House of Commons
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Oral Answers to Questions
Bridget Phillipson (Houghton and Sunderland South) (Lab)
1. What steps his Department is taking to encourage devolution of powers to cities, towns and county regions.
John Howell (Henley) (Con)
9. What steps the Government are taking to devolve powers to local communities.
The Secretary of State for Communities and Local Government (Greg Clark)
We shall have a moment of silence at the end of Question Time, but I think that, as we gather together in the House at this point, we will all want to share our condemnation of the atrocities in Tunisia, Kuwait and France last week. All our thoughts and prayers are with the victims and their families.
The Government are committed to devolving greater powers away from Whitehall to drive economic growth. We have already taken steps to enable that to happen by introducing the Cities and Local Government Devolution Bill. I welcome devolution proposals from all areas, including proposals relating to how powers might be devolved to cities, towns, counties and neighbourhoods throughout the country.
Bridget Phillipson
I echo what the Secretary of State said about recent events.
I agree with the Secretary of State about the need for further devolution of powers, but there is considerable disagreement in the north-east about the need for an elected mayor. Will he commit himself to giving people in the north-east a say in a referendum?
Greg Clark
I am having discussions with the leaders of the north-eastern authorities, and I expect to see them later in the week. There is a real groundswell of opinion in the north-east that now is the time to put aside some of the divisions that have held it back, and to have clear leadership. Nothing will be imposed on an area, but I look forward to meeting the leaders and hearing their proposals.
John Howell
Does my right hon. Friend agree that neighbourhood planning represents the best way of ensuring that communities have a real say in the planning system when it comes to deciding where houses should go, what they should look like, and what green and open spaces should be preserved?
Greg Clark
I do indeed. My hon. Friend is a pioneer of neighbourhood planning. He worked closely with me when I was last a Minister in the Department to ensure that it was introduced, and it has been a huge success. The first neighbourhood plan was in Thame, in his constituency. More than 1,500 communities are now engaged in the neighbourhood planning process, and 300 neighbourhood plans have been published for consultation. I am delighted that my hon. Friend has accepted my invitation to work with me to see what we can do to speed up the possibilities for other neighbourhoods throughout the country.
Jo Cox (Batley and Spen) (Lab)
The Government’s decision last week to shelve plans for the electrification of the Leeds to Manchester railway line fundamentally undermined the concept of the northern powerhouse. When were DCLG Ministers first informed of the decision, and were they informed before or after the election? What opportunity was given to local authorities such as Kirklees to make recommendations to various Ministers?
Greg Clark
My right hon. Friend the Secretary of State for Transport made a substantial statement on the matter, and it was clear that he was dissatisfied with the performance of Network Rail in this respect. However, it is worth our reminding ourselves—and it is important for those in the north to recognise—that £38 billion is being invested in the transport system, which is the most significant investment since Victorian times. As for electrification, only 10 miles of line were electrified during the 13 years for which the last Government were in office, but we are committed to it.
Mr Mark Prisk (Hertford and Stortford) (Con)
The success of city deals so far has been due to the fact that Ministers have avoided over-prescriptive rules, and instead have focused on what each deal can do for each community. May I strongly encourage the Secretary of State to ensure that that flexibility is retained, particularly in smaller towns and counties?
Greg Clark
I will certainly take that approach. My hon. Friend was a great force in working with the local enterprise partnerships in their early days, and respecting the fact that every place is different. It would be ludicrous to observe those differences and then impose a uniform requirement in all places.
Peter Kyle (Hove) (Lab)
May I associate myself with the Secretary of State’s comments about Tunisia?
In all the debates about the northern powerhouse, I am very keen for us not to forget the southern powerhouse. What powers does the Secretary of State expect to devolve from Westminster to cities such as Brighton and Hove?
Greg Clark
The hon. Gentleman should be aware of the success of the Brighton city deal, which has been warmly welcomed throughout his area, and which is one of the reasons for the fact that unemployment in his constituency has fallen by 53% since May 2010. That is a powerhouse that is performing.
Robert Neill (Bromley and Chislehurst) (Con)
One of the great advantages of my right hon. Friend’s devolutionist approach is that city deals can capture the variation that occurs in key areas such as the housing market, which will vary from city to city. Will he talk to organisations such as the Royal Town Planning Institute, which is keen to establish what further work can be done to capture the link between devolution and housing delivery?
Greg Clark
I will indeed, and again I pay tribute to the work my hon. Friend did in the Department in inaugurating this transfer of powers. Housing will be of great importance in all the deals we are negotiating and expect to conclude. There is an appetite for that right across the country and I will certainly take the advice of the RTPI.
Joan Ryan (Enfield North) (Lab)
2. What assessment he has made of trends in the level of home ownership since 2010.
The Minister for Housing and Planning (Brandon Lewis)
Annual statistics on trends in home ownership are published in the Department’s English housing survey headline report, and I was pleased that recently it highlighted the fact that the number of first-time buyers is at a seven-year high.
Joan Ryan
Is the Minister aware that the cost of the average house in Enfield has rocketed to over 11 times the average wage in the borough? Home ownership is now at its lowest level in 30 years, and the dream of buying a home is increasingly out of reach. Why are the Government so complacent about declining home ownership and their failure to build?
Brandon Lewis
The hon. Lady should be pleased that we have seen 600 housing starts in her own area over the last year and that, although we inherited from the last Labour Government the lowest level of house building since about 1923, we have seen that level starting to come back thanks to the work this Government have done to deliver the fastest rate of building not just of council homes, but also affordable homes, in about 20 years.
Mr Philip Hollobone (Kettering) (Con)
Can the Minister confirm that the proportion of people who own their own home actually fell over the lifetime of the coalition Government, and will he reaffirm, as a central promise of this Administration, to increase the proportion of people who own their own homes?
Brandon Lewis
My hon. Friend makes an interesting observation. Of course, home ownership started to fall in 2005, under the last Labour Government. Over the last Parliament, we worked to get the house building sector working again. We have made it clear that we are a party who believe in helping people who work hard and aspire to own their own home, and that is why we will deliver some 200,000 starter homes for first-time buyers over the course of this Parliament.
Kerry McCarthy (Bristol East) (Lab)
24. Figures from the Office for National Statistics show yet another significant rise in house prices in Bristol, with the biggest rise—some 12%—being in my constituency. Affordability is becoming an increasing problem for local people. People from outside Bristol might be able to afford to live there, but local people cannot afford to buy homes. What is the Minister doing about that?
Brandon Lewis
The hon. Lady may realise that there have been just over 1,000 housing starts in the last year in her area, which is well up on where it was before and, again, builds on the terrible situation we inherited some five years ago. I hope she will join me in thanking this Conservative Government for pledging to deliver affordable homes at the fastest rate in over 20 years and, of course, those 200,000 starter homes for first-time buyers at a 20% discount. Perhaps her party would like to get on board and support that work.
Chris Philp (Croydon South) (Con)
Does my hon. Friend agree that the way to address housing affordability is to increase supply? Can he confirm to the House that the approach which saw over 500,000 new homes built during the last Parliament will be continued?
Brandon Lewis
My hon. Friend makes a good point, and we seek to build on that by delivering affordable homes, including starter homes for first-time buyers, and making sure we increase supply. We have seen the increases over the last few years, and the recent figure of some 261,000 homes getting planning approval last year is pretty much a record level, and is a good sign that we have got the market moving in the right direction. We intend to build on that, and will do so.
Mrs Flick Drummond (Portsmouth South) (Con)
3. What steps he is taking to ensure that local councils provide adequate support and assistance to single homeless people when they approach their council for help.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)
By law, local authorities have a duty to provide advice and information to anyone asking for help. To help them discharge that important duty we have, among other sources of support, funded the National Homelessness Advice Service supporting frontline staff, together with the Help for Single Homeless funding, helping 22,000 people across England by April 2016.
Mrs Drummond
Housing is a big issue in my crowded city of Portsmouth and figures show that the number of people in priority-need has increased over recent years. What steps has the Minister taken to ensure that there is good advice and assistance to the homeless?
Mr Jones
I thank my hon. Friend for her question. I know that she took a keen interest in this issue before she entered the House. We provided more than £500,000 in homelessness prevention grant funding to Portsmouth Council back in 2013-14, and the council was able to use it to prevent 1,021 households from becoming homeless. We are providing a further £550,000 to Portsmouth for the same purpose this year. I am certainly not complacent, however, and I can assure my hon. Friend that I want to work with local authorities to build on best practice. I shall also be meeting representatives of Crisis next month to discuss what more can be done to improve services for homeless people.
Bill Esterson (Sefton Central) (Lab)
Does the Minister agree that the best way for the Government to help councils to help homeless people is to ensure that councils can build more council houses?
Mrs Emma Lewell-Buck (South Shields) (Lab)
4. What assessment he has made of the effectiveness of the local government grant formula in directing funding to areas of need.
Jack Dromey (Birmingham, Erdington) (Lab)
15. What assessment he has made of the effectiveness of the local government grant formula in directing funding to areas of need.
The Minister for Communities and Resilience (Mr Mark Francois)
Councils facing the highest demand for services receive substantially more funding, including through the grant formula. In addition, with the introduction of business rates retention in 2013-14 there has been a deliberate shift away from keeping authorities dependent on grant and towards providing councils with the tools and incentives they need to grow their local economies and promote sustainable house building.
Mrs Lewell-Buck
I thank the Minister for his response, but that is simply not the case, is it? Extreme cuts in areas of need have put councils in an impossible situation. Some have found it so hard to protect essential services that they have had to use funding that had originally been allocated for local welfare assistance schemes. That means that, at times, there is nothing left for people who are in desperate need, such as care leavers, those who are homeless and those who are fleeing abuse. Does he really think that it is acceptable for councils to have to make those choices?
Mr Francois
The north-east and the north-west still have the highest spending power per household after London. The average spending power per household in the north-east is £2,313, and the figure for the north-west is £2,250. Those figures are both higher than the England—excluding Greater London Authority—average of £2,086. Spending power per household in the South Tyneside area will be £2,402 in 2015-16, which is more than the England—excluding Greater London Authority—average and also more than the metropolitan area average of £2,226, so I do believe that adequate resources are being provided.
Jack Dromey
The Secretary of State is a decent man with an open mind who has often spoken of the importance of fairness, so how does he explain the fact that while the great city of Birmingham, which has high need, has had a £700 million budget cut equating to £2,000 per household, the leafy shire area of Cheshire East, in which the Chancellor of the Exchequer’s constituency is located, has had an increase in spending power of 2.6%? If fairness is to mean anything, it must lie at the heart of the funding of local government. Fairness should be based on need.
Mr Francois
I thank the hon. Gentleman for his kind words about my boss. I wonder whether the hon. Gentleman still agrees with what he told the Municipal Journal on 29 September 2010:
“Labour was wrong in 1997 to downgrade the role of local government”.
We are not doing that; we are trying to upgrade the role of local government, and I remind him that spending power per household for the Birmingham area will be £2,554 in 2015-16, which is more than the England average excluding the GLA, more than the metropolitan area average and more than the Cheshire East average of £1,851.
Philip Davies (Shipley) (Con)
There are many areas of high deprivation in the Shipley constituency. Does the Minister agree that people who are in need in otherwise affluent areas should be treated in the same way as those who are in need in deprived areas? What can he do to ensure that Bradford Council treats all those in need equally, and that it does not simply direct its resources to those in need in its Labour heartlands?
Mr Francois
I am sure that any constituents who are in need have a doughty champion in my hon. Friend. If he believes the local authority is being deficient in any way, he will not be slow in coming forward to tell it so. Councillors in local government have had to take difficult decisions—I served in local government, so I remember some of those, too—but it is right that councils spend their money equitably for the residents across their entire area.
Kevin Hollinrake (Thirsk and Malton) (Con)
In my constituency, over the next five years, the number of residents aged 65 and above will increase by 20% and the number aged 95 and above will increase by 50%. What funding support can the Minister offer to meet the unique challenges of age and rurality in my constituency and others like it?
Mr Francois
The funding changes made by the previous Government have already delivered a steady reduction in the so-called “urban-rural gap” in spending power levels. Consecutive settlements have helped to address that gap, and between 2012-13 and 2015-16 it reduces by £205 million. I hope those resources will be of some assistance.
Sue Hayman (Workington) (Lab)
20. The National Audit Office is clear that local authorities with the highest levels of deprivation have seen the greatest reductions in spending power, and in Cumbria rurality compounds the problem. Does the Minister accept that the cost of providing services in sparsely populated areas means that less money is then available to address our needs?
Mr Francois
Allerdale is classified as a rural authority and, as such, it received additional funding via the £15.5 million allocated to rural areas for 2015-16, which was £4 million up on last year’s figure. In addition, it is worth pointing out that the Cumbria local enterprise partnership receives some £48 million in growth deal funding, part of which I hope will be to the benefit of the hon. Lady’s constituents.
Martin Vickers (Cleethorpes) (Con)
It is important that local government grant and council tax payers’ moneys are put to the best use. Labour-led North East Lincolnshire Council is considering whether or not to establish its own funeral service, an area already well-served by private businesses, which fear that the council will exploit its monopoly position of providing cremation services. Will the Minister assure me that he will take the matter up with that council?
Mr Francois
My hon. Friend will be aware that we have given councils greater powers, and the matter he raises is a local one. Perhaps we can have a discussion on it, but all I will say is that the council will have to make sure that it enjoys support from local people if it is going to undertake this. Councillors should ask not for whom the bell tolls, lest it tolls for them.
Mr Steve Reed (Croydon North) (Lab)
May I associate myself with the Secretary of State’s earlier comments on the atrocities in Tunisia and say what a pleasure it was to see him recently at the mayor-making in Croydon? Many people across local government hope the new Secretary of State will adopt a fairer approach than his predecessor. Over the past five years, Newham, which has very high levels of social deprivation, has lost more than £1,000 of funding per household while wealthier Elmbridge in Surrey has had an increase of more than £40 per household. How will his approach in future spending rounds put an end to this blatant unfairness?
Mr Francois
I thank the hon. Gentleman for welcoming me to my new responsibilities—at least that is what it said here. [Laughter.] I should explain, for his benefit, that I began my career in local government, serving on Basildon District Council, a robust place once described as the only local authority in the UK where at council meetings the councillors would actively heckle the public gallery. I also thank him for being nice to my boss. May I remind him that part of our approach is to give councils extra resources, and extra sources of resource, with which they can address issues? Local authorities now benefit from nearly £11 billion under business rates retention, with the scheme estimated to deliver a £10 billion boost to national GDP by 2020. By 2015-16, 94% of local authorities will see growth in business rates above their initial projections, which will be worth some £544 million. We are giving local authorities the methods to succeed.
Mr Reed
I thank the right hon. Gentleman for welcoming me to my position as well. As he seems to want people to believe that the Government’s approach is fair, why have the 10 councils with the most children in care lost three times more funding than the 10 councils with the fewest children in care?
Mr Francois
I am very glad to see the hon. Gentleman in his place. We all know that money is tight, but it is worth reminding the House that the Department for Communities and Local Government contributed a package of £230 million to the recent in-year savings exercise, which was found mainly from unallocated contingencies and better than anticipated land receipts. As a result, we did not need to reopen the local government finance settlement for councils for 2015-16. I understand that that was received well across the whole of local government, even in some Labour authorities.
Wendy Morton (Aldridge-Brownhills) (Con)
5. What steps the Government are taking to release more public sector land for development.
Stuart Andrew (Pudsey) (Con)
14. What steps the Government are taking to release more public sector land for development.
The Minister for Housing and Planning (Brandon Lewis)
Over the course of this Parliament, the Government are committed to releasing public sector land with capacity for up to 150,000 homes. Selling surplus land plays an important role in delivering the Government’s ambitious housing programme, as it releases land supply to the market for starter homes and other initiatives.
