the inquiry will start in July but not giving any indication of when it is likely to be terminated?
Secondly, will the inquiry look not only at the law but at the implementation of the law? It was mentioned in the Commons that there had been 63 cases where exploitation or other forms of slavery were clearly identified. There has been just one prosecution. That reminds me a little of the issues around the banks. It is no good having a law that is not implemented. Perhaps the Minister will be kind enough to say whether the inquiry will be able to look into the issue of implementation as well as at the law itself. This seems to me to be absolutely crucial.
My final point concerns the issue of serious crime associated with, for example, cases of exploitation. I will give an example from my own experience, because I used to lecture on this subject when I was at the Kennedy School in Harvard. One of the most dreadful pieces of evidence I came across was that one of the single largest exports to the Philippines from the Trucial States of Saudi Arabia was that of coffins for those who had been domestic workers. I do not point the finger now; maybe things have changed. However, they were very serious in the past.
My last question is this. If someone who makes a complaint refers to a capital or substantial crime such as rape or assault, could we take that into account in the way that we deal with the issues that are now before us? Will the Minister say how that is dealt with at present, because my impression is that sometimes it is not dealt with at all?
Lord Warner (Lab)
My Lords, a number of noble Lords who served on the Joint Select Committee with me have spoken against the Motion of the noble Lord, Lord Hylton. I will say a couple of words in support of the Motion and of the remarks made by the noble Lord, Lord Alton. First, it is worth remembering that we have known for some time about the problems arising from the changes made in 2012 to the Immigration Rules. The Government have come very late to the party on having a review into this issue. I suggest to noble Lords that they may have—finally—come late to the party only because this House, through its amendments, has put a good deal of pressure upon them to do so.
Secondly, I will draw attention to the key difference between the Motion moved by the noble Lord, Lord Hylton, and that of the Government. Essentially, the Motion moved by the noble Lord, Lord Hylton, whatever its shortcomings, gives a degree of protection as soon as the person comes into the country. The government Motion does not do that. It would seem to be a failure on our part as a scrutinising House if we give up this opportunity to put something into the Bill which will make it better and provide more protection while the review goes on. If the noble Lord, Lord Hylton, chooses to divide the House, I can see no reason why we should not vote in favour of his Motion. It does not in any way stop the Government getting this legislation through.
Lord Bates
My Lords, in the character of this legislation, this has been an exemplary debate. The issues have been raised calmly and with great passion and determination by people who have given their lives to tackling this issue of abuse. I am aware that some very serious questions have been asked. I will do my best to respond to them and will also seek to make some other points which I hope will be helpful in reassuring noble Lords about the Government’s intentions.
The noble Baroness, Lady Royall, talked about the position on legal aid for those people accessing the national referral mechanism, a point picked up by the noble Baroness, Lady Williams, as well. Any potential victims, including those on overseas domestic worker visas, will have access to legal aid for immigration, employment and damages claims, once they receive a positive reasonable grounds decision—reasonable grounds being, as we discussed before, a very low, almost formal, test for entering into the national referral mechanism. The Government have said that they have accepted the NRM review recommendations. Here, Jeremy Oppenheim suggested a new process to review decisions where a negative conclusive grounds decision has been made. The noble Baroness made a fair point about where the appeal system is under the existing NRM system. Jeremy Oppenheim recognised that we needed to do something, and we are running a pilot on this. The Government have accepted all the recommendations that have been put forward.
The noble Baroness also asked why this is different from the domestic violence visa. The domestic violence visa is designed solely for those who have come to the UK to join someone who is settled here. They may have come to make their home here. Domestic workers are issued with visas to come for short visits with their existing employers. Most visits are short: about 15 days.
My noble friend Lady Hamwee asked what the government amendment says about Immigration Rules and what the additional requirements will be. The requirements for the visa will be limited to the following: that the person has a conclusive grounds decision from the NRM; that they are a victim of trafficking or modern-day slavery; and that they are not excluded for reasons of public policy, for example serious criminality. My noble friend also asked whether we will allow people with the new visa to work for agencies that clean private homes. This is an interesting point, which we will consider and discuss with interested parties such as Kalayaan. Our concern will be to avoid inadvertently creating a further risk of abuse.
There is a wider point on the review that is being undertaken by James Ewins. This is different, because we have an amendment, but we also have an ongoing review by someone who is widely respected on all sides of the House for his ability to look at this issue. He has been asked to start his work and will report by July. That was one of the decisions that we took in response to the noble Lord, Lord Hylton, the first time he raised this. We therefore expect a report by July, and changes can be made from then. There is a tradition that Immigration Rules are handled in blocs twice a year for the convenience of the House, but it will be for the next Government to say whether this will come in October or whether action could be taken as early as July.
The noble Baroness, Lady Royall, asked whether far more workers have been abused since the changes to the overseas domestic worker visa. This is really a point about the evidence base for this. We have had some evidence presented to us, and other evidence that points in another direction. The quality of the evidence is one of the things that we have asked James Ewins to look at in order to assess its veracity.
The noble Baroness, Lady Williams, asked about the woefully low level of prosecutions. Of course, this is exactly what the Independent Anti-slavery Commissioner-designate has been brought in to do—to ensure that we care for victims but also that this is taken seriously. We specifically ask in the remit whether the policies and processes for pursuing those accused of perpetrating modern-day slavery against those who are on overseas domestic worker visas are effective. That is a specific part of his remit.
Can churches bring forward victims? We are already working with faith groups, including the Catholic Church—I pay tribute to the noble and learned Baroness, Lady Butler-Sloss, who chaired an excellent meeting with British Black Churches looking at this issue, increasing their awareness of it and getting their co-operation in fighting it—in our plans to communicate the new protections. The national referral mechanism review recommendation will support and improve relationships between statutory agencies and organisations including churches. Any organisation that comes into contact with a potential victim may work with the slavery safeguarding lead to refer them into the national referral mechanism.
When will the measures come into effect? I have dealt with that by saying that it is normally twice a year but it can in fact be any time.
Baroness Hamwee
My question was about bringing this particular clause—or section, as it will be—into effect.
Lord Bates
I do not want to get this wrong. I probably need to look to my left for some inspiration, which I have relied on heavily during the passage of the Bill, because this is at such a critical stage. It is pointless to say, as I normally do, that I will write to the noble Baroness. It is a very reasonable question and we should have an answer to it.
On employment tribunals, overseas domestic workers have the same rights of access to employment tribunal services as other workers where the tribunal has jurisdiction. They are able to file a claim and nominate a representative to appear on their behalf. Additionally, it may be possible to provide evidence via a videolink.
Of course, the answer to the noble Baroness’s question is really so obvious I wonder why she needed to ask it. [Laughter] It will come in in October. That is the current plan and the current schedule. But as I have also said, it is for the next Government to introduce this when they wish. There is nothing to stop them bringing it forward once they have James Ewins’ review.
The noble Lord, Lord Hylton, talked about the notification requirement. This is about notifying the authorities when they are going to change employer. This was something that Kalayaan highlighted in its report, Ending the Abuse, which was produced some time ago, in May 2011. I pay tribute to Kalayaan’s consistent work on this topic. The report says, on the right to change employers:
“Home Office data for the period from January 2003 to August 2010 shows that … 41 per cent … of migrant domestic workers cited abuse/exploitation as the reason for changing employer. Given that many MDWs prefer not to reveal their personal experiences to the Home Office, the figures are likely to be much higher in reality”.
That is still an issue with regard to the wording of Amendment 72D.
There have been a number of remarks and I probably cannot do justice to them all. I take seriously the intent behind the intervention by the noble Lord, Lord Alton, to say that there is usually a Parliament to press. I am trying to remember all that he said, but he said at the end that it is important to recognise the moment. In a sense, I am saying that, although perhaps not for the straightforward reasons that we have brought forward here, the Government have made significant steps. The noble Lord, Lord Hylton, acknowledged that. We have moved significantly down the route of making sure that, before people come here, they are aware of their rights and the protections that exist; that employers are aware of the consequences of abuse; that people who come here have knowledge of the minimum wage and other elements that they are entitled to; and that, when people arrive at port, there are interviews with Border Force officials. The Government have moved. They have not simply said no to the amendment but have launched a review; in essence, we are unsure whether we have gone far enough and whether this is the right route.
We have highlighted the particular problems with the amendment. As a number of people have pointed out—the noble and learned Baroness, Lady Butler-Sloss, the noble Lord, Lord Deben, and the right reverend Prelate the Bishop of Derby—there are problems and weaknesses with this amendment. Being the generous man that he is, I know that the noble Lord, Lord Hylton, will probably recognise some of those deficiencies.
The question is whether the House wants to insist upon this amendment and send a Bill that incorporates it back to the other place. The noble Baroness, Lady Royall of Blaisdon, said that there is ample time, and I suppose that there is always time—
Lord Bates
“Ample” is an interesting word when we are on the eve of the Dissolution of Parliament. However, there is of course time to do this—that is not the argument. The argument that we and others have put forward is whether this is the amendment that we want. As worded, it will simply mean that lots of people who are already here in the country and are victims of abuse will not be eligible to be covered by its provisions, whereas our amendment is retrospective and covers people who are already here.
The amendment is also defective in that there is a suite of measures, which people in this House have fought long and hard to include in and make available to this victim-focused legislation, available through the national referral mechanism. It is critical that victims get that level of medical and financial support, which is available through the NRM; that is what it is there for and why it has been reviewed and reformed as part of the work that we have done here. Most crucially, the amendment is defective because a serious and considered piece of work is currently going through its process under the widely respected James Ewins. Our argument is that that should be allowed to take its course.
I hope that people attach some weight to what I am about to say. Those who are responsible for this—Shaun Sawyer is leading the charge for us at the national policing level and making sure that those who are guilty are prosecuted—warn that the amendment as worded has the real, inherent danger of, in the words of the right reverend Prelate, not separating the victim from the crime. That is a potential danger. We want to make sure that the victim is protected but we also want to make sure that the perpetrator of the crime does not then continue to abuse other employees who are there.
I sense that the House is filling up and has probably reached a point where it wants to reach a judgment on this. I sense that and accept it, but I would not want the noble Lord, Lord Hylton, or other noble Lords who might be considering their action, to think, first, that the Government have not wrestled with the issue and tried to find a way forward which works for victims. I would not want noble Lords to feel that this is a one-off chance: that if they miss this moment, they will never get the opportunity to act again. We can act again at any time—Immigration Rules can be changed at any time if they are laid before Parliament—and the report will come forward.
There is another reason—I shall finish on this. This is in no way to suggest that we ought to fit in with this timescale, but today is the UN-sponsored International Day of Remembrance of the Victims of Slavery and the Transatlantic Slave Trade. In my view, it is a highly appropriate day to ensure that this momentous piece of legislation, which has been shaped, reformed and improved so much by all parts of your Lordships’ House, goes for Royal Assent and lands on the statute book, to give protection to the victims who need it and to ensure that the perpetrators can practise their crime no more in this country.
Lord Hylton
My Lords, I thank the Minister for his careful and comprehensive reply to this debate. I must also express my deep gratitude to those who have spoken to the amendment from all sides of the House, whether they attended to support it or to call it into question.
A great deal of reliance has been put on the forthcoming or already started review. I am sure that it will come up with good recommendations, but we have seen too many reviews lie far too long in the long grass to put a great deal of reliance on that. The view has also been expressed that we need more time for more information. We have had two Joint Committees, which have heard a great deal of evidence. We have had more evidence from a whole range of voluntary organisations. I suggest that the time is now to take a decision. Therefore, I wish to persist, just for today, and I beg leave to seek the opinion of the House.
Arrangement of Business
Lord Taylor of Holbeach (Con)
My Lords, now the progress of business is certain, it may be for the convenience of the House if I indicate that I expect royal commissioners to attend this House at the end of business on Thursday to signify Royal Assent to several Bills and to prorogue Parliament. The exact time of the ceremony will be settled tomorrow once the flow of business in both Houses is clear. I will make an announcement to that effect.
Budget Statement
(9 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Deighton
That this House takes note of the economy of the United Kingdom in the light of the Budget Statement.
The Commercial Secretary to the Treasury (Lord Deighton) (Con)
My Lords, the case that the UK has recovered strongly from its catastrophic financial state in 2010 is hard to dispute—although I am sure some noble Lords will do so. We are now the fastest growing major advanced economy, growing at our fastest since 2007. Employment is at a record high: nearly 2 million jobs have been created during this Parliament, and the claimant count rate has not been lower since 1975. Inflation is at an all-time low. On Friday, the FTSE broke through 7,000 for the first time—both a sign of confidence and a further boost to it. The eye-wateringly high budget deficit of 2010, which represented over 10% of GDP, is forecast to halve to 5% by the end of this financial year. Debt as a proportion of GDP is forecast to fall in 2015-16, in line with the original target set in 2010 by my right honourable friend the Chancellor.
The evidence that this is a journey from “austerity to prosperity” is provided by the latest projections from the OBR for real household disposable income per head, which show that on average households will be around £900 better off in 2015 than they were in 2010. However, risks remain. The deficit is still too high, and productivity too low—challenges the next Government will have to address. Our fiscal plan is to eradicate that deficit by 2018-19, which will require around £30 billion of further consolidation over the next two years—2016-17 and 2017-18. That was initially laid out in December’s Autumn Statement and was reiterated in last week’s Budget. If the Conservative Party is elected, it would achieve that through reductions in the following three areas.
Some £13 billion—from a total department bill of £365 billion—represents a continuation of the same rate of saving we have achieved in this Parliament, during which, according to independent polls, satisfaction with public services has risen; that is not surprising when, for example, crime is down. We will carry on reforming public services by focusing on achieving outcomes more efficiently. A further £12 billion of savings will be found from our very large welfare budget of over £200 billion this year, which must be managed to control cost, and structured so that it pays to work. Finally, £5 billion will come from a variety of measures to reduce tax evasion and avoidance. Again, we have a proven track record of success here. Every year we have introduced initiatives to tackle evasion and avoidance—most recently last Thursday, by my right honourable friend the Chief Secretary to the Treasury. We should be particularly proud that the Prime Minister has put tackling tax erosion at the top of the G8 agenda, as that can be effectively addressed only through international co-operation.
By following our fiscal plan, in the final year of this decade—2019-20—public spending will once again be able to grow in line with the economy while continuing to pay down the national debt. At that point, government spending will represent 36% of GDP—higher than in 1999-2000, when the spending crescendo started, fed by the illusion that the cycle of boom and bust had somehow been abolished, an approach which left this country so exposed when the financial crisis struck. Our aim is not smaller government per se, just better and smarter government. The discipline of extracting better value for taxpayers’ money is healthy—and government needs to remind itself that it is spending taxpayers’ money, not its own.
We need to build in resilience to our public finances to absorb the shocks that experience tells us will inevitably hit our economy. That involves not only reducing debt in the good times—the right thing to do for future generations—but also reforming and derisking the banking sector, which was our priority early in this Parliament. We are now able to recoup some of the £192 billion spent bailing out the banks, with our ongoing disposals of Lloyds Bank shares and the securitisation of mortgages from Northern Rock and Bradford & Bingley. It is, therefore, appropriate that my right honourable friend the Chancellor chose to use these proceeds to pay down our national debt and not to indulge in pre-election giveaways.
Our unrelenting focus on fixing the economy is right. Without a strong economy, we will not be able to invest in what we care about most—the NHS, the education of our children and the defence of the realm. Without a credible plan for the economy, promises in other areas are meaningless. One of this Government’s most valuable legacies will be our commitment to the transparency and independent scrutiny of public finances. We set up the independent OBR, imposed a Charter for Budget Responsibility and publish, at every fiscal event, a distributional analysis of the effects of policy changes. It is now much harder for a Chancellor to fix a problem by plugging an unrealistic assumption into a forecast or to avoid a genuine debate about the choices he or she has made.
Of course, the least painful way in which to reduce the deficit is to increase tax receipts by growing the economy. At the beginning of this Parliament our recovery was held back by a combination of the profound impact of the financial crisis, the continuing problems in the eurozone, and a bout of commodity inflation. As a result, growth picked up only in 2013, at a rate of 1.7%, improving to 2.6% in 2014. At 2.5% for 2015 and 2.3% for 2016, the OBR’s growth forecast is at the modest end of the range; if we achieved the Bank of England forecast through to the end of 2017, this would represent an additional £25 billion of GDP in real terms, a potential upside for the future. However, there are also significant downside risks to this forecast growth, beyond our control, as the UK is not immune from Greece exiting the euro in a disorderly fashion, the situation in Ukraine and Russia, potential weaknesses in emerging markets, or the market impact of how the US Fed may choose to exit its current low interest-rate policy.
Economists attribute continuing low productivity growth, both in the UK and elsewhere, to the lingering after-effects of the financial crisis. Reigniting productivity growth is essential for our prosperity, and indeed the OBR forecasts a small increase of 0.9% this year, followed by an increase of 2.5% from 2017. This is credible, if you look at the performance of some of our key manufacturing sectors, such as cars, and service sectors, such as retailing, as well as the opportunities for growth spurred by innovation in technologies such as driverless cars, medical diagnostics and 3D printing. An improved outcome depends in part on the continuing recovery of the banks, so we have a fully functioning financial system, lubricating the reallocation of the economy’s assets to their most efficient uses.
This Government have consistently pursued policies to enhance our growth and productivity through an attractive tax environment and investment in infrastructure, education, skills and training. We have introduced a national infrastructure plan, setting out how we will meet our infrastructure needs for the future. At Autumn Statement, the Government laid out the most ambitious plans in a generation for our transport infrastructure, with huge investment in roads and rail. In this Budget, we set out our strategy for our communications infrastructure, building on our current plan to deliver superfast broadband to 95% of the UK by 2017, by investing in clearing more spectrum to improve mobile services, and setting a new ambition for ultrafast broadband to become available for nearly all. We also built on our education reforms at Budget by introducing postgraduate loans for master’s and PhD students, targeted at supplying the high-end skills that employers have specified. I was delighted to see Sir James Dyson’s support for design engineering at Imperial announced earlier this week.
The tax environment is obviously crucial and we have reduced taxes to stimulate business and investment, illustrated in this Budget by our support to the oil and gas industry. We now expect the companies involved to realign their cost bases to a lower oil price to free up capital for additional investment to boost production in the UK continental shelf. The announcement last week that the Government will carry out a wide-ranging review of business rates will ensure that they are modernised to suit the 21st century.
My right honourable friend the Chancellor has personally spearheaded the northern powerhouse, a second great engine alongside London, for the UK economy. This is based on consolidating northern cities into a super-conurbation, bringing them together through investment in transport and exploiting their strengths in, for example, science and advanced manufacturing. The transport strategy being devised by Transport for the North is aimed at improving connectivity across the region, so that it is not only Manchester and Leeds which benefit but Liverpool, Sheffield, Hull, Newcastle and other cities. However, we are, of course, backing all the regions. We would be delighted to see a south-west powerhouse too.
We want more cities and local authorities following in the footsteps of Manchester and West Yorkshire, with local leaders seizing the opportunity to make key decisions and unleashing higher growth in their areas. The simple theory is that if the long-term growth rate of the slower-growing regions was raised to the forecast rate for the UK as a whole, this could add an extra £90 billion to the UK economy by 2030.
Our strategy is working. Current growth is indeed propelled by business investment, not the household debt that has fuelled past cycles. It is well spread across services, manufacturing and construction and it is geographically balanced. The favourable verdict business gave the Budget speaks for itself. However, this confidence, which is built over the long term, is easily lost by ill thought through interventions prompted by perceived political advantage which only damage the health of the British economy. I am afraid that the Opposition’s foray into the energy markets, criticised by the CBI earlier this week, is a perfect example of what not to do. We now have a situation where investors in energy are reluctant to commit to the UK until after the election—they now regard other countries as less risky, undermining the many years spent building our reputation—and where energy companies are incentivised not to pass on current cost savings to consumers now because they may have price cuts imposed on them later. That is not the way to help businesses succeed or the way to increase living standards.
I will try to shed some light on the living standards debate that the Budget has stimulated. Let us start with the most important fact: the reason living standards fell was the financial crisis and it is people at the bottom of the income scale, particularly those who lost their jobs, who were hit the hardest. The reason living standards have taken some time to recover was the depth of that crisis. In the long run, only productivity improvements will drive the rise in living standards we all seek. That is why growth policies are key.
During the difficult post-crisis period, the Government intervened in the economy in many critical ways to support living standards. Keeping the banks afloat was step one, accompanied by monetary easing to maintain interest rates at record low levels, protecting people with mortgages. The most powerful support to living standards has been the extraordinary performance of the jobs market. Some predicted that adherence to deficit reduction could only result in a jobs Armageddon. That could not have been more wrong. While 400,000 public sector jobs have disappeared, more than five times as many private sector jobs have been created, mostly full-time and skilled. The number of those on jobseeker’s allowance has fallen by 700,000. The youth claimant count is at its lowest since the 1970s. These are not dry statistics. These are real people whose lives have been transformed, and this is a nationwide phenomenon, with all regions benefiting. Alongside job creation, we have put more cash in people’s pockets.
Lord Lea of Crondall (Lab)
I am grateful to the Minister for giving way but he has just made two comments that are very hard to reconcile. First, he said that living standards depend on productivity growth. He then referred to jobs growth. However, there has been no productivity growth; in fact, the growth in productivity since 2010 has been zero. How does the Minister think that living standards will rise fundamentally if we do not make productivity growth our top priority, as gross national product growth is not the same thing?
Lord Deighton
I entirely agree with the noble Lord. My reference to employment simply acknowledged that having a job enables people to protect their living standards. I acknowledge that productivity has not improved in recent years. That is the focus for the future. I have said that productivity is still too low; I agree with the noble Lord on that. It is the key to raising living standards.
As I said, we have put more cash in people’s pockets. We have consistently raised the personal tax allowance from £6,457. That is set to rise to £11,000 in 2017. That enhances take-home pay—a change that has dramatically improved the incentive to work—and has benefited 27 million people and taken 4 million out of tax altogether. We have frozen fuel duty and council tax as well as reducing energy bills. We protected pensioners with the triple lock, so that pensioner poverty is the lowest ever, as well as introducing radical changes to both pensions and savings, which suffer in periods of low interest rates, to give savers much more flexibility and remove most of them from tax altogether.
At the beginning of this Parliament, inflation was eroding living standards, driven above 5% in 2011 by global commodity prices. This position has reversed with inflation now at zero. Motor fuel prices have fallen by 16% and food prices by more than 3%. This is different from the kind of stagnation we have seen on the continent. As a result, we are today seeing rising wages outpace the level of falling inflation. The OECD and the IFS both endorse the use of real household disposable income per head as the best measure of living standards because it includes the effect of tax and benefit changes and employment. On this basis, the latest OBR forecasts show living standards rising at their fastest rate in 14 years. They are projected to improve by over 3% in 2015, leaving them higher in 2015 than they were in 2010 and set to rise every year this decade.
I am proud of this Government’s record in rescuing our economy from the perilous condition we inherited, and I am excited by the prospects of what can be accomplished if we are given the opportunity to see our plan through.
Finally, noble Lords will be aware that this week the Government plan to submit their convergence programme to the European Commission, setting out our fiscal plans. It makes sense to combine a review of this programme with our Budget debate, given their identical subject matter.
Lord McFall of Alcluith (Lab)
My Lords, it is a pleasure to engage in this debate. I want to focus on three areas: first, the fantasy figures given by the Government in the Budget; secondly, the productivity puzzle; and, thirdly, the issues raised in Who is my Neighbour?, the Church of England document, which was welcome.
The Budget last week was nothing other than a party political broadcast with fantasy figures. The OBR was very clear: it is a rollercoaster by which public spending will fall to the floor for the first two years of the next Parliament, with cuts the gravity of which has not been seen to date. But miraculously, it will all recover the year before the next election, with £12 billion extra spending for largesse. It seems that the Chancellor’s reputation grows with every failure. Would he balance the books by 2015? Easy. He failed. In the Autumn Statement last year he predicted a £23 billion surplus. He failed; it is now £7 billion. He promised £12 billion in future welfare cuts. When asked to explain from where they would come, he could not explain. Notwithstanding all the rhetoric on social security, it has done nothing because the social security budget was £220 billion in 2010, and is still £220 billion. The policy in those areas has failed.
As the IFS has said, we are left guessing about radical cuts. The NAO’s Amyas Morse has said that the Government are performing radical surgery without knowing where the heart is. This has ensured that the election debate to come will be about spending cuts. The OBR has said that that sharper squeeze in 2016-18 is indeed savage. The IFS questions whether cuts on that scale can ever be delivered. This is against a background of the slowest recovery on record. Paul Johnson of the IFS was clear. He said that household incomes crawling back to pre-recession levels seven years after the crisis is no cause for celebration.
We have a Chancellor under whom consumption, rather than production, has defined the economic approach. The biggest failure has been mentioned: the lack of productivity growth between 2010 and 2015. It has been stable for the past 40 years, although not at great levels; but it was nonexistent from 2010 to 2015, thereby undermining wages and incomes. The failure to understand productivity undermines confidence in the accuracy of any figures produced by this Government. The economy normally grows at lower rates after financial crises, but stagnation in productivity is extremely rare, and that is what we have witnessed. The question for the next Government is: is this temporary or permanent? The answer will determine our future economic prospects.
There is a dissonance between what the Government state is a “long-term economic plan” and what is happening in the country. Help to Buy ISAs and pennies off a pint are insignificant compared to what is happening in the country, particularly when put against the big picture. That big picture, on which the Government have failed, is a lack of a national infrastructure board, a lack of decentralisation to ensure that local economies prosper, and a lack of a productivity plan. We need a 20-year productivity plan, with annual reports to Parliament, so that we get this right. The Government have gone on about supply-side policies, but such policies on transport, housing and skills have been wanting. I am a member of the Economic Affairs Committee, which today published a report on HS2. The £50 billion of public investment, with £31.5 billion in direct subsidy, should be set against the background of no national transport infrastructure plan. How can one plan for a country without that? When Sir David Higgins came before the committee he was very clear. He supported an east-west line for the north. I asked him why. He said, “I talked to people in Manchester, who told me that it was a good idea, and I accepted that”. That is not the way to go about developing our transport and economic policies.
In 2013 we completed the lowest number of houses since 2010, and that includes a reduction of 5% in 2012. There was a time, in the 1950s, when a Tory Government under Harold Macmillan had an ambition to build 300,000 houses, and they did. Sadly, there is no ambition here on one of the most pressing problems facing people in this country, particularly young people.
This Budget is a manifesto for a meaner Britain. We need to re-inject a politics that is about beliefs and society. That is why I welcome the Church of England report, Who is my Neighbour?. It is very clear that today in Britain it is impossible to support a family on the minimum wage. The report notes burgeoning in-work poverty, whereby 75% of the welfare cuts are to the working-age population. The stark truth is that parents with low-wage jobs and young people have suffered most in this crisis. If we are to recommend a manifesto that is more tolerant, efficient and productive for the country, we could start with the six key values which the Church of England bishops have written in their letter regarding the general election.
The debates about the Budget have centred on the dry currency of figures, rather than on people’s lives. But we have a choice. A no less august body than the Financial Times was very clear in its leader when it said:
“Nothing is inevitable about Britain’s fiscal path”.
We can:
“Pursue an absolute surplus with further tax cuts”,
and thereby have,
“deep cuts in welfare and unprotected departments”,
Or we can:
“Raise £10bn in tax and allow borrowing for investment, and public spending austerity may come to an end next year”.
Those are the words of the Financial Times, not mine.
These are all feasible choices. No one can say at the next election, “There is no alternative”. People’s future livelihoods are indeed at stake at a time when there is disengagement and disillusionment among the electorate. The centre is being questioned as to whether it can hold in Westminster. There is a duty to consider the human and the societal elements, and the sentiments embodied in Who is my Neighbour? are a good start.
“The care of human life and happiness, and not their destruction, is the only legitimate object of good government”.
Those words are not from the Church of England document or Labour, but Thomas Jefferson. That cry is still relevant hundreds of years later. The Government have failed in all three areas and it will be up to the next Government to tackle these important subjects after the election comes in fewer than 50 days.
Lord Shipley (LD)
My Lords, I should like to address three matters: first, the achievements of this Government in dealing with the state of the economy which they inherited in 2010; secondly, rebalancing the economy in terms of growth outside London and the south-east, particularly in the north-east of England; and, thirdly, the current level of debt and the cost of servicing it, the need to get the deficit down and the timescale for doing that.
The noble Lord, Lord Deighton, defended a number of the Government’s achievements, but they are important. We have the highest growth in the G7 in the last year and a record number of people in work. Almost 2 million extra jobs have been created since 2010; 80% of those are full-time, and 80% are in skilled occupations. Employment is growing fast in the north and the Midlands. Apprenticeships have nearly doubled to 2 million since 2010. We have the lowest inflation on record, which helps household finances. The number of university students from disadvantaged backgrounds is higher than ever. Unemployment is down from 8.5% at its peak to 5.7%. Of the 28 countries of the EU, only Germany and Austria have lower unemployment. Low interest rates are helping households too, which is important given that we still have high levels of personal debt. We should applaud this success, particularly that of my own party, which has led the policy of the increase in the personal allowance in income tax to £11,000. It was only £6,500 under Labour in 2010.
The job is not done. There are a number of things that we still must do and there are two very big strategic issues that I agree are very important. Both have already been mentioned in the debate. The first is low pay. It simply must get higher. I do not understand why we have the minimum wage when a living wage is higher. I understand the constraints, but surely we have to have as a policy objective that low pay should be higher. We also need to increase our productivity, although there are some signs of this beginning to happen.
I think we have learnt that most growth under the previous Government was fuelled by consumption. We should recognise that the much higher level of growth now results from investment in infrastructure, plant and equipment, rather than real estate. When I look at the rebalance of the economy, the north is now growing faster than the south, taking a number of measures. This Government have done more to devolve power and responsibilities than any predecessor. There is now a new confidence and a greater understanding that devolution can drive growth. We have heard of the northern powerhouse and the plan for northern transport. City deals and the local growth initiatives, in which I have had an advisory role, have all made a welcome contribution.
The north-east of England has an impressive story to tell. Looking at the north-east LEP area—the figures I will quote are the LEP’s—it is clear that the north-east is closing the gap with the rest of the United Kingdom. We have record output and strong growth across many sectors. We have the highest employment rate on record, with 33,000 more people employed in the north-east LEP area since the Adonis review two years ago. Government and European funding have helped a lot, of course, which are worth well over £1 billion into the north-east LEP area. That funding is being committed locally by local people. The north-east has the lowest level of unemployment since 2008 at 7.8%. Exports in the north-east rose by 7.2% in the last year, despite a national fall of 3.9%. The north-east is the only English region still to have a positive balance of trade, amounting to £4.45 billion.
On productivity, GVA growth per head is growing at a faster rate than in most LEP areas, being the fourth highest in 2013. I contend that this would not be happening had the Government not got control of the public finances in 2010 and had my party failed to form a coalition Government to work in the national interest. The north-east is doing a remarkable job in getting out of the recession and everyone there should be congratulated for it, as should central government. There is a long way to go, but the north-east is headed in the right direction.
The trend in government finances seems to be headed in the right direction, too, for it is essential to maintain fiscal discipline. We are borrowing £90 billion this year to add to our debt, which will have almost doubled under this Government. There are understandable reasons for that, but interest payments have risen to the equivalent of £1,841 per household simply to service the debt. I doubt most households in the UK realise the amount the Government are spending in interest charges on their behalf when they could be spending it on the NHS or, say, on adult social care.
There is a difference between the two parties in the coalition in that the Chancellor’s overall aim, which is agreed, is to achieve £30 billion of further annual savings by 2017-18. I understand the need for that, but we need to be a bit clearer about where we come from. When I talk about annual savings, I am talking about cutting the annual deficit by 2017-18. I doubt the deliverability or desirability of cutting a further £13 billion from undefined Whitehall departments, £12 billion from welfare payments, but only £5 billion from reducing tax evasion, tax avoidance and aggressive tax planning. I prefer the Chief Secretary’s approach, which wants £6 billion more from tax dodging, and £6 billion from additional tax rises from the better off, those with high-value property assets, and the banking sector. That approach means that cuts in welfare and adult social care could be far, far lower. The deficit reductions should be achieved on a 50:50 basis: 50% budget reductions and 50% from extra taxation. That would enable further modest investment in the NHS to take place and it would also protect education spending.
I should declare my vice-presidency of the Local Government Association. I think it very difficult to protect the NHS, pensions and schools and at the same time effect the reductions in spending that the Chancellor seems to want. The impact on local government services, in particular on adult social care, could be very serious. I hope that the next Government will think very carefully about that.
I have one last point, which is an issue that impacts on the north-east and Cumbria, relating to the announcement on Northern Rock. The Chancellor announced that the Government are to sell off the mortgage assets of Northern Rock. It has been reported that the Government might make a profit on its staged sale. If they do, will they consider the strong moral case for donating 5% of the profit that it makes to the Northern Rock Foundation or to a successor body? My point is this: the foundation had been receiving 5% of pre-tax profits since Northern Rock became a bank. If the Government make a profit on the sale, it seems fair that a donation representing 5% of that profit should be passed to the foundation. I hope that the next Government will be willing to address that issue, because it is of great importance to those who have been receiving the additional charitable support from the Northern Rock Foundation in the north-east and Cumbria.
Lord Skidelsky (CB)
My Lords, at the time of his first Budget in June 2010, the Chancellor said:
“The most urgent task facing this country is to implement an accelerated plan to reduce the deficit”.
He committed himself to achieving a “cyclically-adjusted current budget balance”—the relevant part of that deficit standing at 4.8%—by the end of this Parliament. Instead, today, we still have a deficit of 2.8%. Of course, as a good politician, the Chancellor left himself wiggle room by talking about a “rolling five-year period” for achieving his goal. We are still rolling, but always “on target”. In last week’s Budget Statement he said that he will hit his original target three years late. He is like the runner, who, when the race is finished, gets to decide when it started.
In 2010, the Chancellor said that,
“reducing the deficit is a necessary precondition for sustained economic growth”.
Had he said, “sustained economic growth is a necessary condition for reducing the deficit”, he would have been nearer the mark. The main reason for his failure to balance the books is that the economy did not grow according to plan. His 2010 deficit reduction programme presupposed an average GDP growth of 2.7% between 2011 and 2013. Actual growth in the period was 1.3%.
Understandably, the Chancellor does not say much about the growth failure and never talks about the possible connection between his own plans and the failure of growth to materialise. Instead, the Chancellor and his supporters say that this poor growth record was bad luck: his entirely correct policy was undermined by “headwinds”. The noble Lord, Lord Deighton, mentioned a couple of them today—the eurozone crisis and our higher oil prices. However, the Chancellor’s own watchdog, the OBR, disagrees with the headwinds theory. It concludes that austerity reduced UK GDP growth by 1% in both 2010-11 and 2011-12—2% altogether. Using this analysis, Professor Simon Wren-Lewis of Oxford University has shown that austerity has produced a cumulative loss of GDP since 2010 of 5%. That means five years of British output and income permanently lost—we cannot get it back. And that, as Professor Wren-Lewis, points out, is a conservative estimate. No “accelerated plan to reduce the deficit” was required in 2010; just a rate of public spending growth somewhat less than the pre-crash GDP growth rate would have done the job.
The Chancellor’s new rolling five-year deficit elimination programme forecasts GDP growth of just under 2.5% for the next five years. Why on earth do we think that these forecasts will be any better than those of the previous five years, given the continued drag of the proposed cuts on the growth rate and the highly unstable GDP growth pattern since 2013? I accept that there has been a lot of progress in the north-east but the main driver of growth in the last couple of years has been rising asset prices. Where is the Chancellor going to find the £35 billion of cuts that he needs to meet his 2018-19 target? The noble Lord, Lord Deighton, referred rather airily to spending cuts and efficiency savings. I look forward to hearing details of these rather nebulous plans. In fact, what we suffer from is a candour deficit, not a budget deficit.
In conclusion, I enter a protest against the Chancellor’s slippery use of the word “deficit”—a slippery use that has spread throughout the public conversation on the matter and confounds public understanding of what he is doing. In 2010, George Osborne committed himself to eliminate the “cyclically adjusted current deficit”—the word “current” being crucial. However, this was going to be politically difficult, as it meant cutting public services. So his project soon morphed into one of cutting the “structural” deficit—that is, cyclically adjusted current spending plus net investment. This was politically easier, as cutting investment just means scrapping or slowing down investment projects, not cutting actual services. Nearly all the cuts in the Chancellor’s first two years were cuts in public investment, not in current consumption.
Now we come to last week’s Budget. In his speech, the Chancellor claimed that he has cut the deficit from 10% to 5% of GDP and will eliminate it entirely by 2018-19. But here he just means public sector net borrowing: no more cyclically adjusted caveats, no more borrowing, full stop. Since raising taxes is not on his agenda, this means only one thing—getting public spending permanently lower. He evidently now feels confident enough to proclaim openly what was probably in his mind from the start: to reduce the size of the state to dimensions which would have brought a smile to the face of the Iron Lady.
Lord Higgins (Con)
My Lords, since the last general election, the Chancellor has succeeded in transforming the disastrous situation that he inherited into one in which recovery is well under way. He has done so to the extent that the Economist headlines its article on the Budget “Bust to boom”. I think that is something of an exaggeration. Indeed, we must always be aware of creating yet another unsustainable boom. What we need is a sustainable rate of growth, and I shall come to the problems of achieving that in the middle part of what I have to say.
The Chancellor also gave a warning at the beginning of his Budget by saying that,
“the OBR has once again revised down the growth of the world economy … the growth of world trade and … the prospects for the eurozone. It warns us that the current stand-off with Greece could be very damaging to the British economy”.—[Official Report, Commons, 18/3/15; col. 766.]
I believe that that is profoundly true. Perhaps the biggest danger that we now face is another total disruption of the international economic situation. I therefore believe that, as we clearly have an interest in it, we should take a leading role as far as the Greek crisis is concerned. The reality is that it is inconceivable that Greece will become competitive at the present exchange rates. It will do so only if it leaves the euro. Therefore, it is desperately necessary for us to help the rest of the eurozone and overcome some of its inhibitions on this issue by having a plan to ensure that Greece can leave in an orderly way.
In that context, it is important to realise that one reason the Greeks are so keen not to leave the euro is that they do not want to go back to an undemocratic regime, which they had under the colonels. Having said that, they need to be able to sustain their growth. That means that not only do we have to arrange an orderly withdrawal but Greece will need a great deal of financial assistance then, ahead of a crisis arising. Otherwise, the danger is that it will get a competitive exchange rate, having left the euro, and then find itself being financed by Russia, which would be very dangerous. Therefore, the incoming Government should give great priority to persuading the members of the eurozone that the approach they are adopting at the moment is not the right one. We must have proper contingency plans to deal with that problem if our own economy is not to be damaged in the way that the OBR suggests it might be.
I turn, secondly, to the deficit. I understand the various thoughts that the noble Lord, Lord Skidelsky, has just voiced—it is always a pleasure to follow him in these debates—but, despite what he said, it is crucial that we continue to get the deficit down. It is of course true that the Government failed to achieve the objective announced at the last general election. I said at the time that all my experience at the Treasury with previous cuts made me extremely sceptical that they would ever be able to do so, but it is still vital that we should get it down: first, because we cannot leave our children with the kind of debt that we would otherwise have and, secondly—the point made from the Liberal Democrat Benches a moment or two ago—we have to avoid the amount of interest that the Government pay on the debt becoming a bigger and bigger burden compared with other items of public expenditure. Therefore, we must remain on course. I believe that the Government are right to have changed the date but we should still try to achieve a surplus within the period that the Chancellor has now specified. That is crucial if we are to continue the process.
I should say in passing that it is quite extraordinary for Mr Miliband or Mr Balls to shout loudly that the Government have failed in their deficit objective when they have opposed every proposal that might have enabled the Government to achieve it more rapidly. That is a very cynical, but not surprising, approach for them to have adopted.
Turning to the boom, we should be grateful to the OBR for an extremely interesting forecast and analysis of where we are in the so-called gap between productive output and the level of demand. In that situation, I am rather surprised because it seems to suggest that if we continue to mop up such excess capacity as now exists, we can grow at 2.5%, which is a noticeably lower level than almost 40 years ago when we normally assumed that the growth in productive potential would be 3%.
None the less, to my surprise, the OBR is indicating that we are getting closer to that productive ceiling than was previously thought. Clearly, we probably lost more capacity in the recent crisis than we originally thought. Therefore, while we can grow at 2.5% for the immediate period, we will then be in a situation where we can grow only at the rate of productive potential, which must require more investment. I certainly agree with the noble Lord, Lord Skidelsky, on the importance of investment. We need to make sure that that happens.
In passing, there is a continual danger that we may confuse investment from overseas with simply buying up property in England from overseas. If there is to be investment from overseas, it is essential that it should be investment in real productive resources.
Having said all that, with a supportive monetary policy, which has been very much a feature of the past five years, we can make progress. I am more sceptical about whether the governor’s forward guidance on interest rates is a good idea. At all events, the two must go together. The monetary policy has to be combined with the policy of deficit reduction. If that is so, we can have sustainable growth under a Conservative Government in the next five years.
Lord Layard (Lab)
My Lords, if you want to have the right policy, you have to start with the right diagnosis. Unfortunately, the Chancellor has got the wrong diagnosis. He and his colleagues have argued all along that Labour caused the deficit by irresponsible public expenditure, which led to his policy. In fact, the deficit was caused by the banks, and the resulting worldwide recession and the fall in tax receipts. It was not caused by irresponsible expenditure.
I will begin with a few revealing facts from the Treasury’s wonderful Pocket Databank. The Labour deficits in the 11 years before the world recession averaged only 1.2% of GDP. Over that same period, the national debt was substantially reduced relative to GDP. Let us have a comparison with the five years of the preceding Conservative Administration under John Major. In that period the deficit averaged 5.1%, which is four times the Labour figure of 1.2%, and the debt rose relative to GDP. I believe that those are significant figures. Therefore, who is irresponsible? It is outrageous to attribute our problems to the alleged fiscal irresponsibility of the Labour Party before the world recession threw our country and every country into deficit. It is time to see the last of the mantra—the mess that Labour made. It should be revealed as the myth that it is and relegated to the dictionary of phrase and fable.
Unfortunately, in consequence of this wrong diagnosis, something serious is happening in the real economy that is affecting the citizens of this country: the dismantling of many of our public services. As has been said, that is now the central issue for this election. The issue is whether we want to see our public services reduced relative to GDP to the level, or lower, of the 1960s. We say no, for many reasons. Simple economics says that this is nonsense. Every textbook says that, as people get richer, demand for some things grows faster than income, while demand for some other things grows more slowly. Demand grows faster for health and education—things that are characteristically well supplied by the public sector. Demand for things such as food, which are typically paid for privately, grows more slowly.
As we become more affluent, surely we will want to spend disproportionately more on old people, child protection, family support and the local environment. We value these things increasingly as we move further from the breadline. This is basic economics 101. It is interesting that in polls, such as the YouGov poll I looked at this morning, when people are asked whether they are willing to pay more for better schools and hospitals, most of them on balance are in favour of doing so. Therefore, economic theory is in line with what people say about their preferences.
Instead of that, we always hear the argument that people would be better off keeping the money for themselves. What do we think about that argument? Last year, Mrs Merkel had a seminar in her office on the subject of what matters to us. Various people presented evidence on what makes people most satisfied with their lives. In every survey in every country, the evidence is clear that the variation in disposable household income across the population explains less than 1% of the variation in life satisfaction. People vary enormously in their life satisfaction but the variation in their household income explains only a very small part of it. Much bigger factors include variation in mental health or physical health, variation in the quality of family life and so on. If that is taken through to an analysis of the benefits of different things, it can be shown, for example, that money spent on evidence-based mental health care benefits the well-being of people 10 times more than the same sum would if it were left in the household budget. The general point is that, as we get richer, our greatest problems become problems not of material survival and comfort but of health and human relationships.