Wendy Morton
Given the importance of protecting the green belt in areas such as my constituency of Aldridge-Brownhills, what assistance is being given to local authorities to identify public sector land for development and thus further safeguard our precious green belt?
Brandon Lewis
My hon. Friend makes a good point on protecting the green belt, which we have done through the national planning policy framework. My now boss outlined the process during the passage of the Localism Act 2011. We are committed to ensuring that the Government release public land as an important part of that process, and that 90% of our brownfield land has its planning permission in place by 2020.
Stuart Andrew
My hon. Friend will be acutely aware of the concern of many of my constituents about the potential loss of our green belt thanks to excessive housing targets set by Leeds council, but the release of public sector land would help to save those important sites. What measures are available to meet the remediation costs so that developers cannot say that such sites are not viable?
Brandon Lewis
My hon. Friend makes a good point. It was a pleasure to visit him in his constituency and to talk to residents about these issues. It is important that we get public sector land released. With regard to brownfield sites, we have the housing zones programme in place. We have announced that, later this year, we will go into more detail about the brownfield fund, which will be aimed specifically at such details. I will happily meet him and his local councillors to see whether we can help take things forward.
Mr Gregory Campbell (East Londonderry) (DUP)
There is a significant disparity in the rate of public sector development across the United Kingdom. Will the Minister undertake to hold discussions with the relevant Ministers in each of the devolved Assemblies and Parliaments to ensure that residents in each of the parts of the UK get maximum bang for their buck?
Brandon Lewis
The hon. Gentleman makes an interesting point. Ministers are talking all the time; the Secretary of State has been very clear about driving the matter forward. He wants all Departments to deliver to ensure that we get to 150,000 homes. I am happy to look at what he suggests. If we can work with the devolved authorities to ensure that residents right across the United Kingdom benefit, I will be happy to do so.
Dr Roberta Blackman-Woods (City of Durham) (Lab)
Figures from a recent National Audit Office report showed that the Government were so desperate to inflate their record on the disposal of public land for new homes that they included land released as long ago as 1997 by the Labour Government. Will the Minister tell the House how on earth the Government propose to reach the higher target of 150,000 homes with no one else’s record to plunder?
Brandon Lewis
I gently say to the hon. Lady that the programme that I outlined in the previous Parliament consisted of land that was built on or disposed of between 2011 and 2015. We have set an ambitious target of 150,000 homes for this Parliament, which we must reach, and I hope that she will support us in doing that. Let me gently point out to her that I am somewhat prouder of this Government’s record of delivering some 23,000 homes a year through public sector land than I would be of the Labour record of 1,000 homes a year.
Mr Nigel Evans (Ribble Valley) (Con)
6. What recent discussions he has had with the Secretary of State for Education on the provision of free school transport by local authorities.
The Minister for Communities and Resilience (Mr Mark Francois)
Ministers regularly meet colleagues in Government Departments to discuss a variety of topics. Local authorities have discretionary powers to provide free home to school transport beyond their statutory duties and are best placed to balance local priorities against the funding they have available.
Mr Evans
They do have that discretion, but increasingly they are not using it. People who want to send their children to a faith-based school, a grammar school or just the school they want them to go to, not far from the nearest school, are being charged about £500 a time. That is nothing more than a supplement to the council tax. Will the Minister please look into that abuse and stop it?
Mr Francois
I understand that my hon. Friend secured a Westminster Hall debate on this very subject only last Thursday, where he discussed it in considerable detail. He also raised a number of constituency cases and gave examples as he went. I reiterate the point made by my hon. Friend the Minister for Schools in responding to that debate: local authorities need to adopt a reasonable approach, especially in the application of their discretionary powers.
Kate Green (Stretford and Urmston) (Lab)
Parents of disabled children face particularly high costs in arranging their children’s travel to school, and of course it is not always possible for those children to make use of public transport. Will the Minister have a conversation with his counterpart in the Department for Education to ensure that local authorities properly address the needs of those children?
Mr Francois
I understand the hon. Lady’s point. It is worth bearing it in mind that the statutory guidance recommends that local authorities adopt an appeals process, which must be published annually on the local authority website and involve a two-stage review by a senior council officer and, if the issue is unresolved, by an independent appeals panel. Any parent who feels that their disabled child’s needs are not being properly looked after has the right to that two-stage appeal process.
Liz McInnes (Heywood and Middleton) (Lab)
7. What assessment he has made of the reasons for changes in the level of homelessness and rough sleeping since 2010.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)
We have invested more than £500 million since 2010 to support local authorities and the voluntary sector to prevent and tackle homelessness and rough sleeping. That investment has meant that we have not returned to the days of 10 years ago, when statutory homelessness in England was nearly double what it is today.
Liz McInnes
I thank the Minister for that response, but Government figures released just last week show that homelessness has risen by 36% since 2010 and that the number of homeless families living in bed and breakfasts has soared by 300%. Is the Minister not shocked at the dreadful legacy of the past five years, and will he commit to make tackling homelessness a top priority?
Mr Jones
The Government are absolutely committed to tackling homelessness. The hon. Lady mentions bed-and-breakfast accommodation but, to put it into context, a small number of authorities—about 5%—account for 80% of the breaches. We are taking this very seriously and are absolutely clear that the long-term use of bed-and-breakfast accommodation for families with children is unacceptable and unlawful. However, the hon. Lady must also bear it in mind that the use of bed-and-breakfast accommodation is a third of its peak under the Labour Administration.
Mr David Burrowes (Enfield, Southgate) (Con)
Given the pernicious link between homelessness, mental illness, addiction, crime and unemployment, what progress has been made on the autumn statement commitment to extend the principles of the troubled families programme to other individuals with multiple needs?
Maria Eagle (Garston and Halewood) (Lab)
Better be careful what you say, then.
Mr Jones
I thank the hon. Lady for her advice.
I certainly hear what my hon. Friend the Member for Enfield, Southgate (Mr Burrowes) says, and we are making it a great priority to work with troubled families to try to improve their lives and, in particular, outcomes for their children.
Jeremy Corbyn (Islington North) (Lab)
Is it not a scandal that there are so many people sleeping on the streets of this country and that so many children are being brought up in temporary accommodation with no long-term security? Is it not a scandal that much of that is brought about by short-term renting in the private rented sector by people who then get moved out, particularly in London, because of the way in which the benefit cap operates? Should we not rethink housing strategy and housing needs in this country?
Mr Jones
I thank the hon. Gentleman and wish him luck in his endeavours over the next few months. He seems to be harking back to the same failed policies that lost his party the general election. He does raise an extremely important issue about assured shorthold tenancies and what happens to people when those tenancies come to an end. Some excellent work is going on, with some authorities helping people in that position to avoid homelessness. I want to build on the good work that has been done, to ensure that nobody is made homeless as a result of an assured shorthold tenancy.
Lyn Brown (West Ham) (Lab)
So complacent.
I welcome the hon. Gentleman to his post. During the election, the Prime Minister stated that the number of people sleeping rough had gone down over the past five years. Crisis, the homelessness charity, said he had got his facts wrong. The Government’s own statistics show that the number of rough sleepers has gone up by 55%. Will the Minister correct the Prime Minister’s mistake?
Mr Jones
I thank the hon. Lady for her welcome. Compared with the situation five years ago, this Government changed the methodology for counting rough sleeping so that we have a more honest and accurate assessment and do not sweep things under the carpet, as her party did when it was in government. We have a number of programmes on rough sleeping that are working well. The “No Second Night Out” programme has been rolled out across the country, and in London more than two thirds of those new to the streets are not spending a second night out because of that programme.
David Mackintosh (Northampton South) (Con)
8. How many homes have been built under the affordable homes programme.
John Glen (Salisbury) (Con)
18. How many affordable homes have been built since 2010.
The Minister for Housing and Planning (Brandon Lewis)
More than 260,000 affordable homes have been delivered in England since April 2010. The Government’s 2011 to 2015 affordable homes programme exceeded our expectations, delivering nearly 186,000 affordable homes, some 16,000 more than originally pledged.
David Mackintosh
Will my hon. Friend join me in congratulating Northampton Borough Council on using the affordable housing programme to create new affordable housing and bring empty commercial and office buildings in Northampton back into use? What further plans does he have to help local authorities provide more affordable housing?
Brandon Lewis
I thank my hon. Friend for making that point, and he is right. I congratulate Northampton Borough Council on its excellent work in making sure it delivers the homes that residents need. It is important that we do that. That is why we are committed to delivering affordable housing over the next few years at the fastest rate we will have seen in this country for more than two decades.
John Glen
I welcome the Minister’s answer and applaud the Government’s policy of extending the right to buy to housing association tenants, but may I urge him to make sure that there is a robust mechanism to ensure like-for-like replacement of homes sold to housing association tenants? In particular, will he examine what happens in rural areas where community land trusts exist to ensure no depletion of affordable housing in rural communities?
Brandon Lewis
My hon. Friend makes a good point, and I thank him for endorsing the fact that we are determined to do what we can to support people who aspire to own their own homes. We will move forward with delivering that right to all social tenants. The Government are committed to ensuring that people can achieve their aspiration of home ownership. We support people’s desire to own their own home, and we will work with them. Under the current programme, there are rural exemption sites.
Mr Clive Betts (Sheffield South East) (Lab)
Given that the Government have completely failed to replace the council homes sold under the right to buy, and given the Minister’s proposals to force the sale of housing association homes, are the Government committed to replacing housing association homes that are sold and council homes that will be sold to fund the compensation to housing associations? If not, does he accept that his policy will lead to a reduction in the number of houses available for social renting?
Valerie Vaz (Walsall South) (Lab)
What assessment has the Minister made of land throughout the country that already has planning permission for housing that could help the affordable housing programme?
Brandon Lewis
Some 261,000 properties have been given planning permission in the past year. That is a good sign, and it is pretty much a record figure. We need to make sure that those homes are developed in good time. Local authorities grant planning permission for a limited time, so they should rightly expect developers to build them out.
Daniel Zeichner (Cambridge) (Lab)
10. What the replacement rate of council homes sold through the right-to-buy scheme has been since 2012.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
12. What the replacement rate of council homes sold through the right-to-buy scheme has been since 2012.
The Secretary of State for Communities and Local Government (Greg Clark)
Local authorities have three years from the date of sale of each home to replace the property. In the first year following the reinvigoration of the right to buy, there were 3,053 additional sales. Within two years—by the end of 2014-15—3,337 replacements were started or acquired.
Daniel Zeichner
I recall that at the start of the previous Parliament one-for-one replacement was promised, but across the country the actual figure has cracked out at one for 10, and in my city it is one for nine. Why should anyone believe these assurances now?
Greg Clark
I welcome the hon. Gentleman to the House. He must not have listened to my answer, because I said that there were 3,053 additional sales and 3,337 replacements, which is more than one for one.
Debbie Abrahams
The Institute for Fiscal Studies, Moody’s, the National Housing Association and the CBI, to name but a few, have raised concerns about the Government’s right-to-buy proposals. What assessment has the Secretary of State made of the impact of those proposals on the financial viability of housing associations and, in turn, their ability to build new affordable housing?
Greg Clark
The impact of the policy will be to extend the aspiration of people across this country to own their own home, because 86% of people want to do so, and there is no difference between the aspirations of housing association tenants, council tenants and people who own their own home. That is the impact we are achieving through the policy.
John Cryer (Leyton and Wanstead) (Lab)
Does the Secretary of State expect the replacement of housing association homes that are sold off to be the same as, above or below the rate for council homes previously sold off?
Greg Clark
As my hon. Friend the Minister for Housing and Planning made clear, the requirement will be one-for-one replacement. With regard to council house sales, replacement of more than one for one has already been achieved for the first year.
Rosie Cooper (West Lancashire) (Lab)
11. What steps his Department is taking to ensure that localism is prioritised in the decision-making process for nationally significant infrastructure projects.
The Minister for Housing and Planning (Brandon Lewis)
The nationally significant infrastructure planning system strikes a fair and effective balance between two important needs: the national need for infrastructure to underpin growth and sustainability, and the need to address community concerns and maximise local benefits from investment.
Rosie Cooper
I thank the Minister for that non-answer. I would like him to explain to the residents of West Lancashire why, despite the Government’s claim to support localism in the planning process, permission was granted to dump hazardous waste for 20 more years at Whitemoss landfill, for which there was no demonstrable need, either local or regional, and which was opposed by thousands of local residents, the borough council, the county council and me as the local MP. Surely this means—
Mr Speaker
Order. The hon. Lady can preserve the unexpurgated version of her question for the autumn evenings that lie ahead.
Brandon Lewis
Thank you, Mr Speaker, and I thank the hon. Lady for her gracious comments. As she probably realises, that planning application is still within the six-week period during which a decision can be challenged. It would be inappropriate for me to comment on a specific scheme, owing to the quasi-judicial nature of planning.
Andrew Bridgen (North West Leicestershire) (Con)
23. Many of my constituents feel that localism is failing them when they oppose large-scale wind farms and solar farms. Will the Minister consider a minimum buffer zone between such projects and settlements, which would give my constituents some comfort?
Brandon Lewis
I thank my hon. Friend for that question. I am sure he will appreciate that local communities absolutely have their say under the new wind turbine regime.
John Healey (Wentworth and Dearne) (Lab)
13. What estimate he has made of the cost to the public purse of introducing a right to buy for housing association tenants.
The Minister for Housing and Planning (Brandon Lewis)
The details will be set out in the impact assessment when the housing Bill is published, but it is all about ensuring that we support people who aspire to own their own home and extend home ownership to as wide a group of people who wish to have it as possible, and on equal terms to those who have had it for so many years.
John Healey
What a load of waffle. It is quite clear that the Minister has made no assessment at all of the costs of the policy. When he produces the impact assessment before the Bill is published and brought before the House, will he ensure that it shows that taxpayers will pay three times over: first, for the investment to build the homes; secondly, for the discount to sell them; and, thirdly, for the higher housing benefit bills that will result?
Brandon Lewis
I appreciate that the right hon. Gentleman feels strongly about this, no doubt against the background of his interests in the housing association he is involved with.
I gently point out to the right hon. Gentleman that he has made it very clear where the Labour party stands on the issue. Lord Prescott himself made it clear that he did not know what aspiration was. I suspect, from what the right hon. Gentleman has said, that he probably still harks back to his statement to the Fabian Society, in which he spoke about the drop in home ownership since 2012 being no bad thing. We think that it is, and we want to support people who want to own their own home. I am disappointed that he does not support aspiration.
Mims Davies (Eastleigh) (Con)
Does my hon. Friend agree that constructing a local plan where one did not exist in areas such as my constituency of Eastleigh is of paramount importance in delivering home ownership while protecting green spaces and in committing to the strongest sanctions on councils that fail to do this properly by embracing localism and providing locally based community planning?
Brandon Lewis
All housing association tenants will share my view, and my hon. Friend’s, that the best way for communities to have their say is to have a local plan and, even better, neighbourhood plans. I encourage her authority to listen to her and get on with putting its local plan in place.
Margaret Ferrier (Rutherglen and Hamilton West) (SNP)
16. What discussions he has had with the Secretary of State for Scotland on the effect of firefighters pension scheme reforms in Scotland; and if he will make a statement.
The Minister for Communities and Resilience (Mr Mark Francois)
The firefighters pension scheme is devolved, and it is for the Scottish Government to consider its operation in Scotland. As such, I have had no discussions with the Secretary of State for Scotland on this matter.