To say that you are protecting the NHS is simply not enough. We have to think in a different context where we would expect the NHS to grow faster than our national income and not simply protect it. We really want to tackle all the things that people worry about and talk about, including alcoholism, domestic violence, dementia and suicide, which are all big, national problems that require public services. One could argue that people should pay for their own healthcare but that is not the route to an efficient health service. The US spends three times as much on health as Britain but has a lower life expectancy and administration gobbles up 25% of the costs. The philosophy of private good and public bad is too simplistic to handle these issues.
If politicians want to improve the life satisfaction of their people they should stop cutting public services. Why would they want to improve the life satisfaction of their people? Very simply, it is because that is what makes people vote. We now have good evidence that the biggest determinant of how people vote is how satisfied they are with their lives. That is even more important than the state of the economy. That is of course a justification, if you like, for democracy.
We do not need to destroy our public services. Our debt is now 80% of GDP but it is stable, and 80% is well below the average that we have had over the past 200 years. This debt is owed not to foreigners but almost entirely to the Bank of England, which is owned by us—or will be owned by our children who will own the bonds which we leave to them when we die. It is not an imposition on our children—that is a fallacy.
In the short run, cutting our public services will cut our GDP as much as it cuts our debt. The cuts that the Chancellor is proposing are a disaster. The plan has been ridiculed by all responsible commentators, and almost everyone finds it hard to believe that the Chancellor would ever carry it out if he regained power. Let us earnestly hope that he does not.
The Lord Bishop of Portsmouth
My Lords, it is right to acknowledge what is good and encouraging in the economic situation—particularly compared to the background of five years ago—and in much of what the Chancellor announced last week, and I am glad to do so. I warmly welcome the continuing fall in the number of people unemployed and, among the proposals, funding for wi-fi in public libraries, investment in transport infrastructure in the north of England, a boost to charities through the raising of the small donations gift aid limit and the extra allocation for mental health services for children and for new mothers, especially when half of my Bishop’s Lent appeal in Portsmouth diocese is to support local mental health charities. I am pleased, too, to hear of the planned rise in the minimum wage, though longing for the living wage to become the norm. There is much to welcome but, as I have indicated, with some caveats.
I turn to two areas of significance to many people, individuals and families, among whom I and my clergy colleagues serve. The right honourable Chancellor’s encouragement of saving is, of course, to be applauded, and yet the provision of tax-free savings income of up to £1,000 a year, like the increase in the ISA limit and the relaxation of terms, does little or nothing to help small-amount, short-term savings for people on lower incomes trying to meet small unexpected costs such as the proverbial washing machine breakdown. Theirs is not saving for income but a buffer for emergencies. The average amount borrowed through high-cost credit is between £100 and £300, yet 40% of people have insufficient savings to cover a shortfall of £300. For these households we need to look for more creative solutions to promote short-term savings, as outlined, for instance, in the Financial Inclusion Commission’s recent report—payroll saving and matched savings schemes or, perhaps, a savings element to universal credit as proposed by the Centre for Social Justice. Research commissioned by StepChange Debt Charity found that just £1,000 in savings would have prevented half a million households from falling into problem debt. If policymakers agree that better-off groups require incentives to save, then lower-income groups should surely be getting similar support.
Similarly, the rise in the income threshold before income tax is paid benefits many but helps least those on lowest earned or benefit income. Of the £2.5 billion to be spent on raising the personal tax allowance, only £1 in every £7 will go to those with below average earnings. The rhetoric of “removing people from income tax liability” and “raising the earnings limit before tax” is common to both Front Benches and, indeed, most political parties. However, as I have said before, it is disingenuous because it ignores the interplay of income tax and national insurance. The so-called national insurance contributions are effectively the same as income tax to most of us. The headline rise in tax thresholds exceeds—not at all to my surprise—the increase in the starting point for national insurance. You may pay no income tax next year with income below £10,600, but you will pay national insurance at 12% on over £2,500 of income below that. The steps of income tax and national insurance combined are rarely headlined, but you will find that they are 12% from £8,060, 32% from £10,600 and 42% from £42,380. The coalition Government’s early changes significantly helped those on very low earnings in the lowest decile of income, as we have heard. This Budget’s changes are no help at all to those lowest 20% of earners already happily lifted out of income tax. The bulk of them will pay a 12% national insurance contribution, or tax.
Your Lordships’ House will understand, finally, that I am grateful for the extra £40 million allocated for the church roof repair fund, increasing the initial £15 million which I welcomed in December following the Autumn Statement. The heavy oversubscription demonstrates the widespread demand—1,900 applications so far with about half likely to be met after this significantly increased provision. I am not making a sectional point here about the religious use of Christian church buildings but reflecting, rather, the importance of churches and religious buildings at the heart of community both symbolically and practically.
The limited time does not allow me to make similar points of welcome, with some reservation, for changes such as, for instance, the savings support for first-time house buyers. Still less can I expand on the apparent acceptance of the rapid increase in the number of people in employment needing recourse to housing benefit—a more than 50% rise during this Parliament. I would have wanted to hear and ask more about the absence of detail on the productivity challenge we face and on what seem to be planned but unspecific welfare savings.
In these comments of welcome with caveats, I do not seek to make party-political points. However, as I emphasised in my remarks about income tax and national insurance, our people should be given not the rhetoric or a partial or palatable version of how it is, but all they need—not least to make informed decisions in six weeks’ time.
Baroness Smith of Basildon (Lab)
My Lords, much of the commentary we have heard since the Budget—but not, I am pleased to say, in your Lordships’ House—has been a caricature of an economic debate between two harshly polarised views: one political party wants a strong economy and the other does not. Clearly, that is a fiction and a nonsense. There is a dividing line, but it is not on whether it is a right and worthy objective to seek a strong economy; it is on the how and the why—how we can achieve a strong economy, and why we want it. For me, any debate about the economy also has to be a debate about the quality of life. My noble friend Lord Layard made the point that it is about the purpose behind wanting a strong economy.
I know that it suits the government parties to seek to justify their damaging and harmful austerity programme by blaming the last Labour Government, but let us be clear. We did not have a recession because we built too many schools and hospitals. We did not have a recession because too many people used their bus passes. We did not have a recession because there were too many doctors, nurses and teachers. We did not have a recession because too many people had hip replacements. The recession did not start here in the UK; it was world-wide and global. The inconvenient truth for the Government is that the economy was growing in 2010 because of the measures taken by the Labour Government in 2008 and 2009 to ensure that we did not fall into recession.
I refer to the point made by my noble friend Lord McFall that government has to be about more than just the economy. To use his expression, it is about more than just the dry currency of figures; we want a strong economy for a purpose. At one point it seemed that the Prime Minister agreed with this when he launched what was quickly nicknamed the “happiness index”. It was a bit like the “big society” in that we do not hear much about the index any more, but in 2010 it was the new big thing for the Government. The Prime Minister made a speech about the happiness index and said that,
“we’ll start measuring our progress as a country, not just by how our economy is growing, but by how our lives are improving; not just by our standard of living, but by our quality of life”.
He went on to say that he would,
“make sure those government decisions on policy and spending are made in a balanced way, taking account of what really matters”.
We need to judge whether decisions have been made in terms of quality of life and whether they have been made in the light of what really matters.
It seems to me that one of the things that really improves the quality of life for people the most is a sense of well-being that arises from feeling safe and secure, whether in their jobs, in their homes or in society. Yet we have seen an unprecedented level of cuts in policing and community safety, while police morale is the lowest that I have ever known it to be. Police sickness rates, often related to stress, are the highest they have ever been. Across the country we have lost 17,000 police officers—8,500 of those on the front line—4,000 police and community support officers and 15,000 police staff. The Association of Chief Police Officers says that there will be 30,000 more losses in the next Parliament.
Last year, almost 100,000 crimes were reported, but the number being solved has fallen to less than 28%, which means that not even one in three criminals are being charged. Reported rapes are up by around 30%, but there has been a drop in the number of cases being referred to the CPS and a 14% fall in prosecutions. Some 9,000 fewer crimes have been solved. Prosecutions are down, and yet violent crime is up by 16%. That is not a record for the Government to be proud of and it is due to the unprecedented level of cuts in policing.
In my own county of Essex the Government have cut police numbers by almost 600, with another £46 million-worth of cuts being planned. The police mounted section has been axed, the dog section has been cut by 20% and in a coastal county the marine section has lost both officers and equipment. Through tabling Parliamentary Questions I have uncovered the fact that, as the number of people being killed or seriously injured on Essex roads has risen to 750, with the most significant increase among those aged under 18, the number of traffic police has been dramatically cut from 257 officers in 2010 to only 76 last year. There are no longer any 24-hour police stations in Essex and more station closures are planned. My nearest police station is in Laindon. The bright road signs are still directing the public to what is a fairly new police station—but do not ever knock on the door, because it is not open to the public at any time, day or night.
The Government’s answer to all this is that crime is falling, but is it not also the case that crime is changing? How many of us have received emails that are in fact online scams? We have seen increasing rates of cybercrime and fraud as well as internet sexual abuse. The Office for National Statistics has said that, if all of these crimes were fully reflected in the annual crime survey, they could increase the crime figures by around 50%. So that 2010 speech about improving the quality of life rings pretty hollow to me.
Today outside Parliament, I met a number of local residents from Essex and Kent who were protesting about cuts being made by their local councils which have led to their street lights being turned off at around midnight each and every night. Residential areas are then plunged into darkness. Let us recall the Prime Minister’s comments about the quality of life for those who will not go out at night in case they cannot get home before the lights are turned off. There are shift workers, council workers and hospital cleaners who now have to walk to and from work in the pitch dark. They told me that they do not know where the kerb ends and the road starts, or if anyone is lurking in the darkness. There are people alone at home or with their families. They hear a noise outside and look out of the window to see what is happening and whether someone needs help, but they can see absolutely nothing. I have to say that I am utterly appalled by what I regard as a tacky election gimmick cooked up by local Tory MPs who are worried about the huge number of complaints from the public. “We should not be turning the lights off at midnight because it is dangerous; let us leave them on until 1 am.” We can be plunged into darkness at 1 am, not midnight.
I was disappointed by the Minister’s opening speech because I thought that it was rather complacent. He talked about the number of extra people in work. Yes, more people are in work, but why are tax receipts from employment down by so much? It is because many people cannot get the jobs they want, so they take lower-paid jobs that offer fewer hours. The average household is losing £1,600 a year. The Government’s austerity programme has not brought the economic success that was promised. It has led to unprecedented cuts across public services, services which matter to the public, and public confidence has been lost. When we look back at what was said in 2010 about the happiness index and the quality of life, the Government really do have to think again. It is time to make way for a new Government to make the changes that are needed.
Baroness Valentine (CB)
I appreciate that the recent Budget should be treated more as political positioning ahead of the election than as a serious attempt to tackle macro long-term issues, but I want to touch on two things in that latter camp: the north/south divide and the provision of housing. I declare that I am on the boards of London First, HS2 and Peabody.
I turn first to the north/south divide. I am delighted that early on in his speech, the Chancellor recognised that we do not pull the rest of the country up by pulling London down. In the years since the credit crisis, while London has continued to play to its strengths as a global hub—currently we have more large foreign subsidiaries than any other city in the world—the rest of the country has struggled to keep up. As the Chancellor has reined in spending and cut public sector jobs, those economies which are more dependent on the public sector have suffered. But any future Chancellor is going to be faced with the reality that we are still spending some £90 billion a year more than we receive in tax receipts. Without the more than £30 billion net tax receipts provided by London last year, that figure would be a third higher. So the Chancellor needs to work out how to continue to invest the billions of pounds in the infrastructure that is required to get a return from London while at the same time stimulating growth in the north. Perhaps he can take some comfort from a report published yesterday by London First showing that every £1 invested in London’s infrastructure generates around £2.50-worth of economic benefit.
Whether you look at Britain from London or from the north, the key issue is the same: productivity. London is by far the most productive part of the country, but its productivity will be increasingly hampered unless the pressure on housing, commercial property prices and transport is eased. In the north, where Birmingham, Manchester and Leeds are all below the national average, poor connectivity is an important contributing factor. Infrastructure is key to turning both around, and our current low interest rates mean that we have a once-in-a-generation opportunity to invest.
I see HS2 as the backbone of the UK, connecting up social and economic opportunity from north to south. But in order for it to achieve its full potential, it needs to be part of a co-ordinated national transport strategy, and local communities, councils and businesses need to seize the opportunity. The Department for Communities and Local Government should stand ready to support local growth strategies, with serious investment in cities such as Birmingham. In this context, I am very heartened by proposed devolution to Manchester. I am likewise sure that significant investment in London will require some kind of further local tax.
In the Budget, we heard once again about plans for building many houses. The Chancellor claimed that 20 new housing zones outside London could support up to 45,000 new homes, while inside the capital, funding was promised to help unlock 7,500 homes at Brent Cross and 4,000 in Croydon. However, on its own, increasing targets is no guarantee of more houses. In London, targets have increased from 32,000, to 42,000 and on to 49,000—yet actual completions remain stubbornly at around 25,000. Housing in London has got so bad that, in a recent survey, three-quarters of business leaders identified the housing crisis as one of the biggest threats to our economic competitiveness.
There is no quick way to sort this out, but one important dimension is making those targets bite. Local authorities, which are at the sharp end of nimbyism, need both stick and carrot. The stick should be the threat of planning applications being taken over where targets are repeatedly missed. The carrot should be a far higher financial incentive. The current housebuilding bonus has had no discernible effect on housebuilding and is simply not enough. Alongside being more generous on the homes bonus, I would urge our future Chancellor to look at freeing up local authorities’ ability to borrow prudentially for housebuilding. I would, though, like to congratulate the current Chancellor on his proposal for the creation of a land commission in London, which will facilitate getting unused public sector land and buildings out into the marketplace for housing.
I cannot resist finishing on one other small point. The Chancellor has set aside money to help UK exporters to China. It would be very good if a future Chancellor could sort out our airport strategy so that we can actually get to this eastern economic nirvana.
Lord Rooker (Lab)
My Lords, before I start, I will say that I agree with everything the noble Baroness, Lady Valentine, said in her speech about housing, particularly about the threat of planning. I have said before that we should get planning out of DCLG and into BIS, as part of changing the culture of planning.
We should have a little history lesson before we close down for the election. I realise that the noble Lord, Lord Skidelsky, and my noble friends Lord Layard and Lady Smith have mentioned the past, but I want to do that in a little more detail. Do any of your Lordships remember 40 straight quarters of economic growth under Tony Blair—there, I have mentioned his name? There were 40 straight quarters of growth under Tony Blair. The UK entered economic recession in the second quarter of 2008 and—wait for it—left it in the fourth quarter of 2009. We then had three quarters of economic growth under Alistair Darling. Then we had the coalition.
A bit more history—if you google, “How did the economic crisis start?” or “What caused the economic crisis?”, you do not get the answer, “Labour”. It was born in the United States of America, and the answers you do get from various websites, whether the Economist or Accuracy in Media, are the reminder that we all need. The crisis had multiple causes, but the most obvious is the financiers themselves, and central bankers and regulators also bear the blame. We are reminded when we look at these sites of the terms “subprime mortgages” and “collateralised debt obligations”—CDOs. We are also reminded that it started in the USA, where a house price slump began in 2006. By 2008 in the United States, 6% of all mortgages were in default, which was three times the rate of the historical record. Risky loans were made under pressure—and, by heaven, they were risky, with no deposits and no verification of incomes.
Remember Fannie Mae and Freddie Mac, which were backed by the US Government? They were ordered to buy up these risky loans. The writing was on the wall. In the United States, attempt after attempt that was made to reform Fannie Mae and Freddie Mac was blocked by the Democrats. The Clinton Justice Department threatened banks with fines if they did not make the dodgy loans. This is all on the record. Clinton reduced Fannie Mae’s and Freddie Mac’s reserve requirements, leaving them, backed by the taxpayer, even more vulnerable when those dodgy loans started defaulting. This is all on the record.
The trust was lost the year before the Lehman Brothers bankruptcy. The first casualty of the American-led collapse in the UK was Northern Rock, which was saved by the Government—I fully accept that people might have lost jobs but nobody lost any savings, as it was part of the bailing out of the banks. Looking at these sites, we are reminded that, in the US and UK, regulators were asleep at the wheel. There was severe criticism of them for letting Lehman Brothers go when they did, as it simply multiplied the panic. In the US and the UK, the banks thought they had found a way to banish risk and, under pressure from shareholders, operated with minimum equity, leaving them vulnerable.
I do not see why my senior colleagues have allowed history to be rewritten. That is the reality, and that is my criticism of the shadow Cabinet, because it has been rewritten. The record of the last Labour Government on economic growth—getting us out of the recession before the coalition—is there for everyone to see, as is the new Labour record in respect of: the minimum wage; literacy and numeracy hours; NHS Direct; more than 2,000 Sure Starts; full-time workers getting 24 paid days holiday for the first time; 1 million pensioners out of poverty; 600,000 children out of poverty; 1 million social houses brought up to standard; free TV licences for the over-75s; free off-peak travel nationally for the first time for pensioners; free eye tests for the over-60s; free nursery for three and four year-olds; the doubling of pupil funding in England; the cutting of long-term youth unemployment by 75%; the cleanest rivers, beaches and drinking water since before the Industrial Revolution; and the New Deal getting 1.8 million back to work.
I could go on and on and on about the record of that Government, but the point is the Labour leadership should be going on and on about it. I fully accept that new Labour has moved on, but there is no reason not to tell the good story of what was achieved and to stop the rewriting of history. Of course there were mistakes—I was in government most of the time and know some of the internal mistakes that were made. The big, key one of course was the appalling lack of honesty and planning over the Iraq invasion. But come on, election victories came on the back of that record and can do so again—but only if we are prepared to remind people of the facts. That is the reality, but there is a self-denying ordinance: do not talk about new Labour, because of the Iraq war. Therefore, you do not talk about the leadership and the positive things that came from that Government. Then you allow history to be rewritten so that we get the blame for the recession. That is the reality, but we have time to turn it around, if they get their backsides off their seats. That is my view.
Now we have rising levels of inequality, for which I will give just one example. I am not pleased about the inequality but I am pleased that I chose this example before I heard that the Prime Minister had been booed by pensioners on the issue earlier this week. In the field of social care, there has been very unequal treatment. A report from the Joseph Rowntree Foundation last week, The Cost of the Cuts: The Impact on Local Government and Poorer Communities, showed that social care spending in the most deprived communities has fallen, in real terms, by 14%, but in the least deprived communities it has risen by 8%. The reality is that in the most deprived it has fallen by £65 a head—14%—and in the least deprived it has risen by 8%, which is £28 a head. The independent analysis by CIPFA shows that in the least deprived 40% of local authorities, funding for social care has risen, and in the most deprived 60% of local authorities funding for social care has fallen. People are seeing this as a blatant unfairness—no wonder the Prime Minister was surprised when he got booed by pensioners. He was boasting about the NHS and they said, “But you have cut social care”, because the two are interlinked and that is where the cut is now being felt, particularly with the substantial impact on poorer households. That is not the kind of society we should be creating.
I regret that I missed the beginning of the speech of the noble Lord, Lord Skidelsky, but his final point was—which is true and has been said before but has been denied by Ministers—that the attempt is to depress and close down the size of the state. That is what it is about—making a smaller state. The consequences of that are horrendous with the inequalities we already have. I think we should reverse that and we can do it on 7 May.
Lord Brooke of Sutton Mandeville (Con)
My Lords, it is a real privilege to follow the noble Lord, Lord Rooker. I am junior to him in entry to the Houses of Parliament, but it is always a pleasure to participate in a debate with him. The noble Lord, Lord Davies, must be very grateful to him. I shall stay mainly in Britain, although I have visited all the states in the United States except North Dakota and Nebraska, and I have been told that if I have done South Dakota in depth I do not need to hurry back.
The late Ian Wallace, the singer, had a party trick, much in demand at Christmas Day Matins, of singing the carol “The First Noel” to the tune of “On Ilkla Moor Baht ’at”. To borrow the cliché about singing off the same hymn sheet, which always reassures one that the Church of England is still alive, both sides in the Budget debate are doing this but one of them has the hymn sheet upside-down, and the Treasury never does that. As Paul Johnson of the Institute of Fiscal Studies characterised it, there is much truth in the numbers both sides are using but Mr Miliband is quoting gross earnings, whereas the Chancellor is quoting net income, which enables them to have a dialogue about the outcome. In Mr Miliband’s case, a top rate of tax down from 50% to 45% and tuition fees of £6,000 sound good but are in fact doing more for the rich than the poor.
Kipling did not write until 1906 his romantic poem, “A Smuggler’s Song”:
“Five and twenty ponies,
Trotting through the dark—
Brandy for the Parson,
’Baccy for the Clerk;
Laces for a lady, letters for a spy,
And watch the wall, my darling, while the Gentlemen go by!”,
but Pitt the Younger had lanced the Revenue’s excise boil in the 1780s by slashing the customs duties and in the process, in 1787, sustaining his newly launched Consolidated Fund with the duties that consequentially emerged in profusion from the shadows.
In column 782 of Hansard for 18 March, Mr Miliband poses the rhetorical question, “What about hedge funds?”, and since then his special adviser on private health funds has helpfully revealed that he must have been talking to himself. Mr Miliband implies constancy in policy but practises vacillation, although I agree that he does not go as far as UKIP, which has used a single saving in expenditure to fund a double-figure flood of new expenditure projects. The White Knight in Alice, who once invented a pudding during the meat course, would be a good candidate to be UKIP’s policy director. Finally, Mr Miliband said that the Chancellor of the Exchequer had not acted on tax havens, but the diverted profits tax was promised in the Budget Statement for legislation this week, to be brought into effect next month.
On another front, 2015 has seen a marked increase in the number of sightseers in the Royal Gallery, looking at Maclise’s painting of Wellington and Blücher on the evening of Waterloo. I am not yet clear whether, when the Chancellor gave public largesse towards repairing the buildings at Hougoumont on the field of Waterloo, where the Brigade of Guards saw out Waterloo’s “livelong day”, he was aware that his own namesake, George Osborne, had been the lead figure in the first half of Thackeray’s “Vanity Fair” until his fictional death on the field of Waterloo in June 1815.