Margaret Ferrier
Surely the UK Government should withdraw this appalling threat to Scotland’s funding and allow the Scottish Government to manage their own public sector pensions within the agreed funding settlement framework.
Mr Francois
We have to look at the context. The cost of public sector pensions increased by about a third in the 10 years to 2009, and reform was necessary to ensure a fair deal for firefighters and taxpayers alike. Firefighters’ pensions remain generous. A firefighter who earns £29,000 and retires at 60 after a full career will get about £19,000 a year pension, rising to £26,000 with the state pension. It is also worth remembering that the pension age of 60 is the same as it is for the police and, indeed, for the armed forces.
Jack Dromey (Birmingham, Erdington) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Communities and Local Government (Greg Clark)
May I start this session of topical questions by paying tribute to my right hon. Friend the Member for Brentwood and Ongar (Sir Eric Pickles) for his five successful years in leading the Department?
Building on my right hon. Friend’s achievements, my commitments and those of my excellent team are, among other things, to continue to increase the supply of housing so that people can achieve their aspiration of a home of their own; to decentralise powers and budgets to local communities through the Cities and Local Government Devolution Bill; and to maintain an ongoing commitment to turning lives around through the troubled families programme. This week, the Prime Minister announced that almost 117,000 families have so far been helped.
Jack Dromey
With the biggest housing crisis in a generation and an acute shortage of affordable and social housing, would that the Government’s right-to-buy Bill were buried and not brought forward, because it will make that bad situation worse. On the timetable for the Bill, the Prime Minister promised that it would be introduced in the Government’s first 100 days. Can the Secretary of State confirm that it will be brought before Parliament before the summer recess?
Greg Clark
The hon. Gentleman is a former shadow housing Minister, and many of his colleagues are having occasion to reflect on Labour’s failure to offer any substantive policies; he should take his share of the blame. He should be clear from my previous answer that the right-to-buy policy, in relation to council houses, has increased the supply of housing. Whether on increasing housing supply or increasing aspiration, he should get behind our policy. The Bill was in the Queen’s Speech and it will be introduced very shortly.
Gareth Johnson (Dartford) (Con)
T2. The Minister will be aware that the number of empty homes in the UK is now at the lowest level since records began. Will he assure the House that he will continue to work with councils such as Dartford council, which is successfully bringing more and more empty homes back into use?
The Minister for Housing and Planning (Brandon Lewis)
My hon. Friend makes a good point. It has been a pleasure to visit and meet the excellent council in Dartford, which is doing some superb work on this. He is right. The number of long-term vacant homes in England fell by some 10,000 in the year to October 2014, so we are at the lowest levels we have seen. That is good work and we want to go further.
Emma Reynolds (Wolverhampton North East) (Lab)
I congratulate the Secretary of State on his promotion and join him in his condemnation of the terrorist attacks in Tunisia, Kuwait and France. Our thoughts and sympathies are with the victims, families and friends.
The reason the Secretary of State does not know when he is going to bring forward his housing Bill is that the policies were written on the back of a fag packet during the election campaign and were based on forcing councils to sell 15,000 homes a year. Since then, I have asked his Department how many of these homes will become vacant every year, and it said it does not know. How many council homes will he force councils to sell off every year?
Greg Clark
I do not smoke, so there is no question of writing on the back of fag packets, but what I do know is that the Opposition policies for which the hon. Lady was responsible were very much inadequate to the task. In fact, one of her own colleagues, the hon. Member for Barrow and Furness (John Woodcock), has said that the Labour party’s housing policies made his “heart sink”, and each member of Labour’s leadership parade has called attention to the party’s failure to come up with credible policies. We are very clear that extending the right to buy is a way of achieving people’s aspirations. I have yet to hear from the hon. Lady whether she agrees with the right to buy.
Emma Reynolds
We are in favour of people’s aspiration to buy their own home, but we are also in favour of policies that add up and stack up. The Tories are just plucking the figures out of thin air. They have no idea how many council homes will be sold. Indeed, the property specialist Savills estimates that the number is closer to 5,000 rather than 15,000.
This is not just about existing council homes, but about homes that councils are building or planning to build. Is the Secretary of State going to force councils to sell brand-new homes even before those who are on the waiting list—elderly people, families and others—are able to move into them?
Greg Clark
The hon. Lady gives every impression of not being in favour of the right to buy, but she cannot bring herself to say it. I invite her to make her policy clear. Our policy is very clear: on expensive council houses in the top third of the area, it is an efficient use of those assets to sell them in order to be able to allow more homes to be built. That is a very straightforward policy.
David Mowat (Warrington South) (Con)
T3. The Secretary of State may recall canvassing on the brand new Edgewater Park estate in Warrington three months ago, where the major issue was lack of adequate broadband. Will he consider requiring that broadband be provided for new estates in the same way as other utilities such as electric and water?
Greg Clark
I do indeed recall canvassing with my hon. Friend in his constituency and it was a very successful session. He is absolutely right to say that it is important to have broadband connections when new homes are built. In fact, my hon. Friend the Minister for Housing and Planning will meet Joe Garner of BT this very afternoon to press that point. Of course, it is not just a planning matter; it is for BT to make sure that it is alert and adept enough to make those connections.
Richard Burgon (Leeds East) (Lab)
T4. Was the Secretary of State as surprised as my constituents at the decision to suspend the electrification of the Leeds to Manchester rail line? Does that help or hinder the Government’s stated objective of a so-called northern powerhouse generating economic growth in Leeds and the north?
The Parliamentary Under-Secretary of State for Communities and Local Government (James Wharton)
I thank the hon. Gentleman for giving me this opportunity to respond. This Government are investing £13 billion in rail in the north. There will be more trains, newer trains and more regular journeys. It is right that the Secretary of State for Transport should look at the value for money for all projects and his decision is the correct one, but the northern powerhouse is about many things, not just transport. We are going to build it and deliver for the economy of the north of England.
Mr Henry Bellingham (North West Norfolk) (Con)
T5. Are Ministers aware that the Borough Council of King’s Lynn & West Norfolk has a five-year supply of housing and a robust local plan, which will go to the inspector next month? In the meantime, do they agree that it is quite wrong and unethical for developers and housing associations to put in opportunistic applications and appeals?
Brandon Lewis
My hon. Friend makes a good point. It is good to hear that the King’s Lynn local plan will be going through the process as soon as possible. I know that the inspectors will look at it and work with the local authority to get it through the process. If a planning application is made, the local authority itself is the body that makes the decision. Should it end up with an inspector, they will look at the process. Obviously, as the local plan goes through the process it gains more weight, which should be taken into account in any decision.
Diana Johnson (Kingston upon Hull North) (Lab)
T6. With the pause in the electrification of the TransPennine service turning the northern powerhouse into a northern power cut, when did the Secretary of State actually know that the policy was in such difficulty?
James Wharton
Labour Members would do well to listen to their council leaders, so many of whom are supportive and enthusiastic about the policies that this Government are bringing forward to grow our northern economy. As I have already made clear, transport plays a key role in that, but this is about so much more. It is not about a cut; it is about delivering on our promises, growing our regional economies and delivering for the north.
Sir David Amess (Southend West) (Con)
T8. Will my right hon. Friend be very careful about any changes he might be considering to the south Essex local enterprise partnership? What is of paramount importance to me is that nothing is done to damage the regeneration of Southend-on-Sea.
The Minister for Communities and Resilience (Mr Mark Francois)
Local enterprise partnerships have always been free to propose changes to their geography. No such proposals have been received for the south-east, but I am aware that some are likely to be made soon. My right hon. Friend the Secretary of State and other ministerial colleagues will consider any such proposals on their merits. While any changes are considered, it is important for the focus to remain on delivering the existing growth deal commitments made by partners within the South East LEP, which I am sure is what my hon. Friend wants.
Mr Speaker
I call Mr Graham Jones—not here. I call Richard Burden—not here.
Mr Sheerman
And I have been here since prayers, Mr Speaker, so I have been very patient.
The Secretary of State knows from the migration figures that more and more people want to come and live in this wonderful country, and he knows that more and more people want affordable homes. Will he do something dramatic about building houses and will he stop his plan to sell off housing association stock, or does he want to turn our cities into ghettos, as the French have done with theirs?
Greg Clark
No one could be more determined to increase our housing supply than Conservative Members. The hon. Gentleman will know that, when I was the Minister for Planning, we reformed the national planning policy framework, which has increased planning permissions by more than 60% to 260,000 homes a year. What we have done in office is in stark contrast to what Labour Members did in office, when housing completions fell to an all-time low.
Mr Nigel Evans (Ribble Valley) (Con)
T9. I cheered for joy when the Minister for Housing and Planning said that, under this Conservative regime, the wishes of the public would be paramount on the siting of wind turbines. Will the Secretary of State make sure that the message gets through to the Planning Inspectorate when it looks at such applications on appeal?
Greg Clark
I can give my hon. Friend that assurance. I made a written statement to the House and wrote to the Planning Inspectorate to make it crystal clear that the final say on onshore wind farms must be with local people.
Tom Brake (Carshalton and Wallington) (LD)
Does the Secretary of State agree with the Department of Health that local authorities should not charge carers for the support packages that they receive to enable them to carry on their critical caring roles?
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)
I thank the right hon. Gentleman for his question. [Interruption.] I am looking for the right page in my brief. The hon. Member for Garston and Halewood (Maria Eagle) has given me all sorts of wonderful and very helpful advice today.
The right hon. Gentleman is absolutely right that we need to make sure that we support older people properly. In relation to the better care fund, he knows that £5.3 billion is coming through to support people in this financial year.
Michael Fabricant (Lichfield) (Con)
Lichfield District Council is in early negotiations with the West Midlands combined authority and other local authorities, but it wishes to maintain control over planning and housing policy. Will that be possible for local authorities such as Lichfield?
Greg Clark
As my hon. Friend knows, our intention is to transfer powers from Westminster to local communities, and it is for them to determine their arrangements. Places such as Manchester had that in mind when they set their own arrangements, so it is absolutely available in the west midlands.
Anna Turley (Redcar) (Lab/Co-op)
What has the increase been in the number of families who have met the troubled families assessment criteria since the programme began? Has the Minister made any assessment of the impact of his Government’s £12 billion of welfare cuts and of his swingeing local authority cuts on already struggling families who need joined-up local support?
Greg Clark
The hon. Lady visited my old school in South Bank to congratulate students there on being in the finals of the mock trial competition. Perhaps she will convey my congratulations to them as well.
On troubled families, my right hon. Friend the Prime Minister made a statement last week in which he said that more than 117,000 families have had their lives transformed by this crucial programme. It has saved public money as well as transforming lives. We will build on that during the Parliament. I look forward to her support, because Redcar and Cleveland is one of the principal authorities delivering on this.
Mr Speaker
We shall now observe a minute’s silence in respectful memory of the victims of the atrocities in Tunisia.
The House observed a minute’s silence.
Petition
Ann Clwyd (Cynon Valley) (Lab)
I wish to present a petition on behalf of my constituents in the Cynon Valley, my hon. Friends the Members for Merthyr Tydfil and Rhymney (Gerald Jones) and for Aberavon (Stephen Kinnock), and people from all parts of Wales. On the instruction of Mrs Beryl Astbury and Mrs Pamela Lewis, descendants of Mr Richard Lewis, their solicitor Bernard de Maid has written to the Secretary of State for Justice requesting a pardon for Richard Lewis. I repeat Richard Lewis’s last words before his hanging on 13 August 1831, which reaffirm this miscarriage of justice: “O Arglwydd, dyma gamwedd.” In English, this means, “Oh Lord, this is injustice.”
The petition states:
The Petition of residents of Wales,
Declares that Richard Lewis (known as Dic Penderyn) was a Welsh labourer and coal miner who lived in Merthyr Tydfil; further that he was involved with the Merthyr Rising of 3 June 1831; further that during the riot, he was arrested and charged with stabbing a soldier, Donald Black, with a bayonet; further that the people of Merthyr Tydfil were convinced of his innocence and signed a petition for his release; further that despite this, he was found guilty and hanged on 13 August; further that in 1874, a man named Ianto Parker confessed on his death bed that he stabbed Donald Black; further that James Abbott, who testified against Richard Lewis at the trial later admitted to lying under oath; further that at Mr Lewis’ trial, the Prosecution suppressed evidence which would have exonerated him; further that the same evidence, which should have led to his pardon in 1831, was also suppressed by the trial Judge and the Home Secretary; further that there is strong feeling in Wales that Richard Lewis was wrongly executed, that his conviction should be overturned and that he should be granted a pardon.
The Petitioners therefore request that the House of Commons urges the Secretary of State for Justice to grant a pardon to Richard Lewis.
And the Petitioners remain, etc.
[P001530]
Tunisia, and European Council
(8 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Prime Minister (Mr David Cameron)
It is with great sadness that I have to tell the House that we now know of at least 18 British nationals who have been killed, with more injured. The death toll is likely to rise still further. These were innocent British holidaymakers, people who had saved up for a special time away with their friends and family, but who suddenly became the victims of the most brutal terrorist attack against British people for many years. I am sure the whole House will join me in sending our deepest condolences to the families and friends of all those who have lost loved ones.
I know the whole country will want to share in a moment of remembrance. Following the act of remembrance we have just held in this House, we will have a national minute’s silence on Friday at 12 noon, one week on from the moment of the attack. In due course, in consultation with the families, we will also announce plans for a fitting memorial to the victims of this horrific attack.
This morning, I chaired the fourth daily meeting of the Government’s emergency Cobra Committee. Let me take the House through three things: first, the latest on what we believe happened in Tunisia, and also in the separate attacks in Kuwait and France; secondly, the immediate steps we have been taking to help the British victims and their families; and thirdly, how we will work with our allies to defeat this evil in our world.
The events of last Friday are horribly familiar to anyone following them in the media. A radicalised university student, armed with a Kalashnikov, began massacring innocent tourists on the beach at Port El Kantaoui. He continued his attack into the Imperial Marhaba hotel and on to the streets, where he was shot dead by Tunisian police. While we believe he was the sole gunman, it is thought that he may have been part of an ISIL-inspired network. The Tunisian security forces are investigating possible accomplices who may have supported this sickening attack.
On the same day in Kuwait, a suicide bomber killed 27 and injured more than 200 in an attack on the Imam Sadiq Mosque near Kuwait City. An ISIL-affiliated group based in Saudi Arabia has claimed it was behind the attack. In Syria, ISIL executed 120 people in their homes in Kobane. In south-eastern France, a man was murdered and two were injured in an explosion. While all these attacks were clearly driven by the same underlying perverted ideology, there is no evidence to date that they were directly co-ordinated.
Our first priority has been to help the British victims and their families. This has meant helping on site, assisting the wounded, bringing home those who have lost their lives, ensuring holidaymakers still in Tunisia who want to come home are helped to do so and gathering further evidence of what happened. A team of consular staff were on site in Sousse within hours and, by Saturday, were complemented by additional teams of consular staff, police and Red Cross experts. We now have over 50 people on the ground, helping British victims and their families. To help the wounded, we have already sent a team of military medical liaison officers to assist with medical evacuations, and a C-17 has just landed in Sousse to bring home some of the seriously injured.
It is right that we do everything we can to bring home as quickly as possible those who have lost their lives. We have been helping the Tunisians with what, in some cases, is a very difficult identification process. The Royal Air Force will arrange directly the repatriation of all deceased British nationals whose families wish us to do so, as soon as the identification processes are complete, while 60 family liaison officers back here in Britain continue to support the relatives of those killed and injured. We are also working with tour operators to ensure that those who want to come home can do so—more than 20 special flights have already brought hundreds home.