As it has just been announced that the living quarters at Hougoumont, which are suitable for four people, are to be managed as a holiday let by the Landmark Trust, this brings us neatly to one of the pressing questions of the hour; namely, the supply of new housing, where there is still a chronic shortage. The demand side does not currently need encouragement, which might even be counterproductive. Of course, the creation of the first 20 housing zones is encouraging on the supply side but they are not the total answer and we still sigh for the 300,000 houses, mentioned by the noble Lord, Lord McFall, which Harold Macmillan and Percy Mills orchestrated annually in the 1951 Administration. But there were bomb sites to build on then and by now we are the second most highly populated member state of the European Union after Malta.
The dilemma of new space for building adds ironic exacerbation to the issue of the contribution of immigrants within the construction industry. Immigration strains education and health provision in the community but, ironically, it adds to housing demand as well—although working in the industry, they have to have homes themselves. There are no easy answers and UKIP’s responses are unreal as well as unreliable. Happily, and not least because of the presence of the particular Treasury Minister on the Front Bench this evening, infrastructure has been a persuasive magnet in forward planning for the next five years, not only in the comprehensive strategy for the north but in south Wales and the south-west.
I will conclude with a final issue that has not been given front-page billing by either side in the overall argument—the crux of productivity growth, which is always the joker in the pack but is also a hidden complication when even greater employment than the current figures, which Martin Wolf rightly described in the Financial Times as “stunning”, is still looked for. I served my last Parliament in the Commons during Gordon Brown’s first Parliament as Chancellor. I knew that productivity growth, like higher education, was one of his favourite feeding pastures and in consequence I used to put the subject down as a monthly item for Treasury Questions, which incidentally provoked him from time to time into contradicting whoever was his Chief Secretary at the time. But I hope that in the next Parliament it will soon receive more attention. I imagine that what the Budget Statement calls,
“the biggest increase ever in the apprentice rate”,—[Official Report, Commons, 18/3/15; col. 768.]
will make a step in the right direction and a modest contribution to productivity growth, but I have not yet embraced the specifications of what is called the “new national energy catapult” announced in Birmingham, which sounds as though it would have pleased Boulton & Watt.
To end on a similarly appreciative personal note, the House of Lords Library has done its habitual miracle by distilling in a comprehensible form the raw Treasury data into a Library briefing pack for this debate. We are all in its debt.
Lord Whitty (Lab)
My Lords, I very much agree with the remarks of the noble Lord, Lord Brooke, on housing. I do not claim I will be able to match the erudition of the rest of his speech, however.
I was provoked into speaking in this debate by sitting through the whole of the Chancellor’s performance the other day. It was an amazing performance, full of new-found self-confidence, chutzpah, ringing phrases and even a few quite good jokes. But the one thing that was clear about it was that we are in an election period. I, therefore, have to abandon my normal consensual approach in this House and make it clear that I also am in an election period and that that election needs to be fought largely on the economic battlefield.
The speech, although showing a commendable Stalinist commitment to a long-term economic plan, was very tinkering. The Budget did not amount to very much; as one commentator put it, it was a good day for drinkers and a good day for the manufacturers of smoke and mirrors. Apart from that, the speech was, as my noble friends Lord Rooker and Lord Layard have already spelled out, a complete distortion of recent economic history. Indeed, arguably the most successful aspect of the Chancellor’s economic strategy has been to convince the media and large sections of the population—as my noble friend Lord Rooker says, even some members of the Labour Party—that the economic crash of 2008 was entirely due to the last Labour Government’s public spending profile. Never mind that the crisis started in America; never mind that it hit every western country; never mind that prior to the crisis Britain was relatively low in ratios of both debt and deficit to GDP; never mind that it was primarily a crisis of a corrupt banking system that, at the time, the then shadow Chancellor was arguing was far too overregulated; never mind that it was therefore a crisis of private debt, not public debt, and it was the state that had to bail out the financial sector. The Chancellor’s thesis appears to be to blame the cure and not the acute disease of the banking crisis.
If that position were just propaganda, we could probably live with it. The problem is that the Chancellor clearly has believed over the last few years quite a lot of his own propaganda—always a pretty dangerous thing for politicians. For the first three years of this Government, Budgets appeared to reflect that propaganda, and, with it, the nascent economic growth that we were beginning to see in 2010 was stalled and reversed at huge cost to many parts of the economy. Infrastructure spending was the first to go; public services, particularly local authority public services, were cut; housing spending was cut. The continuing lack of recovery, which the Chancellor was blaming on problems in the eurozone and commodity prices, was actually due to the deliberate decisions and austerity programme of the Government.
It is true that, after the rather disastrous Budget of 2013, the Chancellor appeared to panic and change direction a little. Thankfully, we have had some recovery. But most of that recovery is despite rather than because of the Chancellor’s ministration. After all, capitalist economies inevitably are cyclical and eventually there is always a recovery. But the recovery that the Government and the Chancellor are crowing about has, in reality, been the longest coming recovery from a depression in a century, and the nature of the rising tide that is now thankfully here is not one that has raised all the boats at the same time—it is a very unbalanced and divisive recovery. Nor is it really attaining major improvements in economic efficiency. As others have said, our basic productivity rates are behind most of our competitor nations and are very sluggish. Low productivity both causes and reflects the situation in the labour market of low pay. Yes, jobs have been created, but most of the new jobs are at relatively low levels of real pay and most workers have still hardly had a rise in their real wages under this Government. Many of the jobs are highly insecure as a result of a deregulated labour market with a weakened ability to enforce the rights for workers that still exist as they are watered down and access to justice is denied or priced out.
The recovery is deeply divisive: divisive between rich and poor; between old and young; between different parts of the country; between the south-east and the rest of the economy. Only in this last Budget has the Chancellor begun to recognise that the south-west and the north need substantial infrastructure investment. The recovery is socially divisive between those who have paid off their mortgage or are close to doing so and those who are forced to rent in the private sector, trying desperately to get on the housing ladder, or live in social housing. Indeed, this Government appear to wish to see the abolishment of social housing altogether. I have often warned this House that the housing crisis is perhaps the greatest economic disaster, as well as social disaster, that we are faced with, compounding dysfunction in all forms of housing tenure, with families with a head of household who is under 40 facing a continuing prospect of inadequate and overexpensive housing. This is particularly the case in London, but it affects many other cities and many villages and towns in our rural areas. Unfortunately, the Chancellor’s response has been simply to underwrite more pressure on the demand side and do nothing to increase the supply side of new housing. The inevitable result of this is an escalation in the housing benefit bill. More generally, the escalation in welfare payments is a reflection of the low incomes of in-work families and not a result of skiving or people trying to avoid their economic obligations to the rest of society.
The Chancellor’s record is one of nearly four years of unnecessary cuts followed by one year of unequal and divisive recovery—and what does he promise us for the next few years? Pretty much the same: three years of deeper cuts, with a bit of relaxation post-2018.
Others, more informed than I, have talked about the problem of defining economic success in terms of the deficit and debt. The current level of debt, around 80% of GDP, is about the average for the last 200 years, as my noble friend has said. The deficit needs to come down, but not at the expense of economic performance. The repayment of debt depends on the cost of that debt and on the timetable for the repayment of it. If they are manageable, then the debt is manageable. That is indeed the UK’s case. We are not Greece and we never have been, despite the Chancellor’s propaganda. Closing the deficit depends on increasing the income to the Exchequer, as well as controlling expenditure, and that in turn requires a growing economy, not a further round of harsher public sector cuts and the prospect of another five years of a rollercoaster economy. There must be another way. This side of the House will support another way.
Lord Taverne (LD)
My Lords, it is a long time since I spoke in an economic debate. My reason for speaking today is my deep disappointment with the Budget. I respect George Osborne, who does not normally seek cheap popularity. He has depth and stamina and is not a PR man, unlike some other senior figures in the Government. But his Budget boasted about our economic success. If one looks at the record, one will see that boasting reveals a certain degree of complacency. At one time, I was a non-executive director of some major companies. I found the companies that kept declaring how excellent they were to be generally mediocre. The really good British companies were self-critical and concentrated on improving their weaknesses, not on boasting about their strengths.
In fact, our economic record since the crash of 2007 has not been brilliant. There has been progress, but our recent recovery is based on some very shaky foundations. Perhaps the most serious deficit we face is a huge trade deficit, which means that we depend precariously on the inflow of hot money. According to the IMF, the current account deficit is some $120 billion, the largest of any OECD country and three times that of France, with which Osborne compared us so unfavourably. The inflow of hot money, that is excluding capital for portfolio investment in companies and property, is some $210 billion. Our dependence on this fickle form of capital is greater than that of any other major country and it could flow out very rapidly. For example, after the election we are committed to a referendum, and polls show that there is a real chance of Brexit. That could be an economic disaster.
Why can we not pay our way? Because we are not competitive. Indeed, we are pretty well bottom of the league of major countries in the growth of productivity—on which, in the end, as many speakers have mentioned, prosperity depends. Our GDP per head is still 0.5% below what it was in 2007. Productivity has recovered much faster in the United States, Germany, Japan and—please note, Mr Osborne—in France.
Furthermore, the monstrous inequalities in today’s Britain have increased. More people are in jobs, that is true, and unemployment has fallen—good—but at the cost of a major decline in wages, the biggest in more than 100 years. There is now some recovery, but it is very slow. At the same time, top executive pay has been rising by more than 10% a year while wages have suffered.
For that, there is no justification, moral or economic. Inequality does not improve growth or productivity, and of course it undermines a good society. Two of the most important books that I have read in the past decade are The Spirit Level, by Wilkinson and Pickett, and Capital in the Twenty-first Century, by Piketty. The first shows that the most unequal countries are also the most socially dysfunctional. Piketty traces the rise and fall and rise of inequality in the United States, Britain, France and Germany and explains that it is due to the fact that generally, return on capital grows faster than the growth of GDP. Hence, the owners of capital, the rich, grow richer. He also shows that the post-war years, when, through progressive policies, inequalities were reduced in all those countries, were also the years of fastest economic growth. So much for the need to pay chief executive officers and bankers millions a year so that we can be better off or to pay bankers huge bonuses to stop those who helped to bring about the crash being recruited abroad for their unique skills.
Conservatives favour shrinking the state and tax cuts. Tax cuts mean crippling public services. Apart from anything else, it is foolish for Mr Cameron to pledge no VAT rise. He could reasonably say that he sees no present need for an increase in VAT and has no present plans for it, but why tie his hands with solemn pledges when he does not know what crises may be ahead?
Anyway, it may be unfashionable, but in my belief, in present circumstances tax cuts should be the lowest priority of policy. I am with that great American lawyer Oliver Wendell Holmes. He not only dominated the Supreme Court for 20 years after his appointment at the age of 72—which is a good example for those of us of riper years—but declared that paying taxes is the price for a civilised society. Amen to that.
Viscount Hanworth (Lab)
My Lords, you can fool all of the people some of the time, and you can fool some of the people all of the time, but you cannot fool all of the people all of the time. If we take as our evidence his Budget speech of last Wednesday, this is a nostrum of democratic politics of which George Osborne seems to be in denial. Indeed, he seems to have forgotten it completely.
The Conservative Government have had almost five full years in which to observe the developments within the modern British economy and to take the necessary steps to correct its most dysfunctional aspects. Instead of addressing the most prominent problems, the Conservatives have been fanatically pursuing an atavistic political and economic agenda which they have inherited from a previous Conservative Administration: that of Margaret Thatcher, which lasted from 1979 to 1990. The Conservatives under Margaret Thatcher sold council houses without any replacements. They privatised many previously publicly owned industries. They sought to defeat the power of working people that was vested in the trade unions and they oversaw a prolonged period of industrial decline.
That Government also unleashed the financial sector by deregulating its activities with consequences that eventually came to a head in 2007 in a major financial crisis. During Thatcher’s period as Prime Minister, the Conservatives sought to effect a major redistribution of income and wealth in favour of the already prosperous classes. Perhaps the most extreme example of Conservative measures of redistribution occurred in 1988, when the top rate of tax was reduced from 60% to 40%.
The present Government have had the same intentions as their forebear, but they have had less room for manoeuvre and have been weakly restrained by the coalition partners, the Liberal Democrats. Most of the leading publicly owned industries and utilities had already been privatised, so this Government have had to apply their privatisation policies elsewhere. They have applied them to agencies that have been responsible for some basic social provisions.
On the national level, privatisation has extended to the Prison Service, the police force, labour exchanges and education. A major privatisation of our National Health Service is now well under way. At local level, the budgets of councils have been slashed and they have been compelled to hand many of their functions to private enterprises. We have seen the emergence and rapid growth of a new class of unregulated private monopolies, which have assumed the role of the public service providers. Some of them have been notoriously inefficient and exploitative. They include such giant enterprises as Atos, Capita, Serco, G4S and the notorious A4e, which, notwithstanding disturbing allegations of malpractice, continues to gather contracts from the Government.
The ideological justification for employing such agencies to provide public services has been the supposed superior efficiency of private enterprise when compared with that of the public bodies that they have replaced. Even a cursory examination of their activities will show that their operational efficiency has often been dire. However, the concept of efficiency that has been espoused by the Government encompasses the cost savings available from reducing the number of employees and their rates of pay. Contracts of employment that would not have been tolerated when the unions were a force to be reckoned with are now commonplace. Rates of pay in many occupations have been falling drastically at a time when remuneration of high earners has been rapidly increasing.
The Government appear to be satisfied with such an outcome on the grounds that a cheap labour force coupled with high rates of profit and of salaried remuneration are factors that will render the UK attractive to inward investment from abroad. Inward financial investment mediated by the City of London has become a vital factor in averting what would otherwise have become a major balance-of-payments crisis.
The process of the deindustrialisation of Britain, which accelerated dramatically in the era of Margaret Thatcher, has proceeded apace. In 1979, manufacturing in the United Kingdom contributed 25% of GDP, and it contributed largely to our export earnings. In 2010, manufacturing accounted for only 12% of the country’s national output. Its decline has been greater than in any comparable western economy.
The inward financial investment, which has averted a balance of payments crisis, has added nothing to our manufacturing capacity. It has found its way into purely financial assets and into residential and commercial property. Much of it has been devoted to the acquisition of company ownership via hostile takeover bids. Water companies, power companies, airports and banks have been among the many enterprises that have fallen into the hands of foreign investors.
The high-tech industries that continue to emerge in Britain have been particularly prone to hostile takeovers. Their vulnerability can be attributed to a number of associated factors and circumstances that serve the interests of our financial community and their political allies within the Conservative Party. Foremost among those are the rules of corporate governance that facilitate mergers and acquisitions to an extent unparalleled anywhere else among western economies. Britain’s financiers profit hugely from mediating the sale of British companies to foreign buyers. In seeking the finance for expansion, our small and medium-sized enterprises in the UK cannot rely on the commercial banks, which are the main source of industrial finance in other countries. Instead, they must rely upon either retained profits or stock market flotations. Because shares in such companies inevitably entail voting rights, a stock market flotation renders a company prone to the sorts of takeovers that have been bedevilling our manufacturing enterprises.
The inwards foreign investment that has delivered our nation’s assets into the hands of foreign owners has also sustained the high value of the pound. For many years, our overvalued currency has made it difficult for our manufacturers to export their products, which has exacerbated our current account deficit. The Government have done nothing to amend this circumstance, which is now severe. They have done little to restrain the depredations of our overgrown financial sector. They have failed to compel our banks to provide funds to British manufacturing enterprises.
It is extraordinary that in such circumstances George Osborne has been able to declare in his Budget speech that,
“Britain is back paying its way in the world today”.—[Official Report, Commons, 18/3/15; col. 770.]
He has talked of reductions of deficits as if they were reductions of indebtedness, which is increasing in all our national accounts. The Government’s finances have a heavy reliance on the inflated taxes from the financial sector, and their revenues collapsed when the financial sector collapsed. The Chancellor has done much to encourage the revival of the financial sector. He has done nothing to aid the recovery of other sectors of our economy or our society. The Government have been serving the interests of a very narrow sector of our society, and the British electorate will not be fooled for much longer.
Lord Freeman (Con)
My Lords, I want to concentrate on the impact of the Budget and the Autumn Statement on pensions and savings. I very much welcome the initiatives that have been taken, not only by the Chancellor but by the excellent Pensions Minister in the other place, Mr Steve Webb. The noble Lord, Lord Deighton, is going to sit through some three and a half to four hours of debate, so I am not expecting a response, but I would be grateful if he would draw my brief remarks to the attention of the Minister, for whom I have a high regard.
The first point that I want to cover is the taxation of savings interest. This may not sound a very dramatic change, but for a large portion of the population it will have a significant effect because what is proposed, which I welcome, is a tax-free allowance on interest from 2016. Although it is limited to the first £1,000 of savings, it will benefit 95% of savers—that is, 17 million people in this country taken out of tax. The tax-free interest will affect the basic rate of taxation. We have very low interest rates. Those who have looked at their bank statements recently will realise that one is earning something like 1% on bank savings so this elimination of tax, although it may not amount to very much, will be welcomed by many. In due course, I hope that there will be a further extension of this concession in taking savers out of tax.
My second point concerns the cashing-in of savings, typically from defined contribution schemes where people have been saving, perhaps with the assistance of their employers or themselves, into pension schemes. These are typically defined contribution schemes, as opposed to the defined benefit schemes run by the large companies in this country. The Chancellor announced a relaxation in the Autumn Statement, and now again the Budget Statement, which will be subject to legislation, on the rules governing the drawing-down of moneys in savings in these pension pots, although the drawings-down will of course be subject to tax. There is also the trading of annuities, which I very much welcome, although clearly there are issues here which require careful advice to those who are either considering selling their pension or wishing to trade the stream of annuity payments. It is very important that there should be proper care and advice given to those who take advantage of this welcome relaxation.
I start from the principle of trusting the people—those who will receive this benefit—but there has been a lot of cautionary press. Indeed the Opposition, in a recent debate, cautioned about exploitation by those who might offer erroneous advice to pensioners who wish to cash in their pension pots. We need Pension Wise, the new organisation which in literally a few days’ time is to take responsibility for advising pensioners on the use of their funds, to be properly staffed. I suggest that your Lordships’ House have the chance to debate after 12 months the record of the advice given, and any instances of exploitation or bad advice given to people who might not be financially expert in looking after their savings. I hope very much that there will be a report back to Parliament within the first year, or at least after the end of the first year.
Perhaps I may deal briefly with the lifetime allowance for maximum savings with tax relief. It is to be reduced from a pension pot which can be built up, with certain tax reliefs, to £1.25 million—it sounds an awful lot—to a pot of £1 million in 2016-17 and indexed thereafter. However, there is a warning here. If a husband has a spouse and the inflation arising is eating into any payments that come from drawing down those savings, then one journalist estimated quite recently in the press that drawing down £1 million, subject to tax but with a spouse and with necessary inflation-proofing built in, would amount to something like only £30,000 per annum in a pension from the age of 65.
Finally, I want to deal with defined benefit schemes, which are run by the large companies and corporations in this country. A particular problem at the moment is that the very low rates of interest used to discount the liabilities, both gilt rates and corporate bond rates, are such that there are rising deficits in these big pension funds. This is not only in former nationalised industries and large corporations; they cover perhaps well over 50% of those employed in industry and commerce. The impact of these bigger deficits means that companies have to transfer cash into the pension funds to make sure that they have sufficient funds to pay out the pensions. This is causing great concern and I hope that, in due course, the Chancellor can make a Statement on this.
That is all I wish to say, except to repeat the one key point which I hope that the Minister will convey to Steve Webb, the Pensions Minister. I hope that your Lordships will have an opportunity, at least after the first 12 months, to look at the record of these greater freedoms on the population and whether they have been abused by improper advice.
Lord Graham of Edmonton (Lab)
My Lords, I am pleased to have the opportunity of speaking in this debate. Having asked the Minister to note that I intend to speak on my pet subject of mobile homes and the attention paid to it by the Government, I confess to him that I will not be able to stay here until the end of the debate because I am not well. But I am obligated to make one or two points.
I thought that there would be a fair bit in the Budget Statement on housing. Although the Government have lots of plans for housing, there is very little direct reference to it in the Statement. When I asked for the Treasury background papers, I found that a great deal has been put in train on housing by the Government, and that relaxed me a little bit.
In an earlier debate on mobile homes, I relied on information received that Mr Henry Morrison Junior had practised what was called “sales blocking” on his park at Welford-on-Avon, Warwickshire. This practice has disappeared, largely as a result of the 2013 Act. Mr Morrison wrote to me saying that he had never taken part in such actions. I immediately wrote to him, apologised and promised to express my withdrawal of any allegation of such a policy. He has my full approval to use this apology, and I reiterate my regrets and apologise unreservedly. I want to put that on the record.
Very often, parliamentarians are written to by interest groups with their point of view. There are one or two who do so in respect of park homes: Sonia McColl, who is very active in the JUSTICE campaign; Mr Tony Turner, who represents a group in Cornwall; and others. I rely completely on them. In the main, what they send to me has already been sent to the Minister. Therefore, all I want the Minister to do is give me an assurance that he will draw the attention of his parliamentary colleagues to what I have got to say.
The matter deserves attention. There was a phrase that was used by the Government some time ago: “We’re all in this together”. Well, some of us are more in it than others. I think that people who live in mobile homes are getting the short end of the stick. Most of them are aged; most of them are infirm; most of them rely on the good will of the site owner—and many of the site owners can be castigated. The mobile homes population is well looked after not only by the organisations that I have mentioned but by other people, too.
What strikes me is the gap between what the establishment says and what those representing residents experience. Let me illustrate that in the following way. From a small sample, the JUSTICE Campaign, so ably led by Sonia McColl, tells me that police were “wonderful” in Cornwall but that in Arun District Council they were not. The police were helpful in Bracknell, but action was not taken on complaints to the police in east Hertfordshire. No police action was taken in north Somerset, but it was taken in Maidstone. Police were helpful in Test Valley, but in Sevenoaks they said that it was a civil matter and not a criminal one.
That reminds me of a case that was investigated. Inspector Colquhoun of the West Mercia Police was instrumental in making inquiries. One night, a group of men deliberately set fire to two mobile homes on a site. They were caught and they were sentenced, eight of them, to 64 years in prison—so you can see the seriousness of the matter.