Since Friday evening, over 380 counter-terrorism and local officers have been at British airports to meet and support travellers returning home from Tunisia, including helping to gather evidence of what happened. As Assistant Commissioner Mark Rowley said yesterday, the national policing response is likely to be one of the largest counter-terrorism deployments in a decade.
Yesterday afternoon, I visited the Foreign Office crisis centre to see at first hand the work our teams are doing to co-ordinate our efforts at home and abroad, and as I speak, my right hon. Friend the Home Secretary and the Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for Bournemouth East (Mr Ellwood), are out in Sousse in person, doing everything they can to help the British victims and their families and talking to the Tunisian authorities about how we can help strengthen their security. Over the weekend, I spoke to President Essebsi, and I want to put on the record my thanks for the assistance of the Tunisian authorities throughout this horrific ordeal.
The Foreign Office has updated its travel advice, which continues to make clear the high threat from terrorism in the country, just as it did before Friday’s events, but it is not advising against all but essential travel to this part of Tunisia, so it is not advising against visiting the popular coastal resorts. This was agreed by the Cobra emergency committee and will be kept under close review.
These are difficult judgments. Nowhere is without risk from Islamist extremist terrorists, and of course we take into account the capability of the country in question and its ability to counter the threat. In the UK, the threat level remains “severe”, meaning that a terrorist attack is highly likely, but until we have defeated this threat, we as a country must resolve to carry on living our lives alongside it. Making those judgments means taking sensible precautions, and where there is a specific threat, we will always take action immediately, but we will not give up our way of life or cower in the face of terrorism.
These terrorists tried to strike at places of hope—in a country with a flourishing tourist industry on the road to democracy and in a mosque in Kuwait that dared to bring Sunnis and Shi’as together. The Tunisians and Kuwaitis will not have that hope taken away from them. They will not be cowed by terror, and we will stand with them.
Defeating this terrorist threat requires us to do three things. First, we must give our police and security services the tools they need to root out this poison. We have already increased funding for our police and intelligence services this year and legislated to give them stronger powers to seize passports and prevent travel. Over the next two days, our security forces and emergency services will conduct a major training exercise in London to test and refine the UK’s preparedness for dealing with a serious terrorist attack.
We must also do more to make sure that the powers we give our security services keep pace with changes in technology. ISIL’s methods of murder might be barbaric, but its methods of recruitment, propaganda and communication use the latest technology. We must therefore step up our own efforts to support our agencies in tracking vital online communications, and we will bring forward a draft Bill to achieve this.
We must also work with our international partners to improve our counter-terrorism co-operation. I spoke to President Hollande, Chancellor Merkel and Prime Minister Michel of Belgium over the weekend, and we agreed to work together to help Tunisia strengthen its security. Our ambassador met the Tunisian authorities yesterday to put that into action, including by strengthening the protective security arrangements at coastal resorts.
Secondly, we must deal with the security threat at source, whether ISIL in Iraq and Syria or other extremist groups around the world. British aircraft are already delivering the second-largest number of airstrikes over Iraq, and our airborne intelligence and surveillance assets are assisting other countries with their operations over Syria. We are working with our UN, EU and American partners to support the formation of a Government of national accord in Libya, and we will continue to do all we can to support national Governments in strengthening weak political institutions and dealing with the ungoverned spaces where terrorists thrive. As I have said here many times before, if we need to act to neutralise an imminent threat to the UK, we will always do so.
Thirdly, we must take on the radical narrative that is poisoning young minds. The people who do these things do it in the name of a twisted and perverted ideology, which hijacks the Islamic faith and holds that mass murder and terror are not only acceptable, but necessary. We must confront this evil with everything we have. We must be stronger at standing up for our values, and we must be more intolerant of intolerance, taking on anyone whose views condone the extremist narrative or create the conditions for it to flourish.
On Wednesday, a new statutory duty will come into force, requiring all public bodies—from schools, to prisons and local councils—to take steps to identify and tackle radicalisation. In the weeks ahead, we will go further. We will stand in solidarity with all those outraged by this event, not least the overwhelming majority of Muslims in this country and around the world. For this is not the war between Islam and the west in which ISIL wants people to believe; it is a generational struggle between a minority of extremists who want hatred to flourish and the rest of us who want freedom to prosper—and together, we will prevail.
Let me deal now with the European Council. It discussed three issues that strongly affect our national interest. On the situation in Greece, I chaired a contingency meeting in Downing Street earlier today, and the Chancellor will make a statement straight after this one. Let me deal briefly with the other two issues—the need for a comprehensive approach to the migration crisis and the beginning of the UK renegotiation process.
On migration, the right course of action is to combine saving lives with tackling the root causes of this problem. That means breaking the business model of the smugglers by breaking the link between getting in a boat and getting a chance to arrive and settle in Europe. It means gathering intelligence to disrupt the smuggling gangs and using our aid budget to help alleviate the poverty and failure of governance that so often drives these people from their homes in the first place.
Britain has already played a leading role in all this, by keeping its promises on aid and saving over 4,000 lives in the Mediterranean. By contrast, focusing primarily on setting up a relocation scheme for migrants who have already arrived in Europe could, we believe, be counter-productive. Instead of breaking the smugglers’ business model, it makes their offer more attractive. Others in the EU have decided to go ahead with this relocation scheme, but because of our opt-out from justice and home affairs matters, we will not be joining them. We will, however, enhance our plans to resettle the most vulnerable refugees from outside the EU, most notably from Syrian refugee camps, in line with the announcement I made in Bratislava earlier this month.
Finally, on the UK’s relationship with the European Union, we have a clear plan of reform, renegotiation and referendum. At this Council, I set out the case for substantive reform in four areas: sovereignty, fairness, immigration and competitiveness.
First, on sovereignty, Britain will not support being part of an ever-closer union or being dragged into a state called Europe—that may be for others, but it will never be for Britain, and it is time to recognise that specifically. We want national Parliaments to be able to work together to have more power, not less.
Secondly, on fairness, as the eurozone integrates further, the EU has to be flexible enough to make sure that the interests of those inside and outside the eurozone are fairly balanced. Put simply, the single currency is not for all, but the single market and the European Union as a whole must work for all.
Thirdly, on immigration, we need to tackle the welfare incentives that attract so many people from across the EU to seek work in Britain.
Finally, alongside all those, we need to make the EU a source of growth, jobs, innovation and success, rather than stagnation. That means signing trade deals and completing the single market, such as in digital, where the Council made progress towards a roaming agreement that could cut the cost of mobile phone bills for businesses and tourists alike.
At this meeting, my priority was to kick off the technical work on all these issues and the specific reforms we want in each area. The Council agreed that such a process will get under way, and we will return to the issue at our meeting in December. These talks will take tenacity and patience. Not all the issues will be easily resolved, but just as in the last Parliament, when we showed that change could happen by cutting the EU budget for the first time in history, so in this Parliament we will fix problems that have frustrated the British people for so long. We will put the Common Market back at the heart of our membership, get off the treadmill to ever-closer union, address the issue of migration to Britain from the rest of the EU and protect Britain’s place in the single market for the long term. It will not be the status quo; it will be a membership rooted in our national interest and a European Union that is better for Britain and better for Europe, too. I commend this statement to the House.
Ms Harriet Harman (Camberwell and Peckham) (Lab)
I thank the Prime Minister for his statement.
The House meets today in dark times. At least 18 innocent Britons have been murdered and many more have been seriously injured in the biggest terrorist attack on our citizens since the horror of 7/7. Every one of us in this House extends our heartfelt sympathies to the families and friends of those killed and injured. Our thoughts are with them at this terrible time. We cannot begin to understand what they must have been going through as they saw on the news pictures from the beach where their families were on holiday showing sun loungers being used as stretchers and bloodstained beach towels turned into makeshift shrouds.
The families of those killed now face the painful process of helping in the identification of their loved ones and bringing them home. The relatives of the injured will be worried sick and desperate to bring them home as soon as possible. Others are still searching for any information about what has happened to their relatives.
The Prime Minister was right to convene Cobra immediately, and I thank him for updating the House on all the work being co-ordinated through the daily Cobra meetings. I add our thanks to Foreign and Commonwealth Office staff, the British police teams, the Red Cross experts and other British officials who are working on this, as well as to all those—from hotel staff and local officials to the travel reps and other holidaymakers—who are supporting those who have been caught up in this.
As we know from 7/7, support will be needed for the bereaved and injured—not just in the immediate aftermath, but for months and years to come. Can I therefore ask the Prime Minister to establish a dedicated taskforce that reports to a Minister with responsibility for co-ordinating across Departments and agencies to provide that support? It is right that the Home Secretary and the Under-Secretary of State for Foreign and Commonwealth Affairs, the hon. Member for Bournemouth East (Mr Ellwood), the Foreign Office Minister with responsibility for the middle east, have travelled to Tunisia today. I make particular mention of the Minister, who has stepped into this immensely difficult situation highly effectively, clearly drawing on the experience of his own family loss and demonstrating great personal empathy with those who are suffering. We thank him for his work.
There are close ties, going back decades, between Tunisia and the UK. The Prime Minister will have our full support in helping Tunisia tackle the scale of the terrorist problem that now confronts it. We welcome the fact that the Prime Minister, the French President, the German Chancellor and the Belgian Prime Minister have agreed to work together to help Tunisia strengthen its security. Can the Prime Minister say more about what actions are being considered by our Government and internationally to help the Tunisians respond to the economic problems that this terrorist atrocity will inevitably cause, given the country’s reliance on tourism?
While we make preparations for commemorating the 10th anniversary of 7/7, the death toll in Syria and Iraq continues relentlessly to rise. This week alone, there have been deadly terrorist attacks in Tunisia, Kuwait, Syria and France, as the Prime Minister said. People are concerned about how difficult it is to combat this widespread threat. Can he tell us more about the international efforts to tackle the spread of terrorism? The issue is about sharing intelligence, the use of the internet and social media, cutting off finance, control of borders and co-ordinated military support to those fighting ISIL on the ground. Given the contribution that Britain’s armed forces are making in helping the efforts to fight ISIL in Iraq, has the international community been asked to provide further assistance?
The Prime Minister has rightly recognised that the violence stems from an extremist ideology, which hijacks the religion of Islam. He is right that we must be resolute in standing up for the values of peace, democracy, freedom of speech and equality for women, rejecting and confronting those who go along with these extremist narratives. Is he satisfied that the Government are doing everything they can to back up and empower those at the forefront of the challenge within their communities—particularly families, teachers, religious leaders and community groups?
The Prime Minister said that, in addition to the new statutory duty on public bodies to identify and tackle radicalism, he intends to go further in the weeks ahead. Will he outline what actions are under consideration and whether he is working with the Muslim communities on that?
Turning to last week’s European Council, obviously the biggest issue is Greece. It is in everyone’s interest that an agreement is reached. This matter is of huge importance to us even though we are not in the eurozone, because, whatever the cause, if Europe’s economy is hit, Britain will be hit too. Obviously, the Chancellor will say more about that shortly.
On migration, instability in north Africa and the middle east is a growing factor that is driving desperate migrants across the Mediterranean to Europe. I ask the Prime Minister to confirm that the capacity and mandate of our action in the Mediterranean will not be diminished with the replacement of HMS Bulwark by HMS Enterprise.
We back the action against people trafficking to which the Prime Minister referred. Does he agree that EU action is needed to help southern European countries cope with those who are arriving, including support for a swift and robust asylum assessment, and help from other countries for those who are certified as refugees? Does he agree that Britain ought to offer to help some of those who are certified as refugees, just as we have done for vulnerable refugees from Syria, and just as we have done over the decades and, indeed, centuries, when we have provided sanctuary to refugees who have fled persecution and allowed them to make their future here with us?
On Britain’s negotiations with Europe, will the Prime Minister confirm that there is no prospect of any treaty changes being ratified before people vote in our referendum? Of course the negotiations are sensitive, but it is evident that even the people he is negotiating with are not entirely clear what he is negotiating for, and nor are the British people he is negotiating on behalf of. He referred to the announcement at the summit that there will be technical negotiations until December. What steps will he take to keep Parliament and the British people informed? There is an expectation in this country of high levels of transparency. It is not feasible for the British people to feel that they are in the dark.
Finally, we are an island, but whether it is the terrorism in Tunisia, Syria, Kuwait or France, whether it is the refugees in the Mediterranean, whether it is the economy in Greece, or whether it is the radicalisation of young people here at home, this week’s terrible events remind us emphatically once again that we are all interconnected.
The Prime Minister
I thank the right hon. and learned Lady for her remarks and for the way in which she made them. She was generous and right to thank the FCO staff and all the others who have been working round the clock. These are difficult events to respond to, but I really do believe that the people who work so hard to co-ordinate the response in Britain do a very good job.
The right hon. and learned Lady was right to draw on the experience of 7/7. She spoke about the good work of people such as Tessa Jowell in thinking about how best to commemorate and mark such events, and that work needs to be repeated. She asked about a dedicated taskforce. At the moment, there is very much a Foreign Office taskforce, along with terrorism experts, the police and others. There will come a moment when we want to bring in Ministers from other Departments, perhaps including the Department for Culture, Media and Sport, to ensure that we get these things right.
I thank the right hon. and learned Lady for singling out the Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for Bournemouth East (Mr Ellwood), with his experience of the Bali bomb. He is talking to victims and families as we speak, and I think that he should play a prominent role in making sure that, as a country, we get the response right.
The right hon. and learned Lady asked what we should do to strengthen security in Tunisia. The answer is that it covers the whole spectrum from the detailed work of making sure that hotels have the necessary security screening and capacity in place, all the way through to working with the Tunisian intelligence and security services to ensure that they have an intelligence-led model of policing, as we have in this country, so that they can work out where the next threat is coming from and try to get ahead of it.
It is absolutely right for us to help the economies of Tunisia and other countries in north Africa, which links to what the right hon. and learned Lady said about international efforts. Following the Arab spring, there was a partnership with north African countries. Some good progress was made in spending aid money to help those countries, but there is more that we need to do. Given the security threat and the risks that we face, not least the problems of the migration crisis, I think that there is a case for using our aid budget in a more co-ordinated way with others in Europe to drive change and economic success in north African countries.
The right hon. and learned Lady asked about international efforts. We also need to ensure at the European level that we pass measures such as the passenger name record directive, so that we can co-operate better in fighting terrorism.
I am grateful for what the right hon. and learned Lady said about the need to fight the ideology, as she put it, and to confront those who go along with the narrative. I think that that is absolutely right. The more cross-party unity we can have on that message, the stronger I think it will be. We will certainly consider what more we can do to back up teachers, community leaders and others, and, as I said on the radio this morning, I am happy to co-operate and work with leaders across Muslim communities, but they should be people who want to back the basic values of tolerance and democracy that we hold dear in this country.
The right hon. and learned Lady mentioned Greece. I shall leave most of that to the Chancellor, who will make a statement immediately after this.
On migration, let me reassure the right hon. and learned Lady and the House that we will continue to have the capacity in the Mediterranean, with HMS Enterprise, to save lives. We will offer, and have already offered, to help southern European countries to process asylum seekers. I think that the only difference between us is this. We are drawing a distinction between resettling the most vulnerable refugees who are outside the European Union, for instance in Syrian refugee camps, for whom we think Britain can do more and—this is where I think the European Union is potentially heading down the wrong track—a relocation programme for migrants who are already within the European Union. I worry that such a programme would be counter-productive, and that, as I said earlier, it would reinforce the smugglers’ model of getting people here in the first place. There is a disagreement with others in Europe about that. They will be going ahead with their plans, but I think that what we should be doing is helping with the resettlement, and also pointing out that our asylum system has already given asylum to many people from the most vulnerable areas of the world, and continues to do so.