Sonia McColl provided a document known as the “name and shame” list—the Minister already has this information. Twenty site owners are on the list. One owner had 13 parks with 120 homes; another had three sites with 118 homes; another had four sites with 234 homes; another had eight sites with 417 homes; yet another had two sites with 67 homes; another had 17 sites with 1,000 homes; and yet another had 43 sites.
I have with me a newspaper cutting which draws attention to the fact that, in the matter of council house sales, a man and his wife in the Ashford area own 1,000 homes. They have bought them and are renting them out. They are thinking in terms of selling their portfolio, which is estimated to be worth millions of pounds. There is something wrong in the field of housing when that sort of situation can take place.
In the time that I have left, I will simply refer to what other councils are doing. In Cornwall, they issue a document to every resident of a park home. The Minister will know that there is a gap between the activities of the ministry concerned and the effective dissemination of the information to the residents. It is not easy, but it needs to be improved.
Last week, Sarah Wollaston, who is chair of the Health Committee in the other place, asked the Secretary of State for Communities and Local Government how many local authorities had,
“revoked the licences of park home site owners who have breached their site licences more than three times in the last two years”.
The Minister had to say that the Government had no information about this activity. My point is that direct action needs to be taken against site owners who have been taken to court and dealt with, yet who refuse to comply. The written statement which governs these things lays down obligations and responsibilities for the site owner and the applicant. I see that the Whip on duty is smiling at me and he does not do that very often. I know what the smile means, so I will sit down.
Lord Bilimoria (CB)
My Lords, the Government are very proud of the good things in the economy at the moment. As the Minister said in opening the debate, we have low inflation, low interest rates, high employment and growth figures et cetera, but, as he said, it is austerity to prosperity, and he admitted frankly that productivity is too low and the deficit too high.
Earlier this month, my noble friend Lord Low held a debate which I chaired. The motion was:
“This house believes that the Government’s deficit reduction plan involves cutting the deficit too far and too fast”.
The noble Lord, Lord Skidelsky, was present as well. We had Jonathan Portes, the well known economist, Simon Wren-Lewis, professor of economics at Oxford University, Roger Bootle and Doug McWilliams—all very well known economists. When the motion was put to the vote at the insistence of the noble Lord, Lord Skidelsky, it was carried quite comfortably. The point was made, as the noble Lord, Lord Skidelsky, has mentioned in the debate, that the calculations are that if austerity had not been as severe as it was, the growth rate could have been 5% to 10% higher over the five-year period. One needs just to do the sums to see the difference that that would have made. On the other hand, austerity has created confidence in the global financial markets and we have the security of a lender of last resort in the form of the Bank of England.
The Chancellor has, on the one hand, shown his commitment to long-term prosperity for the economy by sticking to the austerity agenda, but, on the other, he has not had the guts to invest in what will make this country truly competitive and increase the productivity that so many noble Lords have spoken about. For example, where in the Budget is an increase in investment in higher education? We invest less by far as a proportion of GDP than the United States, the EU average and the OECD average. This Labour proposal to reduce tuition fees to £6,000 is a red herring. What we need is more investment in higher education. What about investment in innovation? Where in the Budget is the major investment in R&D and innovation? Once again, we as a country invest way below the United States, the EU and the OECD average as a proportion of GDP. The patent box is tinkering at the edges. How can we get businesses and universities to invest more in innovation? Will the Minister tell us about that?
What about tax rates being competitive? A brilliant thing the Government have done is to bring corporation tax down to 20%. It is one of the best things they have done, attracting inward investment and making our companies more competitive. On the other hand, the Government do not have the guts to bring the income tax rate down to 40%. In his enthusiastic speech, the noble Lord, Lord Rooker, spoke about the catalogue of achievements of the Blair Government. It was the Blair Government who carried on with 40% rate of tax, until it was increased to 50%. It was the Blair Government who reduced capital gains tax to 18%, which was hugely competitive, while entrepreneurs’ relief was 10%, encouraging wealth creation, prosperity and tax competitiveness. On the other hand, the Labour Government’s mistake was to increase public spending to nearly 50% of GDP. This Government want to reduce it to 36% of GDP. I still believe that will require unrealistic and drastic cuts in the welfare state and the NHS, which make up a huge proportion of our public spending. Will the Minister explain how the Government are going to achieve that drastic cut? As the Chancellor said, the EU has 7% of the world’s population, 25% of its economy and 50% of its welfare spending. In the Chancellor’s words, we cannot go on like this. Will the Minister explain what he is going to do?
When it comes to defence, the Government refuse to commit to the 2% of GDP NATO commitment. Will the Minister commit to it? The SDSR was negligent. We do not have our Nimrods, which we now need with Russian submarine incursions. We have no aircraft carrier capability for Harriers, which we have needed several times over the past five years, let alone now with the threat in the Falklands. For one of the strongest defence countries in the world to have no carrier capability for a decade is negligent. The Army cannot even fill Wembley, which is negligent. The security of our country is our number one priority. We have physically destroyed the Nimrods and depend for carriers on the French—on the 200th anniversary of the Battle of Waterloo. Will the Minister tell us whether the back-up from the French has been effective?
When he speaks, will the noble Lord, Lord Davies, speak about Labour’s policies? We hear about the dangerous policies: the mansion tax; raising income tax to 50p; increasing corporation tax by perhaps up to 6%; employees sitting on boards of companies’ remuneration committees; employees being given first refusal when a company is sold; and employees being given a share of companies’ profits. To an entrepreneur and a businessman, these sound like real communist measures, and we know how successful communism has been. The business community has genuine concern about the leader of the Opposition and his care for, knowledge of and familiarity with business. He has missed out business in many major speeches. Will the noble Lord on the Front Bench confirm that these Labour measures will be implemented?
What about the SNP? The leader of the Opposition says he will not go into coalition with the SNP, but what if the SNP props up a Labour Government? It wants to get rid of Trident, our nuclear deterrent. Would the noble Lord, Lord Davies, agree with that? Increase public expenditure and you have the nightmare scenario of Labour being propped up by the SNP. It reminds me that in the middle of the financial crisis, my fellow Fellow of Sidney Sussex College, Cambridge, Desmond Tutu, looked up and said, “Oh God, we know you’re up there, but can you make it a little more obvious?”.
It is a question of balance. Britain is number two in the world in inward investment. We have to protect that, and Governments have not been able to. If you look at the graphs in the Budget reports, Governments have not been able to balance their books. Public spending at 40% is the best a Government can achieve. That is what we should target, and getting a 40% tax take. With regard to debt interest, servicing it alone takes 2.5% of GDP. Will the Minister tell us what the plan is when debt interest goes up? How will the Government deal with that amount of more than £50 billion?
The Office of Tax Simplification is an oxymoron. Simplification of tax collection is in this Budget, but the tax code is still 11,000 pages long. There are huge issues here. As chancellor of the University of Birmingham, I chaired for the first time the university court and the university annual meeting. I was able proudly to say that it is a billion-dollar institution. It has revenue of more than £500 million, a healthy surplus, a healthy cash position and, most importantly, a £300 million infrastructure investment programme over the next five years, with a state-of-the-art swimming pool, libraries, a dental centre, new student accommodation and all the things that make it attractive to inward investment in terms of students and academics from around the world. If only our country could balance its books in that way and have an investment programme in the future, we would be able to get high productivity, get the deficit down and get our debt down.
Lord Hunt of Chesterton (Lab)
My Lords, it is a pleasure to follow the noble Lord, Lord Bilimoria. I slightly wonder what country he was talking about, given all the things he referred to, such as worker participation in companies, which the British helped to introduce in Germany after World War II.
This debate should be an opportunity to talk about the economic policy and future prosperity of the UK. I declare my interests in one or two companies. As other noble Lords have said, the speech’s historical analysis seems slightly deficient. There was clearly an enormous crisis, which was not made in the UK. After the crisis, countries responded to it in different ways. Some, such as the United States, immediately stimulated their economy, while others, including the UK, were flat. If you compare the process of coming out of a slump or a crisis to walking up a mountain, there are two ways of doing it. One is to find a nice gentle slope to the top of the mountain, which America did, and the other is to go absolutely flat and then find the steepest place to climb. Obviously, while you are climbing up the steep slope you are climbing more metres per second than those on the gentle slope and then, as the Government keep saying, for one year you do better than other countries. It is a strange kind of geometrical definition.
The important point is that, for most countries, the fundamental aspect of the economy—nobody has really talked about this—is the ownership of the country’s main businesses and the economic relationships with other countries. Neither was really mentioned in the Minister’s speech or, indeed, in the Chancellor’s speech. Financiers in the public and private sectors in the UK do not seem to regard the ownership issue as important. Indeed, the City and the Treasury relish every opportunity to sell off what remains of the UK’s large industrial businesses. We read articles saying that this is a bad month because we not selling off any industry. We have seen this with more and more of our major industries in the UK. In aerospace, Airbus is taking more control. In trains, we have now sold off the Channel Tunnel, where we had a successful public sector. I was talking to a significant manager in the nuclear industry, who said that all nuclear work here is now owned by foreign countries. We have a nuclear programme, which is very welcome, but it is all owned by other countries. We had major world industries in motor cars, electrical engineering and chemical engineering. The noble Lord, Lord Taverne, raised this question: if we lose ownership of all these companies and lose the entire strategic planning of this country, how can we possibly become a world-class country working around the world?
UK engineers and scientists—I declare that I am an engineer and an honorary fellow of the Institution of Civil Engineers, which is where I have had these conversations—recognise that if the countries which own these industries are abroad, that is where the important, interesting design is taking place, such as Hitachi’s nice train which will arrive here. Who did the design? It was done in Japan. Are we going to build them? Yes, but all the design was done in Japan. Of course, there is one way—I have debated this with the Minister before—which is for us sometimes to have a golden share, and then of course we have control, as with Rolls Royce. Why is there only one company with a golden share? We want lots of golden shares, and then we would operate around the world.
This year, of course, we had the near catastrophe of losing AstraZeneca, a major pharmaceutical company. I am glad to say that now, with the help of other European countries, that remains in the UK and will provide a tremendous opportunity for research and development here, and indeed for operating round the world.
Where, then, is the mentality? One Minister, in a very excitable debate—I will not say who it was, as he might be embarrassed—got more and more excited and said, “The thing about this country is that we want to be the corner shop of the world!”. I think he made a Freudian error there. But that is exactly the point: the Government do think this is the corner shop of the world, not the workshop of the world, and that is the problem. It is about internal vision. The Treasury simply does not mind at all, as far as I can see. However, the Government do not seem to realise that if you do not own any industry, you do not control what you make and what you do. That is a logical point that other countries, such as France, Germany and America, understand.
Equally depressing in the Chancellor’s speech—and, I am afraid, in the speech of the noble Lord, Lord Deighton—was the absence of vision about the importance of the UK continuing to be at the heart of development of the European economy. The inwardness and short-sightedness of the Budget speech was breathtaking in that respect. However, two evenings ago I was fortunate enough to hear the vision of the new Commissioner for Science in the European Commission, Mr Moedas, an engineer from Portugal. He called for the continuing role of the UK, with its extraordinary science and technology, in Europe, but he was too polite to mention that the UK is not in the lead in R&D investment as a proportion of GDP. Therefore, it is very important that we remain in Europe; perhaps the Minister might refer to that in his wind-up.
My final point is on the Government’s support for small and regional industry. I welcome the emphasis on working in the regions and the greater development of the regions. It was of course not mentioned in the Government’s speech that after they came to power in 2010 they got rid of the regional development agencies. After some havering, they have now introduced the local enterprise boards. From a major speech last week by the leader of the Labour Party, we know that there will be no going back when the next Labour Government come to power. They will continue with the local enterprise partnerships, unlike their predecessor, who gave the bad example of immediately throwing that up.
However, I give credit to the present Government, who kept on with the Technology Strategy Board; they have now changed its name to Innovate UK, but that is fine. I am afraid, however, that there is no indication that the UK understands that it will not have its own world-class industrial companies unless there is significant investment in the UK ownership of those companies. Maybe the only way to do that is with the famous golden share, in which case we need more of those. Finally, it is important, as the noble Lord, Lord Taverne, said, that this should be the way we have a strong export sector, because at the moment the balance of trade and productivity problems are rather severe.
Lord Flight (Con)
My Lords, voters in this country understand that the Government have done a pretty good job in bringing the economy back after the worst depression since the Second World War. I will only make the point that, first, it was that much worse here than in most of the European countries because of the importance of the financial sector; and secondly, one of the main reasons for the decline in 2010-11, as Professor Collins pointed out, was the mistaken reduction in the money supply in 2009, which was exactly the wrong monetary policy for that time. For the past five years, the fiscal monetary mix has been about right and the austerity Keynesian mix has been about right. As I have said before, there has been a greater explosion of entrepreneurial activity, particularly in new, high-tech industries, than I have ever known or seen in my lifetime, not just in London but all over the country.
To some extent the savings rate overlaps with some of the excellent points made by the noble Lord in his speech. The savings rate in this country has been significantly too low for at least 20 years, if not since the Second World War, which has led to two different sorts of problem. The first is completely inadequate provisioning for retirement and care home expenses going forward, which, sadly, contrasts with Britain having been the leader on pensions and retirement saving in the 1980s. An average pot of some £230,000 is needed to provide the standard two-thirds of income in retirement. The average size of the pot is now only about one-tenth of that. The tipping point will come in 20 years’ time when retirement incomes will start to fall materially. Therefore, without more saving, there will be a big problem down the line.
The second is the economic and strategic impact, to which the noble Lord, Lord Hunt, drew attention. Whereas we were a major creditor nation, owning a lot more around the world than the world owned of us, 25 years of current account deficits totalling some £700 billion on a cumulative basis have been financed by selling off assets, such as businesses. We cannot do Hinkley Point without the Chinese and the French. The strategic loss showed up first in the utility sector, but it is dangerously spread across too much of our economy, as the noble Lord, Lord Hunt, pointed out. Even here in London, one of the reasons why young people cannot buy houses in central London is that 49% of them are owned by people from abroad and an astonishing 49% of City property is now internationally owned. We got away with doing that for a long time. We discovered in the 1980s, following the ending of exchange controls and a floating exchange rate, that current account deficits, which had been such a big issue previously, got funded automatically by capital inflows. I am certainly not against the abolition of exchange controls, and I believe in open markets, but if you have an inadequate savings rate, what has happened here is what will happen. The Government still spend £90 billion per annum more than tax revenues and the household debt to income ratio is up to 172%, which is higher than it was in 2007-08. The savings rate now is about 3%. We need a savings rate of at least 10% on average to be in a more balanced situation. Never forget that savings equals investment, so one of the reasons why investment has been inadequate and productivity growth has been disappointing has been lack of savings. In summary, Governments can borrow other countries’ savings for quite a long time and, as it were, get away with it, but it eventually comes home to roost, and we are now at that stage.
There is some good news. Between 1997 and 2010, four-fifths of growth came from consumption and only one-fifth from investment. Since 2010, investment has increased four times faster than consumption. Last month we had the best current account deficit for 15 years. Auto-enrolment is still in its early days but there is scope for contributions from employer, employee and government to increase and lead to a reasonable accumulation of pensions. The need is perhaps less than forecast because it is very clear that many people do not want to retire as they enjoy the companionship of work. Indeed, if we go back to the late 1990s, some 80% of the total increase in economic activity came from people working longer. I am sure that it will become perfectly natural for people not to want to retire until they are 70 or even 75, with people living much longer.
I hope that this will be a watershed Budget for trying to revive the savings culture. The Budget measures for ISAs have been helpful and important and saving by ISAs is now something like seven times individual money purchase pension scheme saving. It has become extremely important for the self-employed, a growing part of the population, and its great advantage is that it is simple and straightforward. Free interest income up to £1,000 will, I hope, encourage people to save more. I am less keen on limiting pension pots to £1 million. It would have been better to have reduced the tax credit to 20% for everyone and to have got rid of both the maximum that you can have in a pension pot and the maximum that you can put in every year.
The savings rate is far too low, and coming out of a recession that is, perhaps, unavoidable. But over the next decade, if whoever is in power does not take measures to increase the savings rate, there will be growing strategic problems in running the economy and there will need to be stick as well as carrot to achieve what is needed.
Lord Thomas of Gresford (LD)
My Lords, I want to say something about the impact of the Budget on Wales. This Government will be remembered for three things: first, that a coalition of political parties can provide a strong and sustainable Government in the United Kingdom; secondly, that this coalition Government pulled the country back from the brink of economic disaster; and, thirdly, that they set in train new and exciting developments in renewable energy. It was a prospective parliamentary candidate for UKIP who asked the question of the year at a meeting in Cleethorpes last month, when she asked:
“What happens when renewable energy runs out?”.
We in Wales are delighted that the £1 billion project announced in the Budget to build a tidal lagoon in Swansea Bay will be supported. It has a design life of 120 years, it will deliver renewable power to more than 155,000 homes and it will save 236,000 tonnes in carbon dioxide emissions each year. Swansea Bay has one of the highest tidal ranges in the world at an average of about 10 metres and will power turbines four times a day as the tide rises and falls indefinitely.
Ed Davey, the Liberal Democrat Energy and Climate Change Minister, has led the charge, and it is thanks to his efforts to make sure that the environment stays top of the agenda that the Chancellor in this Budget committed the Government to negotiations with Tidal Lagoon Power over the contract for difference—CFD—that will guarantee a fixed price for the lagoon’s electricity over a period to be agreed. The project will create 6,000 jobs and the company has said that the jobs will be created in Wales, with the supply of machinery and so on coming from the United Kingdom. It will generate millions of pounds to the local economy through tourism. The plans demonstrate that there will be a 10 kilometre track around the barrage for running, walking and cycling, and the lagoon itself will be an ideal venue for sailing, rowing and other water sports.
Furthermore, Swansea Bay will be the pioneer for similar developments in Wales, where there are plans already in place for tidal lagoons in Cardiff, Newport and in Colwyn Bay in the north. Montgomeryshire is situated between two national parks and has been subjected to many applications for wind turbines and wind farms, and there is a proposal to devastate it with 33 miles of electricity pylons to connect the output to the national grid in England. I think that the tidal lagoon project is a much more satisfactory and environmentally friendly way in which to deal with renewable energy.
Ed Miliband came to Wales last week and said that the Budget has “dreadful implications” for Wales. Of course, he has no knowledge of the lives of the 3,000 Welsh farmers for whom the ability to average such profits as they may make over a five-year period will do much to deal with the uncontrollable factors of weather, disease and fluctuating prices. Mr Miliband does not appreciate the implications for rural motorists who depend upon their cars of the freeze on fuel duty that the Budget announced will continue. He has no knowledge of the relief to commuters and businesses in south Wales as a result of the proposed reduction of tolls on the Severn Bridge, which will I hope be abolished in 2018, or of the 45,000 people in Wales who could with the help-to-buy ISA purchase their first home over the next five years.
In Cardiff, where the Labour-controlled council is incapable of organising anything at all in Brains Brewery—or indeed any other brewery—the Chancellor, as a result of meetings between Jenny Willott, the Lib Dem Cardiff MP, and Vince Cable, has agreed to promote a city deal which would support large-scale infrastructure projects.
Straight from the front page of our last Lib Dem manifesto, the coalition Government have delivered income tax cuts to millions of low-income and middle-income workers. In Wales, that means that 1.25 million workers have received a £900 tax cut and 167,000 Welsh workers will no longer pay any income tax at all.
I am proud of these achievements, and of all those Liberal Democrats who have served in government. This morning there was a demonstration in Old Palace Yard, as there normally is midweek when Parliament is sitting. It was not a big one, but it had all the usual whistles and horns. Despite my admiration for the demonstrators’ optimism that they could achieve anything with parliamentarians heading for the hustings, I decided to put the headphones on and listen to Mendelssohn’s symphonic poem, “A Calm Sea and a Prosperous Voyage”. It all started off smoothly enough, but soon the tempo quickened, the dissonances arose, and the timpanist had a fine time bashing his drums, while the brass built up to a fortissimo passage. But eventually, following a great fanfare on the trumpets, the music resolved into harmony and peace. At the end of this coalition Government, that is how I feel. I just hope that next time I will not be listening to a Scottish “Fingal’s Cave”.
Lord Lea of Crondall
My Lords, in following the noble Lord, Lord Thomas of Gresford, and his mention of the hustings, this of course is not a Budget in any normal sense of the word. Who is going to have a copy of the Finance Bill? Where is it? Well, quite, thank you—it is sitting on a table. What is actually happening is, as my noble friend Lord Whitty said, that the Chancellor has made an election speech. When my noble friend said that, I thought that it was a statement of the obvious—until I realised that that was not the election he was talking about. My noble friend was talking about the election for the next leader of the Conservative Party. That is the election that matters—and we should get focused on our realities here.
The only real thing that it seems to me is happening in the economy at the moment is the extraordinary and sudden decision that all these pension pots—annuities—can be spent just as you like. Okay, set the people free, but I have to ask a rather relevant question in terms of our savings ratio, wealth and poverty and so on. Savings are very much a factor in the distribution of income and wealth. Indeed, you could treat the state pension as part of the distribution of income and wealth. Donkeys years ago, I was a member of the Royal Commission on the Distribution of Income and Wealth, and I know that these things are not unimportant. If everybody can blow their pot when they feel like it, is that really what the Government want? What is the latest on this focused advice that we keep reading about that is going to ensure that people do not just blow their pot, if I can put it that way?
I was very struck by a point made by the noble Lord, Lord Taverne, which had not been made hitherto—namely, that of the scenarios which may emerge after the election, by far the most damaging is that of a weak Conservative Government playing to their Back-Benchers who want a quick referendum on Europe, with that referendum being badly handled due to the time factor. Given that time factor, the referendum will not follow a real renegotiation, and we know that the different countries in Europe have different timetables as regards elections.
If all that went wrong, Scotland could say goodbye to England in order to stay in Europe and we would lose many billions of pounds’ worth of Chinese investment et cetera. This Conservative Government, and their successor, if that fate befell the country, would go down as about the most disastrous Administration since one that we had in Anglo-Saxon times. However, I do not need to take that historical analogy any further. That scenario would mean that we would be out of everything. We are only half in things at the moment. We have to engage with the rest of the world via Europe very much more intensively than we are doing, using European benchmarks for much of what we do.