The right hon. and learned Lady asked about treaty changes and keeping Parliament informed. Yes, of course I will do that. What matters when it comes to changing the treaties is making sure that there is agreement on the substance of the changes that we seek, which, of course, will involve treaty change. That is what matters, and that is what we hope to achieve.
I very much agree with the right hon. and learned Lady’s final observation that we should work together with others in Europe and, indeed, around the world, because these challenges are shared challenges.
Amanda Solloway (Derby North) (Con)
Following the awful events in Tunisia, which resulted in the dreadful and untimely death of one of my constituents, Scott Chalkley, may I ask what assurances my right hon. Friend can give me that he will do everything that he can to prevent such attacks from ever happening again?
The Prime Minister
First, let me send my sympathies and condolences to my hon. Friend’s constituents. There will be many tragic stories about what happened on that beach and in that hotel, and people will be coming to terms with it for years to come.
No country in the world is free of the risk of terrorism, but we must do everything that we can to combat this threat, along with our partners around the world. That may involve very technical measures that we should take at, for instance, hotels and police stations, or very high-profile, high-value work with Governments, but we should commit ourselves to doing all that we can. As I have said, this will be the struggle of our generation.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
I thank the Prime Minister for his statement on Tunisia, and for the measures he has taken so far and the measures he is proposing.
Three generations of one family from Tipton and Wednesbury have been killed in this atrocity. The impact on their relatives and the local community has been absolutely devastating, and, unfortunately, I am sure that that will be reflected in other families and other communities throughout the country. Will the Prime Minister assure me that he will take up the suggestion made by the Leader of the Opposition, and set up a dedicated taskforce to support not just the family liaison officers, who are doing great work, but local authorities and other public agencies, so that those families are given the specialist support that they will need now and for a long time in the future?
The Prime Minister
The case to which the hon. Gentleman has referred is absolutely heartbreaking. All of us have read about it in the newspapers, and we all know how the family and community will be affected, as he said, for many years to come.
As for helping the families, I think that the first thing to do is ensure that each of them has a family liaison officer from one of the police forces. Those liaison officers are now being put in place. They are experts—they are extremely good at the work that they do—and they should be the point of contact that ensures that families are given all the information, help, advice and support that they need.
The next step, as the right hon. and learned Member for Camberwell and Peckham (Ms Harman) said, is to think about how we are going to mark and commemorate what has happened. That should be done in consultation with the families, so we should not rush that decision, but I think it is right that this Friday we have a national minute’s silence.
Andrew Percy (Brigg and Goole) (Con)
The thoughts of my constituents are with all the victims, especially the three from our local area. I spent yesterday afternoon with the family of Bruce Wilkinson, including his wife Rita, who survived the attack. They thank everybody who has assisted them—consular staff, their travel company, and my hon. Friend the Member for Pudsey (Stuart Andrew). They want Bruce to be remembered for his wit and compassion, and for his love of his family. Can my right hon. Friend assure me that every effort will be made to get the bodies of victims home as quickly as possible, so Bruce and the other victims can be given the dignity in burial they were denied in death?
The Prime Minister
I can absolutely give my hon. Friend that assurance. As well as tales of great tragedy and sadness, there have been stories of extraordinary heroism and bravery, as we would expect from British citizens confronted with such an event. On bringing people home, what we have said, and what I have said today, is that we are prepared to use RAF planes, chiefly C-17s and C-130s, to bring home the British dead if that is what families want. We are putting the arrangements in place now. It has taken time to identify all the victims and that identification has to be complete before a victim can be brought home, but we will work as hard as we can to make sure this happens as soon as possible.
Angus Robertson (Moray) (SNP)
I thank the Prime Minister for advance sight of his statement. We on the SNP Benches share all the expressions of sympathy and condolence to all the families and friends of those so tragically killed in Tunisia. What occurred there and in so many other countries in recent days was horrific and not justified in any religion, especially in this Ramadan month of peace and reflection for Muslims.
The Prime Minister was right to highlight the longer-term challenge of extremism and radicalisation. He pointed out the importance of getting terminology right and not using the name “Islamic State”. Will he join parliamentarians across this House, the US Secretary of State and the French Foreign Minister in using the appropriate term? Does he agree that the time has come in the English-speaking world to stop using “Islamic State”, ISIS or ISIL and that instead we and our media should use “Daesh”, the commonly used term across the middle east?
On migration, I have asked the Prime Minister about the shameful position of the UK Government 80 years after this country brought in thousands of children in the Kindertransport when their lives were in danger. Will he confirm that at the EU Summit other states agreed to take in tens of thousands of refugees, and that the UK has still taken in fewer than 200 from the war in Syria?
The Prime Minister
First, I agree with the hon. Gentleman on the use of the term “Islamic State”. This is particularly offensive to many Muslims who see, as I do, not a state but a barbaric regime of terrorism and oppression that takes delight in murder, in oppressing women and in killing people because they are gay, so I raised this with the BBC this morning. I personally think using the term ISIL or “so-called” would be better than what it currently uses. I do not think we will move it all the way to “Daesh”, however, so I think saying ISIL is probably better than saying Islamic State, because in my view it is neither Islamic nor a state.
In terms of the numbers that other European countries have committed to relocate within the EU, these are people who have already arrived in Italy and Greece. They are planning to relocate about 40,000 people, although there was no agreement about who would take what numbers during what was a lengthy debate at the European Council. I would not, frankly, contrast that with the numbers we are offering to resettle from outside the EU. I would point to the very generous arrangements we have in place in Britain for giving people asylum. That includes many Syrians, many people from Iraq and many Kurds. That is what we have done and will continue to do, as a generous and tolerant nation.
Dr Liam Fox (North Somerset) (Con)
The Prime Minister will be aware that jihadists talk about three types of jihad: jihad of the tongue; jihad of the purse and jihad of the sword. Does he agree that although we should address the threat militarily where we can, too few of the Arab countries are pulling their weight in dealing with a problem that is part of their region? Secondly, does he agree that we must cut off the financial flows to the organisation, and name and shame those individuals and states that are facilitating the further spread of fundamental Islam? Thirdly, during the cold war we understood the value of counter-propaganda. Is it not time to rediscover, not only across Government but among our allies, the need to speak with one voice in order to send out one message when dealing with the dangers and one message about the values and freedoms that have made us who we are?
The Prime Minister
My right hon. Friend is absolutely right. Of course there are, in part, some military answers to what is happening. We need to crush ISIL in Iraq and Syria, but military action alone will not be enough. As he says, we have to go after terrorist finance and the terrorist narrative. That narrative is shared not only by the terrorists but, sadly, by too many who stop short of terrorism but who buy into the idea of a caliphate or the idea that Christians and Muslims cannot live together. Just as we had to confront the ideology in the cold war, we have to do so again now. In the end, I think that we will win because our values of democracy, tolerance, the rule of law, freedom and free enterprise are better values. They offer young people far more hope than going off and being part of a death cult that subjugates women, murders homosexuals and creates murder and mayhem across the world.
Owen Smith (Pontypridd) (Lab)
I should like to add my deep condolences to those of the Prime Minister and my right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman) to all those who have been affected by what has happened in Tunisia, many of whom were Welsh. Will the Prime Minister join me in expressing our admiration for my constituent Matthew James? People will have read in the newspapers how he threw himself in the way of a bullet to shield his fiancée, Saera Wilson, in an extraordinary act of selfless bravery. May I urge the Prime Minister to do all he can to ensure that all the victims receive all the support that they need?
The Prime Minister
I thank the hon. Gentleman for his question. We all read the moving story of what that brave and courageous young man did to save the life of his fiancée; I am sure that it will have moved the whole country. I can certainly give the hon. Gentleman the guarantee that we will do everything we can to help the victims and their families. There are people working round the clock in Tunisia and here in Britain to ensure that that happens, and we will keep that up.
Scott Mann (North Cornwall) (Con)
Yesterday, I learned that two of my constituents had suffered in this callous attack. Cheryl Mellor and her husband, Stephen, from Bodmin in North Cornwall, went to Tunisia for a holiday, but only Mrs Mellor will be returning. I was moved to tears after reading her account of Friday’s tragic events in the local press. Stephen was gunned down next to his wife, trying to protect her as they fled from the chaos. Mrs Mellor is now in hospital in Sousse with life-changing injuries. My heart goes out to her and her family at this extremely difficult time. Will my right hon. Friend assure me that Mrs Mellor will receive the same level of devoted care and attention in Sousse that she would normally receive from the NHS in Cornwall?
The Prime Minister
I thank my hon. Friend for raising that case, and for the way in which he did it. The assurance I can give him and all those who are wounded and being looked after in Tunisian hospitals is that our medical team is on the ground, and for those who can be repatriated as medical evacuations using a C-17, all the technology and medical brilliance that we brought to bear when bringing casualties back from Afghanistan is available to British citizens in Tunisia. If it is possible to move someone and bring them back to the QE2 in Birmingham, that is exactly what will be done.
Ms Tasmina Ahmed-Sheikh (Ochil and South Perthshire) (SNP)
I thank the Prime Minister for his statement. In the past two days, I have spoken to my constituent Holly Graham, whose parents Billy and Lisa Graham are still missing following the attack. There has been public concern about the time it is taking for the authorities to update families in the UK on their relatives in Tunisia, although I fully understand that the UK and Tunisian Governments are working hard to get good quality information to the families here as quickly as possible. Will the Prime Minister use this opportunity to set out the challenges that the authorities in Tunisia and here in the UK are facing when trying to trace UK citizens who have been caught up in these dreadful events?
The Prime Minister
I thank the hon. Lady for the way she put her question, because I share all the frustration of the families and the communities who want to get this information as fast as possible. Scotland’s Deputy First Minister, John Swinney, was in the Cobra conference by video-link to Scotland and raised some of those issues himself. Just to bring home the importance of not making an announcement before we have the information, I should say that two people who were down as missing and whom we were very concerned about turned up back in Britain today, having come home under means that we did not know about. The reason it is taking some time to identify the victims is twofold: people who were on the beach did not, quite understandably, have on them passports or means of identification; and, tragically, in some cases it is difficult to identify people after the horrific attacks that took place. In addition, the coroner in Tunisia, quite understandably, wants to make sure that no mistakes are made, so there is a full pathway from the moment of recognising the victim and all the coronial action that subsequently has to take place.
Crispin Blunt (Reigate) (Con)
Tunisia’s transition to democracy is the one ray of political light coming out of the Arab spring, but it is as fragile as Tunisia’s economy and security. While welcoming measures to support the fledgling democracy’s economic and security aspirations, will my right hon. Friend ensure that its political aspirations also receive support? Does he also recognise that by some accounts more than 20,000 Tunisians have been intercepted trying to join Daesh, some of whom are bound to have reached Libya? Is there any evidence that this attack was co-ordinated from outside Tunisia?
The Prime Minister
First, I agree with my hon. Friend that helping Tunisia on its political journey is as important as helping Tunisia’s economy and civil society, and we will certainly do that—I met the Tunisian ambassador shortly before coming to the House today to discuss these issues. In terms of the linkages of this attack, I think it is too early to say. I am sure that more work is being done now, and if there is anything else to tell the House I will come back at a subsequent opportunity. Where there is no doubt is on the fact that Libya, with its failed state and lack of a Government, has become a place where Islamist terrorists have got a foothold. There can be no doubt about that and while that is the case, other countries in the region, and indeed in the world, are at greater risk.
Mr David Anderson (Blaydon) (Lab)
One of the victims of this appalling act was my constituent Mrs Lisa Burbidge, a grandmother of four. She lived in the town of Whickham and, sadly, it is only six years since one of our own from the same town, Sapper David Watson, was killed in action in Afghanistan. I hope that today we can mourn both of them, Mr Speaker. I urge that Lisa’s family’s wishes are kept to and they are left to grieve in privacy.
Will the Prime Minister ensure that MPs and their staff are given as much help as is possible and practical, so that we can play our part in helping families get over this? I also urge him to go the extra mile and ensure that all Government agencies act with the utmost compassion, sensitivity and understanding in the coming weeks. I am thinking in particular about the Department for Work and Pensions, education and the health service, where these people might need that little bit extra help which is not always there when dealing with massive bureaucracies. That will help the families to come to terms with this situation as quickly as possible.
The Prime Minister
I thank the hon. Gentleman for his question and for paying tribute to Lisa Burbidge. We will certainly give as much help to Members of Parliament as we can. If people want to know what more information is made public, they can speak to the Foreign Office help desk and team. He is right about showing compassion and sensitivity, and indeed common sense, in how we deal with these things. Sadly, there are lots of difficulties in informing relatives, not least that the next of kin should be first—the person named in the passport—and sometimes family structures and relationships can be quite complicated. That can be another reason for delays sometimes. I know that the staff at the Foreign Office and the family liaison officers are doing everything they can to cut through bureaucracy and to make the right decisions.
Mr Henry Bellingham (North West Norfolk) (Con)
I represent a couple of constituents who were on holiday in Tunisia but mercifully escaped unscathed and have now, I believe, returned to King’s Lynn. The Prime Minister mentioned the power to track social media. Does he agree that the time has come for companies such as Google, Facebook and Twitter to accept and understand that their current privacy policies are completely unsustainable?
The Prime Minister
My hon. Friend makes an important point. We are urging social media companies to work with us and help us deal with terrorism. Britain is not a state that is trying to search through everybody’s emails and invade their privacy. We just want to ensure that terrorists do not have a safe space in which to communicate. That is the challenge, and it is a challenge that will come in front of the House. We have always been able, on the authority of the Home Secretary, to sign a warrant and intercept a phone call, a mobile phone call or other media communications, but the question we must ask ourselves is whether, as technology develops, we are content to leave a safe space—a new means of communication—for terrorists to communicate with each other My answer is no, we should not be, which means that we must look at all the new media being produced and ensure that, in every case, we are able, in extremis and on the signature of a warrant, to get to the bottom of what is going on.
Tom Brake (Carshalton and Wallington) (LD)
On behalf of the Liberal Democrats, I echo the condolences and heartfelt sympathy that have been expressed by others in this debate about the outrage. Given the possible link between the Tunisian terrorists and Salafist ideology, will the Prime Minister commission and publish a report, similar to that on the Muslim Brotherhood, on the role of Salafist teachings in fuelling support for violent actions against non-Muslims and Muslims?
The Prime Minister
The right hon. Gentleman makes an important point. If we are successfully to defeat this threat that faces us, we must work extremely hard to understand its true nature. That is why I commissioned the report into the Muslim Brotherhood. That organisation has an uncertain relationship—let me put it that way—with movements that condone violence. I think we see the same with some that have Salafist views. Anything that can be done to further our understanding of where the narrative of extremism is coming from is a good thing.
John Redwood (Wokingham) (Con)
Does not the economic and social damage being done by the tragic conflict between Greek democracy and EU policies demonstrate that Britain is right to seek to bring back powers, so that we have the things that matter to UK prosperity and security under democratic control?
The Prime Minister
My right hon. Friend always puts his case very powerfully. In many ways, what this shows is that it is possible to have different sorts of membership of the European Union. We are not a member of the euro or of Schengen, but when it comes to co-operation over foreign and security policy, it is often Britain that is in the lead—whether it is arguing for sanctions against Iran, sanctions against Russia or a better co-ordination of counter-terrorism policies within the EU. We should not be frightened of different forms of membership. As I have put it, Europe should have the flexibility of a network rather than the rigidity of a bloc.
Shabana Mahmood (Birmingham, Ladywood) (Lab)
May I join others in expressing my shock and sadness at the horrific events in Sousse? Our thoughts and prayers go out to those who have lost loved ones. I welcome the steps that the Government are taking to offer support and assistance to the families at this time.
The Prime Minister has been speaking about the challenge of confronting ISIL— Daesh—and its ideology, and I agree that that is the task ahead of us, but how we do it is a matter for debate. The thrust of the Prime Minister’s comments today and last week are that, as part of dealing with symptoms and causes, British Muslims must step up and call out those who are silently condoning extremist ideologies, but does he agree that most ordinary British Muslims, among whom I count myself, have no more knowledge and ability to step up to the plate and call out in that way than any other ordinary British person? Furthermore, does he agree that it will be from an acceptance of our combined lack of understanding of where we need to step up to the plate that we can better work together to find a solution?
The Prime Minister
I thank the hon. Lady for the thoughtful way in which she put her question. My answer is that British Muslims, Imams, mosques, community centres and Muslims in our communities are stepping up and saying that they condemn utterly what ISIL does and saying that it is not in their name. Indeed #NotInMyName was praised by President Obama in his speech at the UN. My argument is, I am afraid, that we all have to go on doing that—British Muslims included—for as long as this poisonous ideology exists. I say to British Muslims that, the fact is, these people are taking their religion of peace and perverting it. That is the reason for standing up and saying, “You must not do this. This is not what we believe in or what we are about.” The British Government, who include Muslims in their number, will back all Muslims who do that.
My second point is that we would be making a mistake if we said that we need just to confront those who support violence. Some people and some organisations—frankly, we know which organisations—go along with some of the narrative, think that a caliphate might not be such a bad idea, that Christians and Muslims cannot really live together and that democracy is inferior to another sort of system, and do not believe in equality. Those are people that we must call out, too. I want us to appeal to young British Muslims about what this country can be for them. This is a great multiracial democracy and a country of opportunity and we must also raise our game, as it were, and make this a society into which people want to integrate. It is time to speak out on both fronts. There is a need for integration, but also the need to confront a narrative of extremism, even if it stops short of violence.
Sir William Cash (Stone) (Con)
I join the Prime Minister in expressing strong words in condemnation of the evil slaughter of British citizens and others in Tunisia and in condolence for the bereaved.
At the European Council meeting, today and recently my right hon. Friend rightly reaffirmed the Common Market, British courts for British laws, the sovereignty and accountability of our national Parliament and the fundamental change in our relationship with the EU and the eurozone to which many will say yes, yes, yes. He has been buffeted by criticism from other European leaders, who are clearly not listening and who are demanding more integration rather than less. Hope springs eternal, but given his firm objectives in our vital national interests and the EU leaders’ constant criticism of them, what would it take for my right hon. Friend to recommend a no vote?
The Prime Minister
I go to these negotiations as an optimist and a believer that we can get a good deal for Britain. I have now had meetings with all 27 Presidents and Prime Ministers in Europe, in what has been dubbed something of an eating tour around the European Union. I am not saying that they instantly all agreed to the points that Britain is raising, but they are open to the sorts of reforms that I believe are necessary.
Mr Gregory Campbell (East Londonderry) (DUP)
I welcome the Prime Minister’s statement. The sympathies of my right hon. and hon. Friends and, indeed, of all the people of Northern Ireland, are with those who have suffered so terribly as a result of this atrocity. The Prime Minister rightly talked about peace, tolerance and democracy. What is he doing to ensure that the peoples across the middle east who, like the people of the United Kingdom, want to see those values defended and stood up for are united with the Governments of their nations to ensure that we never, ever surrender to activity such as that we have seen?
The Prime Minister
I thank the hon. Gentleman for his question. We are backing those Governments who want to see an active and positive civil society and encouraging democracies such as Tunisia. We are saying to other countries that are not yet democratic that they should be putting in place the building blocks to become democratic countries. As we look at how we best confront terrorism, I am convinced that giving young people in those Arab societies greater hope of participation, democracy and rights is part of defeating the narrative about which I have been speaking.
Sir Roger Gale (North Thanet) (Con)
I know that all other members of the British-Tunisia all-party parliamentary group will wish to endorse the sentiments expressed by my right hon. Friend the Prime Minister, by the right hon. and learned Member for Camberwell and Peckham (Ms Harman) and by Members on both sides of the House who have lost constituents. It would be of no service to the memory of those who have lost their lives if we were to allow an emerging democracy in Tunisia to fail and the terrorists to succeed. When my right hon. Friend receives requests from the Tunisian Government, as I understand from the ambassador that he will, will he seek to ensure that not only the United Kingdom but the European Union gives every possible support in terms of security and the training of security forces? Will he also seek to ensure that the European Union pays the money that it promised but so far has not delivered?
The Prime Minister
First of all, we will help, and the offer is there. Also, because today not only the Home Secretary but a German Interior Minister and a French Interior Minister travelled together to Tunisia, I hope we can co-ordinate the assistance that we are offering, because otherwise I fear that the Tunisians will be overwhelmed with offers of help and may struggle to put them into place.
I want to stress this: when we set the risk ratings and the travel advice for countries, we must take into account their capacity to militate against these threats, so the work that we are urging the Tunisians to do with us is very urgent.
Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)
Like everybody in our community, I was shocked and deeply saddened to hear that Jim and Ann McQuire, a much loved couple from Abronhill in Cumbernauld had lost their lives during the mindless violence in Tunisia. By all accounts they were an extremely kind and considerate couple and were due to attend the Holyrood Palace garden party this Wednesday in recognition of a lifetime service to the Church of Scotland and Jim’s many years as a local Boys’ Brigade captain. I know that the deepest sympathies of this House and the whole community of Cumbernauld will be with the friends and family of the McQuires. I am grateful to the Prime Minister for his statement. Understandably perhaps, however, given the earlier attack on the Bardo national museum, there will be members of the public who have questions about the reliability of Foreign and Commonwealth Office travel advice. As the Prime Minister said, there are fine judgments involved, but what further reassurance can he provide that such information is based on the most robust and up-to-date evidence available?
The Prime Minister
Let me add my condolences concerning the couple from Cumbernauld who have been lost in this terrible attack. The hon. Gentleman asks the absolutely correct question about travel advice. As I have said, there is no perfect way. We base our travel advice on the threat picture and the intelligence that we have at the time. Before the Bardo attack, the travel advice did say that there was a high threat from terrorism in the country, and after the Bardo attack we added a factual update on the Foreign Office website, explaining that further attacks were possible. But the key decision, both post-Bardo and now, is whether to move the advice to a level recommending nothing but essential travel to the country as a whole. Currently we are saying only essential travel to some parts of the country. We are not proposing to change the advice about the coastal region, and I think that is the right decision, based on the evidence we have today.
Were that evidence to change, we could and would change the travel advice and, as I have said, the travel advice also depends on the capacity of the Tunisian system. That is the same for all countries. As I have said, these are difficult decisions. We must not be cowed by the terrorists. They want us to wipe out the Tunisian tourist industry, which accounts for 15% of its economy. The decision we take puts the safety of British people first and foremost. If the evidence and the information changes, we will change our advice.
Mr Keith Simpson (Broadland) (Con)
Understandably, we have centred on one young Tunisian man who carried out this massacre, and possibly some other Tunisians who supported him, but should we not also put it on record that dozens of Tunisians who worked at that hotel risked their lives protecting and helping our tourists? That should be the beacon that supports the Tunisian tourist industry and encourages people to visit Tunisia.
The Prime Minister
My right hon. Friend makes a very important point. There were some extraordinary stories of courage and heroism by local Tunisian people who were appalled by what this man was doing, and that is a great credit to their country.
Sadiq Khan (Tooting) (Lab)
All decent people have in their thoughts or prayers the victims in Tunisia and their families. Everybody should criticise the actions in Tunisia. There can be no justification for what happened in Tunisia, just as there cannot be any justification for what happened in London 10 years ago. The Prime Minister talks about promoting and defending British values. These values are intrinsic to being a British Muslim, and I welcome his comments unequivocally distancing Islam from the perverted ideology. What more will he and his Government do to work with communities to promote and defend these British values?
The Prime Minister
I am very grateful for what the right hon. Gentleman says. What more we can do is make sure that the new Prevent duty is carried out and that institutions work with us to put that in place to combat radicalisation. There is more we can do to discuss with British Muslims how we confront the poisonous ideology. That means making sure that we are talking to people directly and not always going through some self-appointed leaders, who do not always represent British mainstream Muslim opinion. Sometimes that will mean that we will be criticised for not engaging. I do not accept that criticism. I will engage with anyone who buys into the basic standards of British tolerance and decency, but it is important that we have some ground rules.
Mr James Gray (North Wiltshire) (Con)
There can be no greater agony than that being experienced by the people whose friends and relations have been missing and unaccounted for since Friday, such as my constituents John Welch and Eileen Swannack. Despite what the Prime Minister said about the difficulty of identifying the victims, which I quite understand, is there no more consular activity that could be undertaken to try to finalise the list of those who have tragically been killed so that we can set their families and friends’ minds at rest?
The Prime Minister
My hon. Friend asks an entirely fair question. I can assure him that at the Cobra meetings that is one of the most important issues we focus on: what more can be done; are more resources needed; are more people needed? My understanding is that we have police officers, victim identification experts and consular officials on the ground, working hand in glove with the Tunisians. We are going as fast as we can to get that vital work done.
Neil Gray (Airdrie and Shotts) (SNP)
A family from Airdrie who were desperate to get home from Sousse were told by their airline, Thomas Cook, that it would cost them £800 per person to get home early as they had booked through Teletext. The chief executive of Thomas Cook confirmed to me last night that they would get home free of charge, and they arrived home this afternoon after much stress. What advice can the Prime Minister offer to those still trying to get home without sufficient access to holiday reps, or indeed to FCO staff, as in this case?
The Prime Minister
I am grateful to the hon. Gentleman for his question, because I think that it tells a real story, which is that sometimes there is confusion and a lack of clarity to begin with, but then there is a good and clear answer, as with that family who returned home. My advice to anyone in that situation is to talk to their travel company first, but they can also ring the Foreign Office line and get assistance. The Foreign Office immediately looks into any case it sees coming up in the media or on social media to see whether it can help directly, and it will continue to do so.
Sir Edward Leigh (Gainsborough) (Con)
The Prime Minister will want to extend his condolences to the family of young Carly Lovett, my constituent, a 24-year-old girl who was brutally shot down in front of her fiancé. She travelled from the small, quiet Lincolnshire town of Gainsborough, and she did not deserve this—nobody deserved this. The question is what do we do now. What worries the British people is the fact that the threat is not just there; it is everywhere, and it is here. Will my right hon. Friend resist the principled siren voices trying to prevent him from giving the security services all the powers they need over the internet? Also, if he will allow me to make one further point, many British people view mass illegal migration as a kind of dangerous Trojan horse, so I will support him in his efforts to enforce the Dublin convention so that we return illegal migrants from where they enter the EU and we deal with this problem?
The Prime Minister
First, may I join my hon. Friend in paying tribute to Carly Lovett? We have all heard the heartbreaking story about that young woman gunned down in the prime of life. He is right to say that the threat is everywhere. The difference between this type of threat and the al-Qaeda threat that we faced for many years, and which we still face, is that in the latter case we were often dealing with centrally co-ordinated plots, so if we could get on to them we could try to work out how to mitigate them. Here we are dealing with a lot of self-radicalised so-called Jihadis who have been radicalised through the internet, often by people in Syria or Iraq. Hopefully in many cases we will get advance warning and be able to stop them, but in some cases we will not. That can happen in Britain, as it can around the world. That underlines the social responsibility of social media companies, as I said earlier, but also the need for us to have the most modern capabilities to deal with the treat. As for migration, we are signatories to the Dublin convention and we want to ensure that it continues to work.
Keith Vaz (Leicester East) (Lab)
Two and a half years ago, in his first speech of the UK’s presidency of the G8, the Prime Minister warned about the terrorist threat in the Maghreb because of the disintegration of Libya. I welcome the Home Secretary’s presence in Sousse to reassure not only the British citizens there, but the Tunisian Government and people, but the Prime Minister is having bilateral discussions with Heads of Government. What is the international way, and what platform can we use, to defeat those who wish to act in this horrific way?
The Prime Minister
The right hon. Gentleman asks a very direct question. There are several platforms that can work. The G7 wants to have a clearing house for assisting countries like Libya, Tunisia, Morocco and Egypt to make sure that, when not all the countries are offering the same sort of help and assistance, we have more of a working out of who should be working with which country. I hope that that can be put into place and work soon, because it makes sense for Britain, for instance, to partner a country like Nigeria and possibly Libya. Other countries, with their historical links, may be better placed to partner other countries. That is one network. The other is using the EU’s neighbourhood programme to make sure that we give better assistance and support, and building up the civil societies and economies of the countries in north Africa.
Mr John Baron (Basildon and Billericay) (Con)
Co-operation, such as it has been, in combating Daesh has focused on the military situation. However, in recognising that we have failed significantly to disrupt its financial flows from Arab-friendly countries and powerful organisations and individuals from within them, failed to disrupt its prominence on social media, and failed to disrupt its business activities, what more can the Prime Minister tell the House about concrete steps that are going to be taken to combat ISIL—or Daesh, I should say—in these other areas?
The Prime Minister
I would not entirely agree with my hon. Friend’s description of this. Looking at what allied air action has done in Iraq, together with the Kurds, we have shrunk the territory that ISIL holds in that country. There have been some very great successes in taking down ISIL social media sites—taking pages off the web—and in the past few months a number of prominent plots in this country, perhaps as many as four or five, have been prevented. It is very important that we talk up our capabilities, strength and resolve in this way, but he is right to say that more needs to be done. The finance needs to be attacked. We need to bring to bear more pressure against ISIL both in Iraq and in Syria. As I said on the radio this morning, we are going to have to demonstrate some real long-term resolve. If we are not going to invade these countries directly, but we are going to build up their Governments and their militaries, we have to settle in for the long haul knowing that this is the right answer but it will take time.
Mr Speaker
Order. Literally dozens of colleagues are still seeking to catch my eye, and I am keen to accommodate as many as time reasonably allows, for which purpose brevity will greatly assist me.
Naz Shah (Bradford West) (Lab)
First, I would like to take this opportunity to agree with the sentiments of this House in condemning the barbaric attacks in Tunisia—sentiments that are shared across the country in all communities. What we need at home are strong communities, not divided communities. To this end, will the Prime Minister agree to engage in solidarity with all communities? Will he recognise that Prevent is failing in its attempt to engage? Will he today commit in this House to a systematic review of the Prevent strategy?
The Prime Minister
First of all, of course I commit to engage with all communities, and we will continue to do that. I do not agree with what the hon. Lady says about Prevent. We took the advice of an independent review to separate the community engagement work that should be done by the Department for Communities and Local Government from the Prevent work, which obviously has more of a Home Office feel to it, and I think that is the right decision.
Christopher Pincher (Tamworth) (Con)
I echo the Prime Minister’s tribute to the victims of Sousse, including my constituent, Sue Davey, who, with her partner, Scott Chalkley, lost their lives last week. Will my right hon. Friend provide special and personal commendation to the individual brave Tunisians, from those who tried to warn against the attack on the beach, to the building workers who tried to stop the terrorist, to the doctors and nurses in the hospitals who treated the injured, because, as we know but must always be reminded, it was not done in their name?
The Prime Minister
I also pay tribute to Sue and Scott, as my hon. Friend has done. He is right to commend the local Tunisians, whether doctors and nurses, people who turned those sun loungers into stretchers, or people who confronted the terrorist. They are a credit to themselves and a credit to their nation.