My main point concerns the connection between the low productivity problem and the trade balance problem. I think that I have told the following anecdote once before in the Chamber. Someone I know quite well who runs an engineering company in Britain wants to take over a Swedish company. So off he goes to Gothenburg, where a buffet smorgasbord lunch is served and he is invited to say a few words. The person sitting next to him then says a few words along the lines of, “I am the chairman of the works council. Mr Struthers, if you take over our company, I would like to know how you will ensure that this will help us increase our world market share”. On the plane home, Mr Struthers thought about this and said to his colleagues when he got home, “You know, these works council chaps in Stockholm asked me an extraordinary question—namely, whether we had worked out, if we took over their company, how this could be conducive to the company increasing its world market share. Nobody in Britain has ever asked me that question”.
I thought that summed up a very necessary connection between the lack of involvement of workers and the huge tale of low performance. I do not mean low performance only in terms of productivity but also in terms of wages, because whatever theory of value in production you adhere to, it is certainly the case that in our national income accounts, low productivity and low pay equal low gross product. I do not buy that myself. I can cite the opposite argument and see whether anyone in this Chamber believes it. Over the last five years, FTSE 100 chief executive officers have seen their real earnings rocket by 26% —an astronomical rise compared with the years of pay cuts that everyone else has had to endure. Of course, such people in our type of capitalism—there are other types of capitalism in northern Europe—seem to think that accountability is only to shareholders, which has led in some strange cases to boards operating as cabals. That is something that a Labour Government will change, not in a revolutionary but an evolutionary way—and that change will start in June of this year.
Finally, I stress the importance of worker training in improving performance. Only 10% of our employers employ apprentices, compared with three to four times as many in some other countries. In fact, about one-third of employers do not carry out any training at all. That could not possibly happen if we had works councils involving both employers and workers. It constitutes a great gap in our arrangements in this country. As a former trade union official, I suggest that many council members should be elected on the basis of their trade union affiliation. I very much believe that this issue will be central to the policy of the incoming Labour Prime Minister. I trust that he will pursue this initiative and set up a unit in the Cabinet Office reporting to No. 10. Employment, productivity, labour market issues and world market share would be the central focus of such a unit. That focus is totally lacking in the present Whitehall structure.
Lord Holmes of Richmond (Con)
My Lords, we have heard a great deal of numbers, figures and statistics this evening. Coming in at this stage of the debate, I am happy to say that 95.6% of the numbers I was going to use have already been deployed.
It is also a pleasure to speak alongside the noble Lord, Lord Bilimoria. The difficulty is that, at this stage of the evening, it makes one very desperate for a Cobra beer, which would be very pleasant. I had the pleasure of growing up in Kidderminster and the noble Lord, Lord Rooker, was a regular in my living room on “Midlands Today”. I agree entirely with the noble Lord’s point about the beginning of the crash being the American Dream Downpayment Assistance Act. Nobody can dispute that. That is where it began. It was a well intended, naive piece of legislation which was always going to end in tears.
Where I depart from the noble Lord, Lord Rooker, is on the impact of the crash on our economy. Rightly, the Iraq war was mentioned. Billions of pounds that could have been spent on public services were deployed on a misadventure which ruined a country and was a massive drain on our economy. Similarly, public spending on the NHS unquestionably increased by 20%, but for only a 2% increase in productivity. Productivity matters—we heard that earlier in the debate. However, if one is going to increase spending by 20% on the NHS but have only a 2% increase in output, that does not make any sense. Although well intended, it cannot be seen as a good use of public money.
To re-rehearse some of the figures: growth is 2.6%—the highest of any advanced leading economy. Inflation is 0.2%. I agree that it is somewhat Saudi assisted but such a low rate of inflation is still a massive opportunity. Unemployment is 5.3%, a fantastic figure—low unemployment with the highest-ever level of employment. Regarding some of the measures in the Budget, as we have heard, the overall increase in personal allowances by £4,500 is a benefit to many people of £900 in their pockets. Four million people have been taken out of paying basic rate tax completely. The measures on beer duty can be laughed at, but this is the third year running in which it has been reduced. That has a positive impact. The increase in fuel duty planned for this autumn has been cancelled. On savings, and the allowance of £1,000 for those on the basic rate and £500 for those on the higher rate, I should like to ask the Minister: how can these measures and many more not have a positive impact for millions of people from every region and every background across the entire United Kingdom?
I move to the two “I”s—infrastructure and innovation. It is always best to have two “I”s rather than one. Infrastructure spending in the planned powerhouse of the north-west, with HS3, has to be applauded. This is the way in which to drive our cities, not just London but powerhouses up and down the nation. Similarly, the roads programme will have a massively positive impact. Spades at the ready will come up trumps.
There is one piece of infrastructure on which we and every Government could do more. It is the whole question of broadband. If we are going to be a competitive nation, we do not have to just acknowledge the digital opportunity but embrace and lead it. We can be at the cutting edge of this. I ask the Minister to consider the report of the Select Committee on Digital Skills, of which I was lucky enough to be a member. We published our report on 17 February; it addressed a number of these issues—not least the pressing need for high-speed, universal broadband access. We could have this today, but years ago we abandoned technology neutrality and said, “Fibre is the only way”. Fibre is a fantastic way of delivering high-speed broadband, not least in urban areas, but it is not the solution for all areas. In rural areas, there are already satellite solutions that could solve the problem right now, right here today. We need strongly to consider this, not least for farmers but for all rural businesses to let them play their part, not just in the national economy; with modern digital communications, one can have a global business wherever one happens to be if one has that broadband on which to base one’s business.
We need to consider broadband as a utility; it is as significant as water, heat and power. Does my noble friend believe that Her Majesty’s Government are doing enough to embrace, understand and commit to the opportunities that digital offers? We entitled our report, Make or Break: The UK’s Digital Future. It is that significant. There will be no “an economy or a digital economy” question; there will be just a digital economy. It is the everythingness of digital that we all need to understand and embrace if we are to go on the front foot and not just compete but be at the forefront globally in a digital future. There is a potential £43 billion at stake here; 35% of jobs are potentially in danger from automation but, by the same token, almost 1 million will be required in the digital sector before the end of this decade.
In conclusion, I ask my noble friend to consider this: we have had five Budgets from Chancellor Osborne. We have low inflation, the highest levels of employment ever, low unemployment and low interest rates. As a graduate in economics at Trinity College Cambridge, can my noble friend speculate on what the situation would be if we had had five Budgets from Mr Balls?
Lord McKenzie of Luton (Lab)
My Lords, it is a pleasure to follow the noble Lord, Lord Holmes. It was the FT which described this Budget as making the best of a bad job. We should endorse at least half that assessment. That the Chancellor’s rhetoric was running ahead of reality was most starkly demonstrated by the expressed aim that Britain should become the most prosperous country in the world. Would that it could, but we are reminded in our briefing of the gap in real GDP per head between the UK and not only the US but Germany and France, as other noble Lords have mentioned. In the case of the US, it is a gap that has widened.
I was proposing to speak just on the issue of housing but was encouraged by the contribution of the noble Lord, Lord Freeman, to divert briefly to the issue of pensions because he, quite properly, raised the issue of where we are on the guidance service. We are a few days away from these new flexibilities coming into being. My noble friend Lord Lea pressed this point as well. Can the Minister assure us that everything is in place, as originally anticipated and promised, to make sure that support is there for people having to make these decisions for the first time? It started off, in the Chancellor’s terms, as “advice”, then it became “face-to-face guidance”. Now I think it is guidance either face-to-face, digitally or by telephone. It is crucial that everything is in place; certain concerns have been expressed about whether that is the case. It is important that we hear tonight that things are properly in place.
The Red Book records that more than 537,000 new homes have been built during this Parliament—not all started in this Parliament, of course—as though this should be a source of some satisfaction. But this amounts to less than 110,000 each year on average, way less than half of what is required if demand is to be satisfied. We have another housing initiative in the Help to Buy ISA but, as my noble friend Lord McFall said, it is relatively small beer: it is modest and does not look at the supply side. The noble Baroness, Lady Valentine, referred to housing zones and a number of other initiatives that have been announced. We have had a number of them during this Parliament, but it is the net effect that is concerning.
Instead of getting on and building, the Government have spent almost five years making empty announcements on garden cities. The Ebbsfleet scheme was announced in 2012 and announced again in last year’s Budget, with £200 million of funds but only £100 million allocated in the Autumn Statement. The Northstowe development is already in the planning system. Nick Clegg promised £225,000 in funding for large-scale housing schemes in late 2012. That appears again in the Red Book this time.
It is estimated that England’s population will grow by more than 7 million over the next 20 years and that we need to build 243,000 homes each year to keep pace, let alone to deal with the backlog of more than 1 million homes. That is why we have a housing crisis: the shortfall is making it more difficult for people to buy, more expensive for people to rent, and has driven increased homelessness. Home ownership is at its lowest level for more than 25 years. The building of social homes has fallen to its lowest level in more than 20 years. Affordable housebuilding has fallen to its lowest level for at least five years. As the Lyons review reminded us, the typical first-time buyer now needs a deposit of 65% of their income; the average home now costs eight times the average wage; and one in four adults between the ages of 20 and 34 are still living with their parents. The private rented sector now houses 18% of all households, including 1 million children, with the average household in the private rented sector spending 40% of their income on rent, compared with 20% for those with mortgages.
At the start of this Parliament the Chancellor removed more than £4 billion of funding from affordable housing—a 60% cut. National government spending has steadily switched from investing in new homes to subsidising housing costs via housing benefit. The coalition now spends 20 times as much on housing benefit as on affordable housing building grants. The cost of housing benefit has risen by 9%, despite curbs on entitlements. The Government’s flagship new homes bonus is failing to get new homes built and is diverting money away from local areas with the greatest need. We would replace this with fairer funding arrangements, since the Government’s approach has unsurprisingly been regressive, with low-income households being disadvantaged by benefit cuts and the better-off being able to access the Help to Buy scheme.
What would we do? We need to get at least 200,000 homes built a year by 2020, providing up to 230,000 jobs in construction, with all the training and apprenticeship opportunities that that would bring. To do this, we would give local authorities the powers and resources to build the homes that their communities need. We will ensure that all councils produce a plan for homebuilding in their area and allocate sufficient land for development to meet the needs of local people. We will give local councils the power to designate new housing growth areas, in which they will be able to assemble land, commission development and deliver the homes that their communities need. We will unlock the supply of new homes by giving local authorities “use it or lose it” powers over developers who hoard land that has planning permission so that they can sell it on for a bigger profit, instead of building on it now.
Generation rent has been ignored for too long by this Government. We need to ensure that private renters get a better deal. We need to give security and peace of mind by legislating to make three-year tenancies the norm, giving renters a stable home and landlords more stability too. We need to end excessive rent increases by putting a ceiling on rent increases during the new three-year tenancies. We need to ban rip-off letting agent fees for tenants by legislating to stop agents charging fees to tenants. We need to drive up standards by introducing a national register of landlords and giving new powers to local authorities to drive up standards in their areas.
We need to allow greater flexibility to individual local authorities for their housing revenue accounts where councils present a business case and an investment plan to build more social homes. The Treasury would be able to ensure that the additional flexibility does not see an increase in total borrowing over and above that currently planned for. We need to strengthen the definition of “affordable housing” in the planning system, and we need to reverse the Government’s changes to affordable homes obligations. The Government have exempted developments of less than 10 homes from affordable housing Section 106 levies and have introduced vacant building tax credits, which will have a disastrous impact on the delivery of affordable housing.
The Government’s record on housing over this five-year term is not good. The Budget has shown no recognition of the scale of the challenge and no credible policies to tackle the crisis. This must be left to others.
Lord Best (CB)
My Lords, I think that I am going to make myself popular, being speaker number 25 and being able to say that the words of wisdom that I have carefully crafted have already been spoken by one or other of your Lordships this evening, particularly perhaps by the last speaker, the noble Lord, Lord McKenzie of Luton. He is an expert on housing matters, and it is housing that I was intending to address. Perhaps I may give some extracts from my speech that will give its flavour.
The headline in last week’s Inside Housing, the award-winning magazine for those in the world of housing, read:
“Sector dismay after Budget ignores supply”.
The Budget came less than two days after a huge rally at Westminster Central Hall, which called for “homes for Britain” and the ending of the housing crisis within a generation. The anxiety now is that the Budget’s principal measure for housing, the Help to Buy ISA scheme, will promote demand, with a grant of £3,000 for first-time buyers who save £12,000, but there are no measures in the Budget to increase the supply of new homes.
The Budget’s small print has some positive messages for housing: an increase in the number of growth areas, where development of brownfield land gets a boost, although there are no new funds for these areas; a London land commission to map sites and more powers to the London mayor; a feasibility study on progressing large-scale projects promoted by local authority partnerships; consultation on more effective use of compulsory purchase powers, which are such an essential tool in securing sites; and a feasibility study on boosting self-build and custom housebuilding. That is all good stuff but declarations, maps, consultations and feasibility studies do not in themselves build houses.
Two realistic options exist to crank up housebuilding to a level approaching that of times past: reviving council housebuilding and expanding housing association output. Many local authorities are raring to go, with the capacity to borrow and the willingness to work collaboratively with partners. Their borrowing, even though it can be safely and prudentially repaid from rents and sales, currently counts against the deficit in the UK. It would not do so if accounting practices used in other EU countries, and by the OECD and the IMF, were adopted here. Government must be braver in going for a change in the definition of public spending that would allow councils that are willing and able to do so to use their huge assets to get back into some serious building programmes.
Then there are the housing associations. The Chancellor found the £2 billion in the Budget for Help to Buy ISAs. That same level of investment, as spelt out by David Orr, the chief executive of the National Housing Federation, would enable housing associations to build 69,000 new affordable homes. Doubling that investment—enough to create around 140,000 extra affordable homes—would be a real response to the crisis in housing supply hitting our children and grandchildren. Can we hope for this in the next spending review?
Baroness Thornton (Lab)
My Lords, to justify his spending priorities, the Chancellor quipped:
“The sun is starting to shine and we are fixing the roof”.—[Official Report, Commons, 18/3/15; col. 769.]
This blinkered perspective deliberately ignores the growing crisis of underinvestment in the social infrastructure on which the economy rests. The 60-minute Statement made no mention of vital areas such as childcare, social care, education, the disabled and health. Even if one accepts that a bit of roof repair is going on, can it make sense to fixate on the roof while causing the social foundation to crumble?
What has life been like for the last five years under this coalition Government if you are a woman with children on a low or modest income or you are disabled? As my noble friend Lord McFall said, quite rightly, the success of any economic strategy is measured in its effect on people and their lives. So how have disabled people fared?
After many years of progress under both Tory and Labour Governments, with the DDA, Making Rights a Reality for Disabled People and the signing of the United Nations convention under a Labour Government, now, under this Tory-led coalition it feels as though we have gone back to the dark ages. Disabled people have been—I do not think it is an exaggeration to say this—vilified, while the support that they rely on has been slashed without a care for the long-term or human consequences. According to campaigners, disabled people have been hit nine times harder than non-disabled people by austerity cuts. Such support as has remained in place is increasingly confined to the most severely disabled. Surely, such an approach is simply counterproductive.
Those seeking work have faced reduced employment support. Thousands of disabled people have been affected by welfare changes. Councils have experienced significant budget reductions and have had to reduce access to social care for disabled people and their families as a result. Two-thirds of those hit by the hated bedroom tax are disabled. That is 440,000 people. There is no automatic exemption for disabled people, except for those with an overnight carer. We are proud that when Rachel Reeves gets to the DWP she will scrap the bedroom tax, before she goes on maternity leave. Noble Lords know that Labour is a modern party.
This Government’s policies have led to greater isolation, reduced social participation, worse health outcomes and less chance of disabled people being able to participate economically. Yet even as disabled people are taking the hit, every day there is a drip-drip story in the media, which repeatedly portrays them as scroungers, skivers and frauds. On these Benches, we have said clearly that it is wrong, cruel and shameful. It underlies unacceptable levels of hate crime against disabled people and we need to call time on it. The result of this general election will do just that.
Turning to how women have fared over the last three years of George Osborne and his Lib Dem cohorts, everyone is aware that David Cameron and this Government have a problem with women. Even so, it is amazing that they have hit women and their families hardest with their austerity programme. Research from the House of Commons has found that £22 billion out of the £26 billion—85%—raised over this Parliament from tax and benefit changes has come from women’s pockets. According to the IFS, families with children have been hit hardest by all of David Cameron’s choices, which is a clear betrayal of his promise to lead the most family-friendly Government ever.
Forty-four years after the Equal Pay Act was passed, women still earn just 81p for every £1 earned by a man. The Chancellor said that the gender pay gap is falling, but this is mostly due to a greater fall in men’s wages than women’s. Self-employed wage statistics are not included in this figure, so there is still cause for great concern. Progress on closing the gender pay gap slowed under this Government. While I welcome the recent turnabout on equal pay transparency, we have to ask why we have waited so long. Let us look at actions and not words: even David Cameron thinks that it is acceptable to pay one of his own Cabinet Ministers less than her male predecessor—namely, our Leader in your Lordships’ House being paid over £22,000 a year less than her predecessor.
I agree with my noble friend Lady Smith that the story of this recovery has been one of low-waged, insecure, temporary work, which has hit women particularly hard. More than one-quarter of all working women are now on low pay and make up the majority of workers on zero hours contracts. Yet the Government have refused to back our plans to ban exploitative zero hours contracts, to provide incentives to employers to pay living wages and to raise the minimum wage to £8 an hour. A Labour Government will do those things. More women are moving into part-time work than ever before and more young women are being left behind under this Government. Half a million young women aged between 18 and 24 are not in education, work or training, which is higher than when Labour left office.
While this Government boast about the apprenticeships they have created, they are prepared to tolerate a stark gender divide within apprenticeships, with women overwhelmingly in the lowest paid occupations. For example, 58,000 women took up apprenticeships in health and social care, and 25,000 went into children’s care, but only 400 took a position in engineering. A truly woman-friendly Government would recognise this gender segregation as a problem and would tackle it.
Key to a woman being able to work, if she is a mother, is childcare. Childcare costs have soared under this Government, with the price of a nursery place up 30% since 2010. There are 720 fewer Sure Start centres than in 2010 and the number of registered childcare places has fallen by more than 40,000. What will Labour do when it is in government? We will support families to better balance work and childcare. We will extend free childcare for the three and four year-old children of working parents to 25 hours to support more parents back to work. That will be on top of tax-free childcare. We will fund that by increasing the bank levy. We will guarantee access to wraparound childcare, such as breakfast clubs and after-school clubs. We will support both parents to share in those important first weeks with their newborn baby by doubling paternity leave to four weeks paid at the minimum wage. We will pay for this in the savings we will make from more women returning to work because of the 10-hour extra free childcare to which they will be entitled.
The Chancellor claimed in his Budget speech that the Government had been a success for women, with the smallest pay gap and the largest number of women at work in our history. These are incidental successes. There are more women at work than in our history because there are more women, not because the Government have created more jobs. The Government have shown little sign of giving any specific attention to women in the economy even though they have been under particular strain over the past five years.
For one of the most potent examples of how this Government’s lack of awareness of the impact of their policy on women you only have to look at what has happened to women’s refuges. Services and networks protecting women against domestic violence are under terrible strain and the most vulnerable women are being set back probably about 40 years. I have already mentioned the impact of cuts on women seeking refuge from domestic violence in places such as Chester and Gloucester. It is a disgrace and it is serious.
The current austerity agenda and programme of deep spending cuts has left women facing a triple jeopardy—cuts to jobs, benefits and essential services—locking them into poverty. Women have fared extremely badly under the Government’s austerity programme. This is absolutely not a price worth paying.
Lord Northbrook (Con)
My Lords, as speaker number 28 on the list, I shall try to avoid repeating figures mentioned by others.
I was surprised by how many speakers on the Benches opposite absolved the previous Labour Government of any responsibility for the huge budget deficit the coalition inherited. While I recognise that what happened in the USA was a major contributor to the financial crisis, the Labour Chancellor forsook the prudence of new Labour’s earlier years. As the noble Lord, Lord Rooker, stated, new Labour moved on—and Tony Blair is a classical example of that. UK debt was already high because of other reasons, including the Iraq war, and had we not as a coalition put the squeeze on public spending the markets could have panicked, interest rates could have gone through the roof and we could have been in a situation similar to Greece.
The first good economic news in the Budget was the OBR’s upgrading of growth forecasts for this year and the following two years. The Chancellor stated that business investment has grown four times higher than household consumption since 2010 and manufacturing output has increased more than four and a half times faster than it did in the entire decade before the crisis. Over the last year, the north grew faster than the south.
The job figures last week continued the tremendously good trend. When the Government set out on their strategy, the Opposition predicted more than 1 million jobs would be lost. Instead, more than 1.9 million new jobs have been created. Critics have said in the past that these are not real jobs, that they are all part-time and all in London. However, the Chancellor stated that 80% are full-time jobs, 80% are in skilled occupations and employment is growing fastest in the north-west. Of course, as many speakers have said, productivity is still a problem, although in the car industry and the retail sectors it has improved markedly. Overall, the job news is good. Low unemployment means lower rates of increase in welfare benefits. Table 4.27 of the OBR report shows downward revisions of, on average, £3.2 billion a year between 2015-16 and 2019-20.
On the budget deficit, it is a tremendous achievement to get annual borrowing down from £150 billion to £90 billion—£1 billion lower than forecast in the Autumn Statement—and the latest figures last Friday showed a £3 billion improvement over the previous year. This of course means that government gilt and interest charges compared to last December’s forecast for the next five years are now expected to be £35 billion lower due to the decline in inflation.
I turn now to government spending. Lower borrowing will continue only with a credible plan to control public spending and welfare. The Chancellor pointed out that the administrative costs of central government have fallen by 40%. This is highly commendable. However, welfare spending is still forecast to increase by nearly 10% over the next five years.
Other areas of annually managed expenditure which show eye-catching increases are central government debt interest, still increasing at more than 25%—a legacy of the previous Government’s mismanagement of the public finances—while local finance current expenditure is predicted to be up by more than 25%. As far as I am aware, no one else seems to have mentioned net public sector pensions, which are even worse at 10%. But they come up with an 18% increase because for some reason the employer’s contribution is netted off, although it seems to me that it is paid by you and me as taxpayers.