Rushanara Ali (Bethnal Green and Bow) (Lab)
Our thoughts and prayers are with the victims and their families. This appalling act of terror against defenceless holidaymakers highlights the need for us to fight extremism both at home and abroad. These terrorists seek to drive a wedge between the majority of the world’s Muslims, who have no truck with what they represent, and everyone else. We must all work harder to make sure that they do not succeed. What steps will the Prime Minister take to make sure that any international response includes action to help stabilise and rebuild post-conflict states such as Libya and others to prevent them from continuing to be a breeding ground for, and exporters, of violent extremism? Will he reconsider my call earlier this year for an inquiry?
The Prime Minister
I very much agree with the hon. Lady, particularly on rebuilding broken states affected by conflict. As the Secretary-General of the United Nations has said, a missile can kill a terrorist, but it is good government and governance that kill terrorism.
Bob Stewart (Beckenham) (Con)
Does the Prime Minister agree that no security service in the world, including the Tunisian security services, will be able to identify someone who secretly radicalises himself, trains himself quietly and then operates largely independently?
The Prime Minister
My hon. Friend is absolutely right, but that reinforces the point that, because we are not necessarily dealing with a network, anybody who has information and is worried about someone who is going wrong—who is getting radicalised and is either visiting extremist preachers or looking at extremism online—needs to act. Otherwise, it could end the way it has in the past few days.
Jeremy Corbyn (Islington North) (Lab)
Obviously, what happened is appalling, tragic and terrible and has to be condemned in every way, and we should support those people in Tunisia who are doing their best to build a free, democratic and secular society with less unemployment and more youth engagement.
I want to take the Prime Minister back to the point made by the Chair of the Foreign Affairs Committee about the situation in Libya. Does not he think that the destruction of so much of Government and society in Libya has caused, and provided an opportunity for, the problem to get worse?
The Prime Minister
If the hon. Gentleman is asking whether I regret the action we took to stop Colonel Gaddafi massacring his own people in Benghazi, then no, I do not. The cause of terrorism is people choosing to take up terror. At the same time, should we try to build these countries and governance? Yes, of course we should, but we should never forget where responsibility lies.
Nadhim Zahawi (Stratford-on-Avon) (Con)
A powerful antidote to the ISIL poison would be if young British Muslims could see Arab Sunnis who are playing host in Iraq and Syria rejecting ISIL and ejecting it from their midst. Will my right hon. Friend redouble his efforts to find a political solution to reject ISIL and eject it from Iraq and Syria?
The Prime Minister
My hon. Friend is absolutely right. We need to build an Iraq where its Prime Minister is clearly working for Sunnis as well as Shi’as and Kurds, but we also need Sunni Muslims in Iraq to rise up and reject ISIL. Without that, it will always be more difficult to take that cancer out of the country.
Derek Twigg (Halton) (Lab)
May I press the Prime Minister on a question I asked him a couple of weeks ago about the Sunnis and Sunni tribes in Iraq? The fact is that the Iraqi Government are not reaching out to them or arming them. Without that, we are not going to see the Sunni tribes and the Sunnis taking on ISIL. What is the Prime Minister, along with European partners, doing to ensure we put pressure on the Iraqi Government to do that and ensure that the Sunnis are involved?
The Prime Minister
The hon. Gentleman asks absolutely the right question. I have personally raised this issue with President Abadi, including at the G7 summit in southern Germany, and will continue to do so. We have to encourage him to be brave in reaching out from his Shi’a base. We should also work with Sunni regimes in the area that themselves can work with the Sunni tribes to encourage them to accept the offer of an inclusive Iraqi Government and to reject ISIL.
Philip Davies (Shipley) (Con)
Every year the EU is a smaller and smaller part of the world’s economy, its currency is a basket case, it is undemocratic and its free movement of people makes it easier for terrorists and other criminals to enter the UK from other parts of the EU. Rather than faffing about with a renegotiation when we know the Prime Minister is going to get next to nothing but dress it up as a great triumph, may I suggest that he would be better employed negotiating the terms of Britain’s withdrawal from the European Union?
The Prime Minister
I sometimes wish that my hon. Friend would not speak in riddles, but be clear about what he really wants. I hope to prove him wrong by bringing home a substantial package that will make a difference and address the concerns of the British people, but in the end they will be the judge.
Mr George Howarth (Knowsley) (Lab)
I welcome the Prime Minister’s statement and his words of condolence for the families who have so tragically lost family members. I also welcome his recognition of the need for a counter-narrative to violent extremism, but will he accept that there are many pathways into violent extremism and that any counter-narrative must be based on a proper understanding of those various pathways? Will he undertake to set up an audit of what we know both in the intelligence and security services and through open sources, so that any counter-narrative can be more firmly based?
The Prime Minister
The right hon. Gentleman makes an important point. The Home Office has now set up an organisation to better identity and understand not just violent extremists, but the various extremist groups and organisations out there. I accept and agree that we have to look at pathways into extremism, but we cannot ignore the fact that young people who have been to good schools, have strong family backgrounds and are not suffering material deprivation have none the less chosen a violent extremist path. That says to me that, while we must of course go on attacking deprivation, making sure we are a more inclusive country and tackling inequalities at home, what we are really looking for is the cause of the ideological linkages that people are making, and it is those we need to go after.
Mr Speaker
Order. A single, short sentence question could now represent a parliamentary triumph. I call Mr Bernard Jenkin.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
Will the Prime Minister explain how a mere promise of treaty change can be made legally binding?
The Prime Minister
In very much the same way, when Ireland had a treaty change and a protocol addressing that treaty change, the referendum took place in Ireland before all the other countries’ Parliaments had passed the treaty change, so this has happened on previous occasions across the European Union.
Mr Khalid Mahmood (Birmingham, Perry Barr) (Lab)
I want to join the Prime Minister, my right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman) and Members from across the House in paying our condolences to the families of the people caught up in the barbaric attack on the holiday resort in Tunisia.
I want very quickly to mention to two issues. The first is about recognising as Muslims those in the Daesh group. These people are not Muslims; they are what is known as Khawarijite. This has gone on in Islam for a long time—they were responsible for killing two of our Khalifas at the start of the religion—and it is continuing. Where I agree with the Prime Minister is that we have to take responsibility for our young people not being edged along in Islam towards them, because these people are not Muslims. We must take responsibility for dealing with that across the whole community—the Muslim community and all other communities and institutions as well.
The Prime Minister
The hon. Gentleman speaks with great knowledge about this, and I have admired what he has said about this over the years. He is right that these people are bastardising and perverting a religion, but we cannot ignore the fact that they are self-identifying as Muslims. That makes it even more important that we reject what they are saying and prove to young people, including young Muslims, that they have nothing to do with what the true religion is about.
Paul Maynard (Blackpool North and Cleveleys) (Con)
I am sure the Prime Minister can imagine the sadness in Blackpool given that two of my constituents sadly died in this attack, having wanted nothing more than to go on a summer holiday. Does he share my view that one thing that could be done is for the EU to restart urgently its initiative with all of the nations on the southern Mediterranean coast, which seemed to die away with the Arab spring and the crisis in the eurozone? We need to start again on that.
The Prime Minister
My hon. Friend is right. Money is being spent in countries such as Tunisia, but I suspect it is not enough and that it is not focused on enough things that make a real difference to the Tunisian economy and the Tunisian people.
Diana Johnson (Kingston upon Hull North) (Lab)
I welcome the Prime Minister’s statement, and I ask that we all join in sending our condolences to the family of my constituent Claire Windass, who tragically lost her life on Friday in Tunisia. Her family have issued a statement saying that Claire
“was a warm, kind-hearted woman who made friends easily and was loved by everyone who knew her. She will be deeply missed.”
The family have called for privacy, but will the Prime Minister assure me that lessons have been learned from families who have very tragically been in similar circumstances in the past about the kind of effective support that will best meet their needs and requirements over the weeks and months to come?
The Prime Minister
Let me join the hon. Lady in paying tribute to Claire Windass and mourning her loss. Lessons have been learned from previous tragedies. That is why it is so important that the Under-Secretary, my hon. Friend the Member for Bournemouth East, who lost a relative in the Bali bombing, is involved. As a country, we have developed better ways of making sure families are kept in touch with developments. There is still more to be done, but lessons will be learned and we will be as sensitive as we can.
Peter Aldous (Waveney) (Con)
My constituent Stuart Cullen lost his life on Friday. Can my right hon. Friend assure me that he and the others who died, and their families, will never, ever be forgotten?
The Prime Minister
I can certainly give that assurance to my hon. Friend. With him, I mourn the loss of his constituent Stuart Cullen. It is very important that we speak with families in the coming days and weeks to think of the best way to have a fitting memorial to their suffering and to what this has meant: one of the largest losses of life in a terrorist incident that Britain has suffered in many years.
Margaret Greenwood (Wirral West) (Lab)
I add my condolences to everybody affected by this tragedy. What discussions are the Government having with travel insurance companies to ensure that all those who are in Tunisia and who wish to come home may do so free of charge?
The Prime Minister
The hon. Lady raises an important point. My understanding is that the companies have offered travel back to the United Kingdom. A lot of planes have been laid on. We believe that system is working. Where it is not working, we are getting on to the company concerned and trying to make sure the problem is fixed. On the issue of where people have been injured or returning the bodies of those who tragically have been killed, we are stepping in directly with transport via the RAF to try to help.
Mr David Nuttall (Bury North) (Con)
Will the Prime Minister please pass on my thanks to his fellow European Union leaders? Every time one of them refuses to agree to one of his very modest requests in the renegotiation process, they make the task of those of us who argue this country would be better off outside the EU just that very little bit easier.
The Prime Minister
I do not want to disappoint my hon. Friend too much, but actually the reception I have had from my fellow European Prime Ministers and Presidents has been rather more positive than he suggests.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
My thoughts and prayers are with those caught up in the horrific events in Tunisia, including those from Cardiff. What consideration has the Prime Minister given to reviewing and, if necessary, upgrading our support and training security forces in other countries where British civilians and interests may be under threat from Daesh? Will he put those considerations at the heart of the upcoming strategic defence and security review?
The Prime Minister
The hon. Gentleman makes a very important point. The SDSR should be about these issues, as well as the more traditional issues of protecting and defending Britain herself. We are a country where our people work, travel and live in all sorts of different countries. Making sure we work with those countries to enhance their security is an important part of what we do.
Jake Berry (Rossendale and Darwen) (Con)
Naomi and Carol Wearing, two of my constituents from Darwen, were injured in the attacks last Friday. Naomi was reportedly injured by the use of a hand grenade during the attack. They have now returned to the UK and are being treated in Blackburn hospital. I would be grateful if my right hon. Friend assured me that Blackburn hospital and all our other NHS hospitals will receive all the support they need, including the use of extended counselling for victims.
The Prime Minister
Let me join my hon. Friend in paying tribute to his constituents who were caught up in this terrible attack. I am sure assistance will be made available for counselling. What happened was a deeply traumatic event that will affect people for many months and years to come.
Graham Stringer (Blackley and Broughton) (Lab)
Earlier this year, the Prime Minister said he wanted proper, full-on treaty change. How can we take his negotiations seriously when he has dropped this reasonable demand in the first round of negotiations?
Mr Steve Baker (Wycombe) (Con)
With my constituent John Metcalf recovering from his wounds in Tunisia, together with his uninjured girlfriend, Jo Coles, may I strongly associate myself with my right hon. Friend’s remarks? May I also strongly welcome the direction of travel he has set out for European reform? How have our European friends justified political integration for non-eurozone member states, to achieve free trade?
The Prime Minister
Different European countries have different views about integration—some sign up absolutely to the idea of ever closer union and want every country to take every step pretty much at the same time—but there is a growing awareness in Europe that actually we can have a Europe with different forms of membership. As I said, some countries are in the euro and some are out, and some are in Schengen and some are out, and when we sit round the table discussing issues such as Libyan security, some countries will be leading members of NATO and some will be neutral and not members of NATO. I think we should be relaxed about this flexibility and encourage it still further.
Ian Paisley (North Antrim) (DUP)
This atrocity awakens and provokes many hideous memories of atrocities of mass murder in my own country—Ballykelly, La Mon, Warrenpoint or any of the other countless atrocities that have taken place. I therefore welcome the Prime Minister’s statement, the grief he has publicly put on record and the fact that on Friday we will be able, as a nation, to pay tribute with a minute of respect. How much of the aid currently given to Tunisia is being directed towards the education of people there away from fundamentalist beliefs?
The Prime Minister
Not enough. The aid and assistance has been much more focused on building up Tunisian democracy and the institutions of this fledgling democracy. Given the scale of the threat, however, we will have to look again at these partnership programmes, and obviously education should be part of that, bearing in mind the danger of radicalisation, which the Tunisians are looking at themselves. In addition, these countries often have parts that are quite wealthy and successful and parts that are falling behind, and we need to address that challenge, too.
Michael Fabricant (Lichfield) (Con)
My right hon. Friend has already said that the threat here remains “severe”. He and my constituents will have read the report in The Times this morning that Scorpion automatic weapons might have been imported into the UK. What can he say to reassure the people of this country?
The Prime Minister
I will not comment on a specific report, but my hon. Friend is right that the threat level in Britain is “severe”. It is set independently by the joint terrorism analysis centre, and “severe” means that an attack is highly likely. He also makes the important point that we should continue to do everything we can to keep the trade in weapons, including replica weapons, out of Britain. A lot of action has been taken, and the National Crime Agency is doing very good work, but we need to keep up the pressure.
Heidi Alexander (Lewisham East) (Lab)
I am ashamed to think that this summer many of us will swim in a sea where people have drowned simply because they were fleeing war, violence and poverty. Is the reason the UK is failing to take its fair share of refugees that the Government find human suffering easier to bear if it is made someone else’s problem?
The Prime Minister
I just do not agree with the hon. Lady. Britain is fulfilling its moral obligations by picking up people in the Mediterranean—4,000 so far, I think—rescued by the Royal Navy, and is one of the only rich countries in the world to have kept its promise on its aid budget, which is being used to help those countries. Do I think it right, however, to be part of a relocation scheme for people who have already arrived in the EU? No, I do not, because it would add to the business models of the smugglers. The idea that we can only take a moral, upright position if we take part in a European scheme that I believe is misguided is just wrong.
Richard Drax (South Dorset) (Con)
I am delighted to report that my constituent, Macauley Arnold, his girlfriend and her family were on that fateful beach and at the time of the shooting were offered shelter by a local Tunisian in his house. Does my right hon. Friend agree that this shows the innate kindness and courage of the Tunisian people?
The Prime Minister
I absolutely agree with my hon. Friend. There are many examples of this sort of courage and kindness, and it is good to see them; these people are a credit to the Tunisian nation.
Andrew Gwynne (Denton and Reddish) (Lab)
I associate myself with the comments of the Prime Minister and the Leader of the Opposition on the terrible events in Tunisia. On the issue of migration at the European Council, did the Prime Minister take the opportunity to discuss with other European leaders the situation at Calais, and does he think that the EU proposals for relocation systems will help or hinder the efforts there?
The Prime Minister
The short answer is that they will not make any short-term impact, but they might, in my view, make it worse in the long term by encouraging more people to make the journey. I did have a brief discussion with François Hollande about the situation in Calais, and my right hon. Friend the Home Secretary is meeting the French Interior Minister later this week. There is more we are going to do—in spending money, providing fencing and other actions such as sniffer dog teams and the like—to try to help the French and work together with them to reduce the problems in Calais.