With regard to the overall spending picture, the Government should be congratulated on keeping departmental spending under control, but other expenditure does not appear to be in control. That is why total expenditure is planned to increase by 8% over the next five years.
I now move on to living standards, although most of this has been said by others. GDP per capita is up by 5%, and according to the living standards measure used by the ONS and the OECD, households are on average £900 better off than they were in 2010. Increasing the personal tax-free allowance has been a huge benefit to working people, and that is forecast to keep improving over the period. I also welcome the commitment to raise the higher rate threshold to £50,000, but I still believe that the top rate of tax should be brought down from 45% to 40%, which after all is only what it was under the last Labour Government. Lower taxes, within reason, bring in higher revenues.
I also welcome the Chancellor’s move to help savers with the four major steps which have been announced, but I support the view of the noble Lord, Lord McKenzie of Luton, that very careful surveillance is required and safeguards must be in place for those who choose to take out their lump sums and annuities. Secondly, allowing flexibility on ISA withdrawals within the tax year without losing the tax-free entitlement is a good idea. Thirdly, the Help to Buy ISA is ingenious and will help first-time buyers with their deposits, especially where houses are cheaper.
On corporation tax, which has been one of the highlights of the tax policies of the coalition over the past five years, the latest cut to 20% is especially welcome for smaller businesses, as are the national insurance exemptions for the under-21s and apprentices, along with the abolition of class 2 contributions for the self-employed. The business rates review is welcome, as is the replacement for the annual investment allowance. Can the Minister give us any more detail on what is expected on either the business rates review or the annual investment allowance?
In other business areas, the oil industry has been thrown a lifeline, and I welcome its £1.3 billion cut in taxes over the next five years. According to the Financial Times, the move has been welcomed by UK operators.
The diverted profits tax on multinationals is welcome, but several commentators are saying that it is being pushed through too quickly. The danger is that, however well intentioned it may be, the OECD review is coming out only later in the year. Might it not be better to wait for the results of that review rather than rushing this through and HMRC being subject to a flood of lawsuits? Companies might be able to challenge the legislation under European law or the UK’s treaty provisions, according to the law firm Pinsent Masons. Some £5 billion of tax is anticipated as long as the welter of new rules does not create more loopholes than it closes. The Government should be wished well in this area, but not too great haste is recommended.
Overall, I think that the Chancellor has done a good job, which I hope is appreciated by the electorate. Finally, I think that it would be very dangerous to hand the car keys back to the guys who crashed the car.
Lord Stevenson of Balmacara (Lab)
My Lords, with some notable exceptions, including the last speaker, this has been quite a good debate. There is no question but that the prizes for economic literacy lie on this side of the House, although notable exceptions might be made for the noble Lord, Lord Skidelsky, who, as usual, put his finger exactly on the button and made a number of points which I am sure had the Minister squirming in his seat. At least they bloomin’ well ought to have done—I did not see much squirming, but I hope he will read the remarks in Hansard.
The advantages of being the last Back-Bench speaker are often not recorded. Several noble Lords at the end of this debate have said that they did not like the fact that they were among the last, but I quite like it. For one thing, what you say is usually ringing in the ears of those who have to wind up, so you will get some response to what you have said. Secondly, if like me you are the sort of person who deals with the fag-end, if you like, of the political spectrum, you can often get in without having all your remarks previously made. I will speak about the arts and the importance they have in the economy—your Lordships may not like that, but I am going to do it anyway, because it needs to be said. The remarks by my noble friend Lady Thornton on disability and women were also refreshing and very apposite to the debate.
Like many other Members of your Lordships’ House, I was present at the moving memorial ceremony for the late Dickie Attenborough—Lord Attenborough—who died last year. As part of the ceremony, his brother David read an extract from his maiden speech, given in November 1994, which I would like to quote. He said:
“From the very earliest of times the arts have been an instinctive essential of our humanity … The arts not only enrich our lives but grant us the opportunity to challenge accepted practices and assumptions … The arts are not a luxury. They are as crucial to our well-being, to our very existence, as eating and breathing … The arts are not a perquisite of the privileged few; nor are they the playground of the intelligentsia. The arts are for everyone—and failure to include everyone diminishes us all”.—[Official Report, 22/11/94; cols. 178-81.]
As my right honourable friend the leader of the Opposition observed in his excellent speech after the Budget last week, a glaring omission from the Budget Statement was public spending. Why, he asked, was there,
“no mention of investment in our national health service and our vital public services”?—[Official Report, Commons, 18/3/15; col. 780.]
I am sure that he meant public services including arts, culture and sport, which I will mention later.
The figures are there to be seen in the Red Book. Page 69 shows what is planned in the next Parliament, particularly for 2015 to 2018. There are as many cuts in departmental spending in this period as there have been over the last five years, and what is striking is that the pace intensifies in the early part of the next Parliament.
In its Budget commentary, the Office for Budget Responsibility says that achieving the Government’s plans,
“depends heavily on cuts in public spending—particularly on public services and administration”,
in,
“the first two years of the Government’s medium-term spending policy assumption”.
That represents a,
“3.6 per cent of GDP (or £65 billion in today’s terms) cut in day-to-day spending on public services and administration”.
The OBR’s briefing note says:
“The real cut in public services spending … is … much more severe than anything we have seen to date”.
It comments:
“It is important to emphasise that this profile arises from what the Government itself describes as a ‘fiscal assumption’ and not from firm and detailed departmental plans”.
You might ask why there are no plans—it is very surprising to find at the end of the Parliament that there are no plans set out for the next few years. According to the OBR, these assumptions,
“will form the baseline for whichever party or parties are in government after the election and have to carry out the next spending review. This profile for implied public services spending may have ticked a number of boxes for this Budget, but it will not have made that task any easier”.
According to the Red Book, the Budget implies real cuts in departmental allocations, which I make to be 5.5%, 5.25% and then 2.3% over the first three years. I would be grateful if the noble Lord could confirm that those are the figures and I have read them correctly. I make that total £65 billion in round terms. However, given that certain departments are protected, there is going to be a differential impact on departments such as the DCMS, which is what I want to speak about. Again, the figures are not there in the Red Book, but I reckon that will be 30% over three years, which is almost exactly the same as the cut made in that department over the last five years. Given that the DCMS has a current baseline figure of about £1.2 billion, that suggests that a body such as Arts Council England, for instance, will face a cut of some £85 million in that three-year period, which is roughly 10% of its grant. That of course is on top of cuts already imposed in this Parliament of about 30%.
Like my late noble friend Lord Attenborough, I believe that the arts are important for the economy as well as the country more generally. At a time when people ask where the jobs of the future are going to come from and how we are going to pay our way in the world, we should be in no doubt that the arts and creative industries are the important sector that we must be supporting, because it will provide the jobs, the growth and the support for the economy.
Of course, this country excels in the arts and culture in all their forms. We produce some of the greatest creativity on the planet. Whether it is music, fashion, film, theatre, broadcasting, design, art, libraries or museums, our cultural creativity is admired, envied and consumed right around the world. The creative economy already accounts for more than 2.5 million jobs and contributes more than £70 billion a year to the UK’s economy and £15.5 billion of exports. The creative industries are growing faster than any other sector.
However, the artistic and creative success which is so evident today did not come out of the blue. It is built on years of public support and investment—investment which nurtured the creative talent of people from all walks of life, in all parts of the country, because arts and culture thrive on the widest pool of talent. For our economic success in this sector to continue to grow in the future, it needs a widening, not a narrowing, talent pool. These cuts will destroy this growth.
Let us take, for example, the decline in arts provision in our schools. The fact is that since this Government came to power there has been a marked reduction in the participation of our children in the arts. The Government’s own report Taking Part spells it out. For primary schoolchildren, participation in arts activities is down by a third: music down from 55% to 36%; theatre and drama down from 49% to 33%; dance down from 45% to 29%; and visits to heritage sites have almost completely declined.
Your Lordships’ House will recall the debates on the much vaunted EBacc, which the arts community fought so valiantly against because it sent a damaging signal to schools that they could, with impunity, downgrade the arts they already provided. So now the number of children sitting arts GCSEs is declining. Since the election, music is down 9%, drama down 13% and film—my topic—is excluded from the curriculum altogether. Incidentally, the Government have also cut teacher training places in arts education by 35%, so the numbers of specialist arts teachers have fallen. This makes no sense in terms of the arts and our creative industries but it makes no sense at all in wider cultural terms either.
Britain is for some reason blessed with brilliant creative talent, dynamic artistic cities, vibrant festivals and one of the world’s most iconic cultural institutions—the BBC—but what we do not have from the current Government is substantial, strategic, visionary leadership in this sector, an arts policy fit for the 21st century which ensures art and culture for all, or the investment, particularly for young people. As Lord Attenborough said in 1994:
“The arts are for everyone—and failure to include everyone diminishes us all”.—[Official Report, 22/11/94; col. 181.]
Lord Davies of Oldham (Lab)
My Lords, I begin by craving the indulgence of the House. My noble friend Lord Stevenson caught my ear; I was present at the memorial service, and the defence of the arts by Lord Attenborough was a brilliant speech, reprinted in the programme. On either side of it were sayings from Mahatma Gandhi and a Shakespeare sonnet. As far as I was concerned, the service was a work of art in itself on paper before we actually heard the words being read. It was a great occasion.
I would also like to comment on my noble friend Lord Graham. He and I won adjoining seats in Enfield in 1974 and served together there for a number of years. I was delighted that he spoke this evening. I know that it was a limited area on which he spoke and probably pretty marginal to the Budget, but I think it gave cheer to us all that he puts a very high priority on service in this House in difficult times.
This has been an excellent Budget debate—but so was the debate in the House of Commons, which of course went over several days, in which many of the contributions were extremely thoughtful and well worked-through. That suggests that the debate we will have in the country in the general election may reach rather greater heights than some people suggest our political culture is now capable of. It did not start off too well because, as my noble friend Lord Lea indicated, there was pretty well nothing in the Chancellor’s speech about the macroeconomy. It is not long before the election so he indulged in a political speech, but he said little about the macroeconomy.
We had nothing on the question of our balance of payments problem. We had nothing on productivity. In fact, those issues seem to be suffused in the general aura of success, which the noble Lord, Lord Deighton, succeeded in imitating, to a degree, in his opening contribution this evening. What success? The success of the economic plan—but that economic plan became long term when it failed because the Chancellor could not deliver an end to the budget deficit in 2015. So, we have an extended plan, and that plan has some very dire implications indeed.
It is quite clear—it is all in the Red Book—that, as my noble friend Lord Stevenson and many other speakers in the debate said, we have not seen anything yet. The cuts of the past five years are going to be exceeded in three years, which will have a dramatic effect upon our economy and our society. And for why? As the noble Lord, Lord Skidelsky, identified, the Government’s original position way back in 2010 was a false analysis of the crisis leading to some pretty awful solutions to it. My noble friend Lord Layard identified very clearly the basis of the false analysis: that it was all down to excessive spending by the past Labour Government. No, it was not. This country was the second lowest in debt of the advanced countries when we left office and it was not the case that our expenditure had run out of control. What happened was that the global financial crisis, which started in the United States, as described most excellently by my noble friend Lord Rooker, reduced the receipts of government to a calamitous extent.
Of course it needed a significant response, but the idea that it called for a Government imbued with a philosophy of reducing the size of the state and doing everything that they can to get public expenditure down, irrespective of the impact upon our economy and society, it did not need and has not needed but has unfortunately received thus far under this Administration. The task of noble Lords on my side of the House is to make sure that this Government get no opportunity to extend their ill thought-through plans based upon a completely false premise.
We have to recognise that the expenditure cuts that are coming are coming against a base where cuts have been so sharp already that we are getting right to the bone. How can the police meet their obligations with the kinds of cuts that are likely to face them? What about defence? After all, that has, on the whole, been an issue that has concerned the Conservative Party in particular over the years. What does it think about this debate about the 2% figure if defence is to bear its share of the cuts? As defence is an unprotected sector, it is going to, if this Government were returned to power.
What about other areas of expenditure? Local government spends a very great deal of its expenditure on social support and welfare for children and the aged. It is going to get a massive cut in those resources if this Government continue in office.
The challenge is clear. We need to establish that this Government have presided over failure and the slowest recovery for over a century, with a desperate price being exacted from ordinary people.
What about the bedroom tax? The Government recoil at Labour’s proposal on the mansion tax directed towards the wealthy in our society and those who take advantage of the London housing position, to which the noble Baroness, Lady Valentine, referred. Housing in London is critical. We cannot keep the economy of London running if there is a flight of large numbers of people from the city because housing is too expensive because of foreign investment. That is so obvious, but what did the Government say about housing in the Chancellor’s Budget speech? Nothing of any significance.
We have a major task to tackle after what has been a desperate decline in growth, lost revenues, as the noble Lord, Lord Skidelsky, identified so very clearly, and then a little bit of a spurt before the general election, which is about to be put at enormous risk if the Government carry on with their existing policies. It is quite clear that we have a low-wage, low-productivity economy in which people get poor returns for their work and, as the right reverend Prelate the Bishop of Portsmouth, identified, many of them are still subject to a marginal rate of taxation—if you take taxation plus national insurance—which renders it difficult for them to sustain their living standards.
We know that the success of an economy cannot be based on low wages and low productivity, not least because the only way in which it has been continued thus far is because migration figures are so high and large numbers of our labour force are earning low wages and doing jobs in circumstances where wider society is more reluctant to respond.
We have 1.8 million zero-hours contracts in this country at present. The tax and national insurance combination has extended to considerable levels. We have a £300 billion deficit on our balance of payments. I will just mention the success story of 2011-12: we lost our triple A credit status. This Chancellor dares to come before the country to say, “Give me a renewal of the mandate because I am doing so well”. In fact, what is reflected is a colossal failure.
That means that we need to take different measures. Labour is quite clear what we are going to do. We intend to raise living standards by increasing the minimum wage, because we do not think that a low-wage economy makes any sense. We intend to safeguard the National Health Service, because we are terrified that such is the level of cuts promised in this Budget, they are bound to impact on the health service. They do in any case, because cuts in social welfare thrust people into the health service through the accident and emergency service. The leakage is already there, but it is due to get a great deal worse if this Government are able to follow through on their plans.
We intend to cut business rates for 1.5 million small business properties by not reducing corporation tax—with a slight increase to corporation tax. We also intend to deal with housing in the only way that one can, which is to build houses. It is not a problem of illegitimate demand—it is a problem of supply. I should have thought that the party of Macmillan in the 1950s would recognise that Governments can put their back into creating supply of houses if they are prepared to do it and it is defined as a priority. By heavens, it ought to be a priority in our country at present.
We are also going to balance the budget and the books in a fair way. That means we shall take a slightly different view on the bedroom tax, which we intend to scrap, and on tax cuts for the very wealthy in our society—the millionaires.
Lord Bilimoria
I thank the noble Lord for giving way. Did he just say that there would be a slight increase in corporation tax?
Lord Davies of Oldham
My Lords, the Government are promising a reduction. We are not going to carry out that reduction. That is putting it as fairly as I possibly can in comparison between the parties. We will keep it where it is. The Government intend, for reasons best known to themselves, to cut it.
That means that a change of government is absolutely essential. The greatest need is the one that was expressed by my noble friends Lord McFall and Lord Layard, by the right reverend Prelate the Bishop of Portsmouth and by my noble friend Lady Thornton, who talked about the position of women in society. It is that we need an improved public morality. We need to recognise that there is more to life than just the economy of getting and spending. Life for people, when it is enriched, is about relationships, fairness and degrees of co-operation to help those who have greater needs—to have some degree of common endeavour. Those are the values of my party, and we intend to carry them out in government.
Lord Deighton
I thank noble Lords for an excellent and wide-ranging debate. When I first did a Budget debate, the discussion was all about whether growth would ever return. Today, we are discussing whether having the fastest-growing economy in the world, creating 2 million jobs and having zero inflation is a good thing or not. I will drill a little more into the detail on that.
I had thought that we were talking about this Budget but we have also had an interesting discussion because the party opposite has wanted to wallow in whether it was responsible for the financial crisis, which is an open goal that I can scarcely resist. I think everybody agrees that the recession was caused by the financial crisis, starting off in the American mortgage system. However, as my noble friend Lord Northbrook said, the rate at which public spending had expanded by the time we got to the financial crisis left this economy more exposed than it should have been. This was a problem for all recent Governments, who left us too exposed to the financial sector.
The other point, which is not often raised, is that we clearly had very poor financial regulation in the financial crisis. That exacerbated the problems with the banks. I am afraid that the previous Government were the architects of a highly flawed regulatory system, which failed to detect many of the problems. While I am not saying that they are completely guilty, I am saying that there are some very serious cases to answer.
Lord Stevenson of Balmacara
I appeal to the noble Lord to move on in this debate because we are going to get nowhere with it. The regulation he is talking about was of course fully endorsed by his party. It was absolutely thrust on us but with pressure on all sides to do it. He cannot evade or duck the responsibility in this. This was something that happened outside the UK. It was brought into the UK and we did our best about it. We have already heard my noble friend Lord Layard and others explain how we managed to get the economy back on track. I think that it would be worth moving on.
Lord Deighton
I am very happy to move on. I did not really bring it up. I was just expanding my perspective on a topic that many noble Lords opposite had rehearsed.
With that incentive, I shall move on to living standards. I think everybody accepts that the financial crisis has created an extraordinarily difficult period. As I said in my opening remarks, it affects people at the bottom end of the income spectrum, people with other difficulties to cope with, more than anybody else. The noble Baronesses, Lady Thornton and Lady Smith, were eloquent on some of those issues.
Lord Lea of Crondall
Would the Minister like us to infer that it did not require any touch on the tiller from the Government for that inequality to increase, and that it was to do only with something inherent in the nature of the economy that we have had this growing inequality? Surely what the Government have done has given a massive boost to inequality.
Lord Deighton
I will try to deal with facts rather than with emotion. I referred earlier to what I think is one of the better legacies of the Government: the transparency with which we measure things. We do it at every fiscal event. The distribution impact of the fiscal changes under this Government has been more favourable to the bottom end of the income spectrum than in any year of the previous Labour Government. That is what the statistics tell you.
Lord Lea of Crondall
Would the Minister like to tell us what has happened to the top-to-bottom ratio?
Lord Deighton
Inequality has not increased at all between the previous Government and this Government. That is not to diminish the problems that people at the bottom end of the scale face. This Government have tried to deal with the root causes of poverty: worklessness, low earnings and poor education. That is where the Government’s premier programmes have been addressed. The number of workless households has fallen by about 600,000 under this Government. Many noble Lords, including my noble friend Lord Shipley, have commented on the situation with respect to employment and the number of jobs that have been created. The noble Baroness, Lady Smith, asked how tax receipts could come down when employment went up. The reason was that we moved up personal allowances and took people out of tax. It is as simple as that.
This Government intervened in many critical ways to protect living standards for people. I shall not go through the list again because we do not have time. The noble Baroness, Lady Thornton, and the noble Lord, Lord Davies, cited zero-hours contracts. They represent just over 2% of the total workforce. Of the jobs created, the majority are at the high or middle end and the vast majority of them are full time. The party opposite should accept that creating 2 million new jobs is okay. It does not have to keep describing what the problems with it are. It is actually a good thing; it is part of the recovery. It is much better to have those people in work. As I have said, the jobs are principally at the middle and high end and they are permanent jobs.
Our focus has been on trying to protect the young and old. We have protected pensioners through the triple lock. The measure again tells us that pensioner poverty is at an all-time low. I listened carefully to the comments made by the noble Baroness, Lady Thornton, about disability. Probably my most rewarding experience in the past 10 years was working on the Paralympics and seeing the difference that they made to people’s perception of the ability in disability. That is a legacy that, on a cross-party basis, we should absolutely build on.
I shall talk about spending cuts as there is significant concern about the potential impact of continuing, in the words of the noble Lord, Lord Layard, the dismantling of public services. That is absolutely not the intention of spending taxpayers’ money more carefully, of looking at ways of reforming public services, of being focused on the outputs and of being more efficient about the inputs that go into them. There is still significant opportunity for reform in delivering public services more efficiently, and that is where the focus of the spending cuts should and will be.
The noble Viscount, Lord Hanworth, asked where privatisation fitted into it. I make no apology for this party being careful with taxpayers’ money. If you really want to look at the record of this Government, we adhered precisely to the spending plan we set out five years ago. We have delivered that in a disciplined way with the public’s view of public services being that they have in fact improved. That is the evidence.
A number of noble Lords, including the noble Lords, Lord Bilimoria and Lord Davies, referred to the defence budget. Let me restate that at £34 billion, we have the second-largest defence budget in NATO. It is the largest in the EU. We are currently spending 2% and we will decide what to do at the next spending round. Again, my preferred approach to spending is that we have to have a plan and understand what we are trying to accomplish, and the budget numbers flow from that. It is about what you are trying to accomplish. I am delighted that the right reverend Prelate the Bishop of Portsmouth was able to acknowledge the tripling of the church roof fund.
Let us switch to the deficit. It is at the heart of the differences in fiscal policy between the parties. We have discussed the case put by the noble Lord, Lord Skidelsky, over the past few years. I was taught Keynesian economics at the feet of the noble Lord, Lord Eatwell, so I certainly understand the theory, but in 2010 this country had a massive, unsustainable deficit and the practical situation was that action needed to be taken to reduce that deficit in order for the public and the markets to have confidence. Frankly, we were faced with no other option but to deal with that as the primary objective and responsibility of government at that time. Had we not dealt with it as effectively as we did, it would have been an irresponsible act and would have left us substantially exposed to future debt costs. It is a bit like a vastly overweight person saying, “I’m going to start a diet in two years’ time, but in the mean time, keep serving me the chips and chocolate”. That is how it would have been.
Lord McFall of Alcluith
The Minister talks about the debt, but let us think of the debt that they inherited in 2010, which was £870 billion. That figure has now almost doubled to more than £1,500 billion. Why has that debt doubled in a period when there has been a mania from the Tory Front Bench about having to pay off the debt?
Lord Deighton
Technically what happened was that we stuck to the spending plans, growth did not recover as we expected, principally because the rest of the world was in recession, so the tax receipts did not come in, and the deficit continued to go up. That is the reality of the situation. If you listen to the two sides on the deficit argument, one is asking why we have not cut fast enough and the other is saying that we have to cut a little slower. I think that, given the circumstances, my right honourable friend the Chancellor has navigated the balance very effectively. My noble friend Lord Flight made that point.
Lord McFall of Alcluith
The Minister has failed to answer. In the light of his failure to answer, will the Government adopt a more modest approach to this situation and recognise their failure on debt over the past five years and the kid on that they are trying to exercise on the British public?
Lord Deighton
The Government’s strategy is crystal clear. The benefit of getting the deficit under control is absolutely worth it in terms of fixing the roof while the sun is shining. That is the philosophy. To do it over a two-year period and to get control of our public finances so that we can then grow and focus on, for example, the productivity argument I shall speak about in a minute is the critical part of the argument.
Lord Skidelsky
Does the noble Lord not accept the OBR’s conclusion that the austerity policy slowed down the rate of growth of the economy in 2011-12 and 2012-13? If that is the case, is it not a bit neglectful of him not to take into account the effects of the spending cuts on the economy?
Lord Deighton
That is consistent with my earlier response, that we did not have that choice because the markets would not have allowed us to continue with the scale of deficit we had.
Many noble Lords made very useful and interesting contributions on the housing market: the noble Lords, Lord McKenzie, Lord Best, Lord McFall, Lord Whitty, the noble Baroness, Lady Valentine, and the noble Lord, Lord Graham, who, with mobile homes, may well have the solution to some of our supply problems. The current status is that over 500,000 homes have been built during this Parliament. Of course, that is also tied to the financial crisis, but planning approval and housing starts are now at their highest for seven years, so they are benefiting from part of the recovery.
I agree with the general sentiment of most noble Lords who contributed on this topic that supply is the principal problem, and that dealing with our planning system, incentivising local authorities to build more, using both sticks and carrots in the process, is absolutely key to the way ahead. The noble Lord, Lord Best, suggested that there was nothing in the 2015 Budget for housing supply, but then referred to all the things in the small print that are going on. The demand-side interventions by my right honourable friend the Chancellor have been very effective; Help to Buy has been a successful policy—more than 80,000 people now own homes who would not have been able to do so before. The OBR and the Bank of England are comfortable that the impact of improving demand in that way has not been highly inflationary to the house price market.
There were lots of comments on pensions and savings, from my noble friends Lord Freeman and Lord Flight—who talked about the savings rate in a very interesting and thoughtful contribution about what we need to do about the long-term savings rate and how important it is—and from my noble friend Lord Northbrook and the noble Lord, Lord McKenzie.
One of the key questions all noble Lords asked was about where we are on Pension Wise, which is the service provided by government to provide guidance to people who are now faced with these new flexibilities. There are three potential channels: the digital channel—noble Lords can go home tonight and look at that, as it is up and running—which gives a description of what the flexibilities are; the telephone channel which is managed by the respected organisation TPAS—you can call up a call centre now and book an appointment with TPAS to have a 45-minute telephone session; and you can also call up Citizens Advice, which is the respected brand that delivers the face-to-face service. Therefore, each of those organisations—TPAS and Citizens Advice—has hired and put its people through a training programme so that they are ready to meet the demand. Of course, that is a very challenging thing to work out, because it is very hard to work out how many people will want what kind of advice, and when. However, we have done everything we can to ensure that that service will be available with the right capacity and the right quality—and to take on board my noble friend Lord Freeman’s point, with support from the FCA there will be plenty of opportunities to have a look at how it is working, and there will be a lot of work around making sure that potential scammers cannot be successful.
It is useful to be critical about growth and productivity performance, because it is important to focus on what we can do to make it better. We should remember that we are growing faster than anybody else at the moment, so it is not all bad news.
My noble friend Lord Taverne and the noble Lord, Lord Hunt of Chesterton, talked about the role of foreign capital coming in—hot money, as my noble friend referred to it. Generally speaking, this economy has enormously benefited from being an open economy, with the advantages that come with that. The noble Lord, Lord Hunt, referred to Hitachi, which has come here to assemble the trains, and has also decided to set up in the UK as the base for its European rail business. So, generally speaking, operating as an open economy has been a hugely successful thing for this economy.
Lord Taverne
Would my noble friend deal with the question of the danger of the inflow of hot money, which makes us very vulnerable indeed if there is a crisis of any kind? Is not the deficit on the balance of trade a very serious failure of the present Government?
Lord Deighton
There is a deficit on the balance of trade, although the most recent figures two weeks ago were the strongest that they have been for a very long time. I accept that our relative export and import performances are not as strong as they should be, but I would not put it down to a failure of this Government. It is a chronic long-term challenge, which British industry has to face up to.
Hot money is a complicated subject. In terms of investing and having ownership shares in our big businesses, I frankly do not find that particularly disturbing, because we are in a global market and those ownership positions are traded very actively. As I said, Britain has benefited on a net basis and manages that exposure very effectively.
The noble Lord, Lord Northbrook, asked what the future was for a business rates review and the annual investment allowance. The Chancellor said that that allowance would be looked at in the Autumn Statement next year.
There was a strong consensus for more decentralisation around the House—the noble Baroness, Lady Valentine, for London and my noble friend Lord Shipley, looking at the north-east.
My noble friend Lord Thomas referred to the tidal lagoon in Swansea, and I am delighted that that has moved into the next stage of negotiation. I was also delighted that he pointed out the work that has been done for farmers to help with their volatility by spreading out their taxes over a five-year period.
I am very much in sympathy with the perspective of the noble Lord, Lord Stevenson, on the arts, which is an important part of life and a great national strength. Through the tax system we are doing quite a lot to support the film industry.
In conclusion, I thank noble Lords not just for this debate but over the years that I have been at the Dispatch Box, when we have had very interesting exchanges. I have learnt a lot and improved my perspective from it. I thank my noble friend Lord Newby, who has been my colleague at the Treasury and has been magnificent at the Dispatch Box.
Despite the argument that we have been having, the British economy is in a very different situation five years on from the one that we inherited. We have stabilised the public finances. There is a very valid debate about the pace at which deficit reduction continues from here, but the circumstances of the economy will have a great deal to do with that, as they did over the past five years. For me, the focus is really on two things, both of which I would describe as productivity challenges. One is in the public sector, delivering great outcomes but in a much smarter way with more limited inputs. The same applies to the private sector, where the Government’s job is to create an environment in which we can unleash the inherent dynamism of that sector and, frankly, let them get on with it.
Convergence Programme
(9 years ago)
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Lord Deighton
That this House approves, for the purposes of section 5 of the European Communities (Amendment) Act 1993, the Government’s assessment as set out in the Budget Report and Autumn Statement, combined with the Office for Budget Responsibility’s Economic and Fiscal Outlook and Fiscal Sustainability Report, which forms the basis of the United Kingdom’s Convergence Programme.
Finance (No. 2) Bill
Public Contracts Regulations 2015
(9 years ago)
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Lord Hunt of Kings Heath
That this House regrets that the Public Contracts Regulations 2015 laid before the House on 5 February are being implemented with unseemly haste, will cause confusion as to which procurement regime is to be used for integrated health and care contracts, and do not implement the assurances given by Ministers to Parliament during the passage of the Health and Social Care Act 2012 that NHS commissioners would be free to commission services in the way they consider in the best interests of NHS patients. (SI 2015/102)
Lord Hunt of Kings Heath (Lab)
My Lords, I say at once that I welcome certain aspects of the regulations we will debate tonight, specifically the help for social enterprises. However, I am concerned about their potential impact on the NHS, the enforced tendering of services that will entail and the potential confusion between two different sets of procurement regimes for the health and social care sector.
These regulations implement the main public sector procurement directive agreed by the EU in 2014 but also introduce a number of UK-specific changes intended to open up public procurement, including for small businesses. The directive replaces the old system of type A and type B services, and the new light-touch regime will apply to health and social services—formerly Part B services.
Contracts in the category will fall under the new rules if they are valued at above €750,000. Above the threshold, commissioners will have to publicise in advance their intention to award contracts and announce the contract award decision after it has been made. This regime will sit alongside the healthcare-specific requirements in the NHS (Procurement, Patient Choice and Competition) Regulations 2013 and Section 75 of the 2012 Act, which we debated in your Lordships’ House on 24 April 2013. I am sure that the noble Earl will recall that lively debate.
The introduction of this new regime has been delayed for NHS-funded healthcare services until April 2016 to allow commissioners time to adapt. The Government have argued that this is necessary because of the need to ensure that commissioners and other key stakeholders are fully prepared. The Government have stressed that other contracting authorities, such as local authorities, are not subject to these additional domestic regulations and therefore need to follow the new rules for the light-touch regime as soon as they come into force. However, the Government have also been forced to acknowledge that there are concerns about the scope for potential confusion as a result of the existence of two regimes side by side for another 12 months.
The Opposition have sought two different legal opinions, both of which advised that these new regulations could force the tendering of NHS health and social care services to go beyond the requirements of the Section 75 regulations under the 2012 Act. Practically all health services will be above the €750,000 threshold. This would escalate the level of service tendering and privatisation of health and social care services as well as wasting vast amounts of money on pointless tendering procedures when the money would be far better spent delivering services for NHS patients.
At best, the new procurement regulations are confused and unclear. NHS services have an additional year because the new regulations do not come into force for health services until April 2016, whereas they came into force on 26 February 2015 for all other areas. Council social care services have to comply with these new regulations immediately so, in effect, two procurement systems will be operating for health and care until 2016. There will undoubtedly be confusion over the definition of some services, to do with whether they are strictly social care or include elements of healthcare as well, and therefore whether they are subject to these regulations and there is a requirement for them to be advertised and tendered. The advice we have—I think experience in the last three years shows that this will be the case—is that CCGs will understandably err on the side of caution to avoid legal challenge and therefore advertise or tender services in case the new regulations are found to apply to them.
What happens if an NHS body wishes to commission a contract that includes elements of clinical healthcare and social care? This will not be completely unknown, given the effort that we all support towards trying to integrate health and social care. The question arises: which regime will the NHS body have to follow? Will it not be driven to split out these elements in two separate contracts to comply with two separate legal requirements? What about the potential for legal challenge? Would it not drive a wedge between joined-up commissioning of health and social care?
The regulations also fail to take advantage of many of the flexibilities in the 2014 directive that could have exempted the NHS from having to run pointless tenders. They also fail to incorporate the flexibilities in the directive that would have allowed NHS bodies to decide not to tender when there are wider strategic interests that mean a comprehensive local health service must continue to be provided by a key NHS provider.
These missed opportunities reflect the Government’s political imperative to turn the NHS into a market and pave the way for private sector operators to deliver more NHS services. The imposition of market mechanisms when they are not needed, and the failure to allow CCGs flexibility to decide when tendering is the right approach for patients, will create wholly unnecessary additional cost and uncertainty at a time when NHS bodies should be focused on meeting the needs of an ageing population and improving services.
We are already seeing the impact because many CCGs undoubtedly believe that there is no alternative to full-scale tender. A vast amount of resources is being consumed, with no benefit to patients. The evidence is clear. Commissioner spending on private providers has increased from £4.1 billion in 2009-10 to £6.3 billion in 2013-14. The proportion by value of community health services provided by private sector providers has increased from 12% in 2010-11 to 18% in 2012-13. Private provider spending on mental health services increased by 12% between 2010-11 and 2012-13. Overall, the Department of Health’s annual accounts suggest that some £10 billion of the total NHS budget of £113 billion is spent on care from non-NHS providers.
Some large contracts have attracted particular attention and concern. For example, in Staffordshire, CCGs are seeking bids for a 10-year contract worth £1.2 billion for cancer and end-of-life care, which is potentially likely to significantly involve private sector providers. Then there is the Bedfordshire case. The Bedfordshire CCG awarded a five-year contract to Circle as prime provider, assuming a total risk for musculoskeletal services worth £120 million. A local NHS provider has subsequently refused to sign the contract under which it would provide some of those services because it would see a referral drop of 30%, thereby putting at risk its trauma services, which are cross-subsidised by musculoskeletal services. There are other examples of bizarre decisions being made by clinical commissioning groups because they feel that they must put services out to tender, and by doing so they seem to have no analysis of what that would mean for the viability of the whole health service system.
A recent study by the British Medical Journal found that one-third of contracts to provide clinical services awarded in the year from 2013 were secured by private providers. A study by the NHS Support Federation found that, of 80 contracts awarded, 54 went to non-NHS providers. We have also seen what I can describe only as a ludicrous intervention by the competition authorities in sensible service changes in Dorset and then Bristol.
I am sure that the noble Earl will want me to refer to the recent King’s Fund study, which concluded that any benefits from competition,
“can be outweighed by costs and difficulties of competitive process”.
As the study says, it is also clear that CCGs remain very uncertain about procurement and tendering rules. They are spending a lot of money on legal advice. A lot of that legal advice is very risk-averse, which is why so many services are being put out to tender.
The Lord Bishop of Peterborough
My Lords, I am grateful to the noble Lord, Lord Hunt, for bringing this Motion. I will speak only very briefly because he has given most of the detail and said most of what I want to say, particularly about the confusion in the tendering and commissioning process. Integrating health and social care is obviously right—I very strongly support it—but why the rush? Why not do it slowly and carefully? If I understand aright, Scotland has entered a lengthy, considered stakeholder consultation and will finalise its regulations on health and social care at the same time, by April 2016, along with the majority of EU member states. So why do we have to go so quickly? I do not understand the rush in one-half of the equation, which unbalances the whole thing.
Experience tells us—we have had examples from the noble Lord, Lord Hunt—that changes on this scale are highly complex, deeply disruptive to those involved and often much harder to implement than initially imagined. Is not proper consultation, careful decision-making and measured implementation the right way forward in such matters? I, too, urge the Government to take this more slowly and get it right, because it really is important and we want to support it.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)
My Lords, I am grateful to the noble Lord, Lord Hunt, for initiating this debate on what is a very important subject. Let me begin by emphasising one key point. The main purpose of the Public Contracts Regulations 2015 is to implement the new EU procurement directive. There is no choice over whether the UK transposes that directive: it is mandatory to do so. It contains the new rules regime by which all European public authorities have to abide. The Government implemented this directive early to realise as soon as possible the economic benefits from the modernised rules regime. Both the noble Lord and the right reverend Prelate have expressed criticism to us for doing so, but the reason is that this should lead to more than £4 billion-worth of benefits to the economy each and every year. That could not be overlooked.
Since 2010, the Government have embarked on a radical programme of commercial reform as a lever to stimulating economic growth and reducing the deficit. In 2013-14 alone, this approach saved taxpayers £5.4 billion. As part of our ongoing commercial reform programme, the UK negotiated hard in the European negotiations on the new EU procurement directives in 2012-13, and we were successful in securing a number of key improvements to the European public procurement rules regime. The new rules support UK government priorities of economic growth and deficit reduction by making the public procurement process faster, less costly and more effective for business and procurers alike. The European Commission estimates that SMEs across the EU could save up to 60% of bidding process costs.
Aside from transposing the new public procurement directive, the regulations include a number of domestic reforms, instigated by my noble friend Lord Young of Graffham, to make it simpler for small businesses when bidding for public sector contracts. The Minister for the Cabinet Office, my right honourable colleague Francis Maude, and my noble friend Lord Young of Graffham have driven these reforms from concept through to implementation in these regulations. The changes include ensuring that all advertisements for public sector contracting opportunities appear in one place on a national website, the abolition of time-consuming and costly pre-qualification questionnaires for low-value contracts, and improving payment terms down the supply chain.
The statutory instrument was laid in Parliament on 5 February 2015. The regulations came into force, for most purposes, on 26 February 2015. I stress the words “for most purposes” because, although most public procurement activities will be subject to these rules from that date, there are special provisions in some areas. One such special area is the healthcare sector. The Government have delayed the coming-into-force date for procurements by NHS clinical commissioning bodies to the latest possible date allowed by the EU—18 April 2016—to give clinical commissioners more time to prepare for the rule change in recognition of the interplay between the new EU procurement rules and the UK’s existing healthcare procurement legislation.
I make it clear that the Public Contracts Regulations themselves were not foisted upon Parliament at the last minute or hidden until the regulations were laid but have been, in line with good practice, subject to formal public consultation over a period of time, over and above what had already taken place for the EU procurement directive.
The Government received more than 200 stakeholder responses to the public consultation on the draft regulations. Most respondents were supportive of the overall approach to early transposition, and the delayed transposition for NHS clinical commissioning services was welcomed by stakeholders in that sector. The government response to the consultation was published and publicly available from 30 January 2015.
I should now like to reflect on the concerns about potential confusion as to which procurement rules regime applies for integrated health and care contracts. To consider this, it is helpful to reflect not only on the regulations and the directive that they implement but on the pre-existing set of UK healthcare procurement rules. Those rules have existed in the UK since 2013, following the Health and Social Care Act 2012; the noble Lord, Lord Hunt, alluded to them in tabling this Motion. The new EU procurement directive includes a mandatory new provision for member states to put in place a new light-touch regime of procurement rules for health, social, education and certain other service contracts. In transposing that requirement, the UK has taken careful account of stakeholders’ concerns and has designed its national provisions to be as genuinely light touch as possible, within the parameters set by the EU. In the UK health sector, a set of healthcare-specific procurement rules has been in place for some time, covering arrangements for the purchasing of clinical services. The NHS Procurement, Patient Choice and Competition Regulations 2013 were put in place to drive improved quality and best value, which effectively put in place a light-touch regime for clinical services.
During the Government’s recent public consultation on the Public Contracts Regulations 2015, it became apparent that stakeholders in the field of clinical services procurement were concerned about the interplay between the new light-touch procurement rules regime and the existing healthcare procurement rules. The Government acted upon this feedback and agreed to allow more time for clinical service commissioners to adapt. Consequently, the Government decided to take the sensible and pragmatic decision to delay the application of the new regulations on clinical services procurement by clinical commissioning groups and NHS England until the transposition deadline of April 2016. Such procurements will continue to be governed by the pre-existing procurement regulations—that is, the Public Contracts Regulations 2006—until that time.
The delayed implementation in respect of clinical procurement is clearly defined, and rests on the identity of the commissioning body. Commissioners of healthcare services are exempt until 18 April 2016. Local authorities are not. Integrated commissioning plans, joint commissioning or arrangements for a CCG or local authority to commission on behalf of the other will all remain available. The decision about which rules regime applies will depend on which commissioner leads the procurement and the service in question. The Government’s response to the public consultation on the draft regulations acknowledged the potential for short-term complexity.
The Government have since published guidance on the new light-touch regime, in addition to providing a wide variety of training and guidance materials on the new procurement rules overall. In the health sector, work is also under way to bring greater clarity in the system about how health commissioners, both from NHS bodies and local authorities, can work together under the respective legal regimes. NHS England and Monitor have, and continue to, run a successful series of joint workshops for commissioners and continue to provide advice and support to clinical commissioners in individual cases, where appropriate.
Turning to the concerns about the freedom of NHS commissioners to commission services in the best interests of patients, I would like to reassure noble Lords that these regulations respect those freedoms. As I have already set out, these regulations do not apply to the procurement of clinical services procured by NHS England or clinical commissioning groups yet. But even when they do apply in April 2016, they will not force commissioners to tender NHS services automatically.
Advertisements for competitively procured contracts will have to be placed in the official journal of the EU where the contract is worth more than €750,000, unless an exemption applies. Commissioners can consider whether there is, in the circumstances, an obligation to go to the market or not under the terms of the directive and implementing regulations. The requirement to advertise if no exemption exists is a mandatory feature of the new EU procurement directive. The Government have no option but to implement it in national legislation but, as I have already said, we are delaying implementation of that requirement to the latest date possible.
The Public Contracts Regulations 2015 and the Procurement, Patient Choice and Competition Regulations 2013 are consistent in requiring contracts to be procured fairly and transparently. They also both contain appropriate exemptions that apply to contracts that need not be advertised—for example, where there is only one possible provider.
It is perhaps helpful at this stage to delve deeper into the issue of when to tender, in particular to address some of the incorrect commentary that is often perpetuated suggesting that all services have to be put out to tender. The Public Contracts Regulations, when implemented for health, contain a number of flexibilities that can, where justified, be utilised by commissioners to dispense with the need for an open competition. Importantly, the Public Contracts Regulations require a fair and transparent process once the commissioner has decided to go out to competition. The major change introduced by the directive relates to the need ordinarily to advertise in the Official Journal of the European Union—or OJEU, as it is generally known—rather than to the decision on which procurement process to follow.
Lord Hunt of Kings Heath
My Lords, I thank the noble Earl for his response. He said that the imperative of the Government to introduce the regulations early is because of the economic benefits. Let me say at once that I have always accepted that there are some benefits in these regulations. I particularly welcome the social enterprises provisions, but my concern remains, rather like that of the right reverend Prelate, that the introduction of the regulations applying to care services now as far as local government is concerned, along with the existence of NHS regulations, will cause a great deal of confusion.
I also think that the noble Earl is underestimating the confusion out there in the health service about which services should be tendered and which should not. I do not believe that clinical commissioning groups accept the kind of view that he is putting forward. They are getting legal advice that actually makes them very risk averse. The noble Earl said that the requirement to advertise does not mean that people have to tender, but once you advertise you are inevitably on a route towards tendering.
Finally, on Staffordshire, my issue is that essentially the CCGs are outsourcing commissioning decisions which they as the statutory bodies ought to be taking for 10 years, and they are failing to engage with the public. They will not appear at public meetings to defend the position. The noble Earl will know from MPs in Staffordshire that there is a lot of concern about this, and if a Labour Government are elected we will certainly want to call in on what is happening.
Before I beg leave to withdraw the Motion, perhaps I may say to the noble Earl that he has been the Minister for Health in this Chamber for five years, and on behalf of my noble friend Lady Thornton and myself I would like to thank him for the courteous way in which he has responded to our many debates. I particularly thank him for the way he has agreed to meet a number of small charities over those five years on issues that I have raised. That is very much appreciated. I should also say that we have enjoyed working with the noble Baroness, Lady Jolly, as well.