Bob Blackman (Harrow East) (Con)
As part of our Prevent strategy, we rightly ban hate preachers from coming to the UK. Sadly, their message and their perverted ideology is beamed directly to our young people by social media, but also by satellite directed and communicated to certain mosques. What further action can my right hon. Friend take to prevent this from happening?
The Prime Minister
My hon. Friend makes an important point. We can ban the preachers, but we must also look at their use of media—not just social media, but some individual television channels—and make sure that where messages endorse extremism and violence, we have a way of stopping them. This is a very important issue.
Mr David Hanson (Delyn) (Lab)
On the day before this terrible incident, a neo-Nazi was convicted of a machete attack on a random individual in a supermarket in Mold in my constituency—in broad daylight on the streets of north Wales. He had been radicalised by internet content, which is equally as bad as internet radicalisation that leads to the Islamic attacks such as happened this week. I welcome what the Prime Minister said, but will he genuinely look, with the internet providers, at how we can stop that type of information being brought into people’s bedrooms from where lone wolves can use it to warp their approach to life?
The Prime Minister
I will certainly do that. We have acted together with the Internet Watch Foundation to take down many pages of extremism. The right hon. Gentleman makes an important point. The arguments about violent and non-violent extremism also apply to the extreme right. This House would never condone the idea that we should tolerate the National Front but go after Combat 18. We would never do that when it comes to fascism, so we should not do it when it comes to Islamist fascism either.
Conor Burns (Bournemouth West) (Con)
The right hon. and learned Member for Camberwell and Peckham (Ms Harman) rightly highlighted the appalling treatment of gay people and women by those who subscribe to this evil belief. Is there not something powerfully symbolic, particularly to young Muslim women, in the fact that it is a female Home Secretary who, in the aftermath of this attack, is standing in solidarity with them in Tunisia today?
The Prime Minister
My hon. Friend makes an important point. Indeed, the role of women was an important one in Tunisian democracy, moving the country towards the democratic future that we hope it will continue.
Geraint Davies (Swansea West) (Lab/Co-op)
I give my best wishes to Matthew James, a gas engineer in Swansea who took three bullets in protecting his fiancée; he is now recovering in Cardiff hospital. In talking in Swansea to both Shi’ite and Sunni imams from Bangladesh, Pakistan and Iraq, I have found that they are as one in saying that the Daesh are impostors, gangsters, murderers and blasphemers. Will the Prime Minister work side by side with the mainstream Muslim community and give them the resources they need to combat radicalisation, rather than saying that it is their fault and their problem? It is our problem, and we must solve it together.
The Prime Minister
I think that the hon. Gentleman is absolutely right in how he puts it. They have a role to play, and we should help them play it. One of the challenges has sometimes been the relevance of the mosque to young Muslims when it can sometimes seem less relevant to their lives. That is why we need to address the whole issue of ensuring that imams have good English when they are dealing with potentially alienated and radicalised young British people.
Mr Peter Bone (Wellingborough) (Con)
Today, the Prime Minister has said that he will put the common market at the heart of our EU membership. I am sure that the British people—and myself—will be shoulder to shoulder with him on that. Why do the British media say that he cannot do this, when I know that he will not accept anything less than fundamental reform and a common market?
The Prime Minister
I thank my hon. Friend for his support; I want to continue this ever closer union between us for as long as possible.
Jonathan Ashworth (Leicester South) (Lab)
In Leicester, we all hope and pray for the safe return of Ray and Angela Fisher. I am grateful for the commitments that the Prime Minister has made with respect to the embassy and Foreign Office staff. Does the Prime Minister agree that Daesh thrives on divisions in the region, whether those involve Kurds or Arabs, Sunni or Shi’a? What is he doing to build an effective united front against Daesh?
The Prime Minister
I join the hon. Gentleman in wishing his constituents well. On building a united front, there is now an enormous international coalition that includes many Arab and Gulf countries. We need to keep that coalition together because all of us bring different things. Some of those countries, as Sunni Arab states, will bring the ability to talk to Sunni Muslims in Iraq and bring them away from Daesh and towards a belief in an integrated Iraqi Government.
Mr Speaker
Order. I am afraid that we have no time for questions with preambles, but if colleagues are willing to imitate the admirable example of the hon. Member for Harwich and North Essex (Mr Jenkin)—the hon. Gentleman is beaming at his recognition—I shall do my best to accommodate them.
Henry Smith (Crawley) (Con)
Following last Friday’s terrorist attacks in Tunisia, my constituents John and Janet Stocker are still unaccounted for. May I have assurances from my right hon. Friend that all NHS records that may be required by the Tunisian authorities to identify victims will be made available?
The Prime Minister
I can certainly give my hon. Friend that assurance. Victim identification specialists and police officers are out in Sousse working with the Tunisian authorities on exactly that sort of issue.
Tom Pursglove (Corby) (Con)
In the midst of this tragedy, will the Prime Minister join me in commending all those who went about their business this weekend—particularly those who went to support our armed forces events?
The Prime Minister
I certainly will. I was delighted to join the Armed Forces Day parade in Guildford. There was an enormous turnout. People who might have read about potential plans to disrupt it were not being put off—and that is the British way.
Steve Brine (Winchester) (Con)
I welcome the Foreign Office’s sensible and measured advice, which my right hon. Friend has explained a bit further this afternoon. What conversations has he had with the Tunisian authorities about the domestic security response that people travelling to the coastal region can expect? Many people will be making decisions in the next few days and will really want to know more.
The Prime Minister
I assure my hon. Friend that we are talking to the Tunisian authorities right now; the Home Secretary is in Tunisia talking to her opposite number, to make sure that our offer of help with security is taken on board. I think it very important that it is.
Jeremy Lefroy (Stafford) (Con)
Does my right hon. Friend agree that the bravery of UK and Tunisian citizens alongside each other is a sign that terror cannot win if Governments show a similar resolve both to fight it together and to provide the hope of which he has spoken?
The Prime Minister
My hon. Friend is absolutely right. This will take resolve, patience and determination among Governments and people.
Dr Sarah Wollaston (Totnes) (Con)
Does the Prime Minister agree that, just as we need to do all we can to disrupt vile propaganda from ISIL on social media, it is time for our mainstream broadcast and print media to review their editorial policies and stop publishing stills from snuff videos and blasting us with the faces of smirking terrorists? Instead, let us see the faces of those Tunisians who stood arm in arm to protect innocent tourists.
The Prime Minister
My hon. Friend makes an important point. The media have to exercise their own view about social responsibility and what they should and should not publish. I really hope that the BBC can look again at calling the organisation “Islamic State”. It is not Islamic and it is not a state. It is a terrorist organisation. Call it ISIL, call it Daesh, but do not give it the dignity that it is asking for.
Rehman Chishti (Gillingham and Rainham) (Con)
As somebody from the Muslim faith, whose father and grandfather were imams and whose uncle is an imam, I see British and Islamic values going hand in hand. Does the Prime Minister agree that each and every one of us has a duty to challenge non-violent extremism wherever it occurs in our society and community?
The Prime Minister
My hon. Friend speaks with great knowledge on this issue. The short answer is yes— Members of Parliament can all play a role in shifting the debate on this vital issue.
Jason McCartney (Colne Valley) (Con)
I join the Prime Minister in praising our brave Royal Air Force for the role that it is playing in the skies over northern Iraq. Meanwhile, on the ground, the brave Kurdish peshmerga forces are taking on Daesh. Does he agree that now is the time for the peshmerga forces to be properly armed and to receive the funding from Baghdad that was promised?
The Prime Minister
I will look into the funding from Baghdad. All that I can say is that we are helping the Kurdish forces with ammunition, training and support.
Mr David Burrowes (Enfield, Southgate) (Con)
Although I welcome the extension of the resettlement programme for Syrian refugees, are we not open to the criticism that it is too little, too late, particularly when compared with the more generous resettlement and refugee programmes that other countries have for those fleeing persecution?
The Prime Minister
If one takes a five to 10-year view of the number of people we have given asylum to, we are consistently in the top five European countries. On that basis, I think we can say that we play our part.
Andrew Rosindell (Romford) (Con)
Does the Prime Minister agree that it is fundamental that we retake complete sovereignty over control of our British borders if we are to prevent this evil ideology from creeping further on to our shores?
The Prime Minister
It is important to have strong border control, but the situation in Calais demonstrates the importance, in the age of ferries, the Eurotunnel and all the rest of it, of working with our partners to deliver the security that we need.
David Rutley (Macclesfield) (Con)
What steps are being taken to ensure that intelligence is properly shared by national security organisations in middle eastern countries that should be allied in tackling terrorist atrocities?
The Prime Minister
We are sharing intelligence. Obviously, we have different relations with different countries, but the more we can build up trust, the more we are able to do that.
Chris Philp (Croydon South) (Con)
In relation to safety here at home, does the Prime Minister agree that when the security services identify people who are threats and who are here illegally, we should deport them as a matter of priority?
The Prime Minister
I absolutely agree. One reason why we want to alter the arrangements in the Human Rights Act is that they can sometimes get in the way of doing that.
David Morris (Morecambe and Lunesdale) (Con)
I share the Prime Minister’s sentiments about the families who have been bereaved.
Given the people trafficking in the region, the people coming across the water and the terrorism that exists there, will the Prime Minister consider beefing up the resources that are given to Gibraltar to help combat terrorism and to move people around when necessary?
The Prime Minister
I will certainly look at that point. Enormous pressure is being put on places such as Malta, and if there are issues in Gibraltar, I will look at them.
Alec Shelbrooke (Elmet and Rothwell) (Con)
My constituent Miss Richardson was due to travel this Wednesday to the beach resort where this heartbreaking massacre took place. Her tour operator, Low Cost Holidays Ltd, has agreed to waive the seven-day cancellation fee but is still applying administration charges for alternative bookings. What can the Government can do to encourage tour operators to act with compassion in relation to alternative bookings?
The Prime Minister
We have encouraged the tour operators to treat people properly. To be fair to them, they have offered people cancellations without penalties and their money back. I will ask the Foreign Office team to take up the specific points that my hon. Friend has made.
Stuart Andrew (Pudsey) (Con)
I would like to add my tribute to Bruce Wilkinson, who lost his life on Friday. His daughter is a constituent of mine. The dignity of that family is a credit to Mr Wilkinson and is in stark contrast to the depravity of those who committed this crime. Will my right hon. Friend ensure that the bereavement support will go on for many months? The effects of losing somebody in such circumstances often last many years. I join the hon. Member for Moray (Angus Robertson) in saying that we need to change what we call these terrorists—they are not an Islamic state.
The Prime Minister
Let me join in the tributes to Bruce Wilkinson and the way that his family have handled this terrible tragedy. My hon. Friend’s point about Islamic State is well made. He spoke about making sure that we continue with the help and counselling. Part of that will be in how we commemorate and remember these dreadful events. We are just coming up to the anniversary of 7/7, which is a reminder of how important it is that we mark these things properly, because relatives go on mourning for years and decades into the future.
Mr Speaker
I have not forgotten the voice of Kettering, whose patience is now rewarded.
Mr Philip Hollobone (Kettering) (Con)
With regard to the desperate and growing wave of human misery that is taking to the Mediterranean in leaky boats from the north African shore, what advice have Her Majesty’s Government and the European Union taken from the Australian Government about the successful way to tackle large-scale, organised, seaborne human trafficking?
The Prime Minister
We have looked at what the Australians have done, and we have also looked at what the Spanish did in respect of migration from west Africa to the Canary islands. In one year they received 36,000 migrants, but just a few years later that was down to zero. They broke the business model of the smugglers and found a way of returning people to the African states and working with those states. That, I think, is the model that we need to adopt. It is obviously more complicated in this case, but that is the long-term answer.
Mr Speaker
I am most grateful to the Prime Minister, to the Leader of the Opposition, and to the 70 Back Benchers who contributed in the 70 Back-Bench minutes.
Mr Speaker
Points of order come after statements. We are saving the hon. Gentleman up, if I can put it that way.
Greece
(8 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The First Secretary of State and Chancellor of the Exchequer (Mr George Osborne)
Let me report to the House on the latest developments in the financial crisis in Greece, how they might affect British citizens, and how we will protect our economic security at this uncertain time.
The developments over the weekend have been well reported. Greece’s financial assistance programme is due to expire tomorrow. After tense negotiations last week between the Greek Government and their eurozone partners, it looked likely that a deal to extend that programme would be agreed. On Friday, however, the Greek Prime Minister suddenly announced that there would be a referendum on 5 July on the terms of the programme extension, and that he would recommend that the Greek people vote no. On Saturday, the eurozone Finance Ministers confirmed that, as a result of that unexpected move, negotiations were at an end and the programme would expire. Yesterday, the European Central Bank said that without a programme, it could not extend the emergency liquidity assistance that is the life support of the Greek banking system, and last night, clearly under pressure, the Greek Government announced that banks would not open today and that capital controls would be introduced.
There is considerable uncertainty about what happens next. Over the past 48 hours I have spoken to fellow Finance Ministers, the chair of the Eurogroup and the head of the International Monetary Fund. At lunchtime, as we have just heard, the Prime Minister chaired a meeting attended by the Governor of the Bank of England, myself, the Foreign Secretary and others to co-ordinate our response. Britain’s attitude to the developing Greek crisis is clear: we hope for the best, but we prepare for the worst.
Let me address some immediate issues that will concern people. First, our view on the overall state of the relationship between Greece and its fellow eurozone members is this: whether or not Greece should ever have joined the euro, it is now part of that single currency, and an exit will be traumatic. It was the Greek Government’s decision to hold a referendum that was the immediate trigger for the events over the weekend and the bank closures today. We should plan on the assumption that the referendum will effectively be a choice for the Greek people about whether their country now leaves the euro. That is a matter for the Greek people to decide, and we respect their democratic right to decide their country’s future. We also respect the right of the eurozone to set conditions of membership. The remorseless logic of integration is one of the reasons we did not join the euro and do not want to join in the future.
Secondly, I turn to the impact of the current events on the stability of the financial system in the United Kingdom and throughout Europe. Related to that is the position of the Greek banks here in the United Kingdom. The Greek crisis has, in one form or another, been with us for five years. It is one of the biggest external economic risks to the British economy, and the situation today shows that those risks remain. No one should underestimate the impact that a Greek exit from the euro would have on the European economy, or the knock-on effects on us. That is why I have consistently argued that the best way to protect ourselves from those risks is to put our own house in order.
Of course, markets anticipate some of the risks. Private sector exposure to Greek banks and the Greek economy is far lower than it was, say, three years ago, so the financial market reaction today has been relatively contained. Stock prices on European exchanges have fallen by between 2% and 5%, and Greek bond deals have increased by about 400 basis points to more than 14%, but bond spreads in other eurozone economies have remained broadly steady. The eurozone authorities have made clear that they stand ready to do whatever is necessary to ensure the financial stability of the euro area, and we welcome that commitment to the currency. Equally, the British Government and the Bank of England stand ready to ensure our financial stability in the United Kingdom.
The four largest Greek banks, Alpha Bank, Eurobank, National Bank of Greece and Piraeus, all have branches here. Their UK balance sheets are small: between them, their deposits total less than £225 million. Resolution and supervision of those branches is the responsibility of the Greek and EU authorities. Protection of depositors is solely the responsibly of the Greek authorities. All four branches are open today.
There is one Greek bank with a subsidiary in the UK—Alpha Bank. It is a standalone entity that is separate from its parent bank. It is small, with assets of slightly more than half a billion pounds, it is regulated by the Bank of England, and customers can be assured that their deposits are covered by the UK’s Financial Services Compensation Scheme.
Thirdly, there are 40,000 British residents in Greece, including 6,000 receiving payments from the Department for Work and Pensions and about 300 receiving public sector pension payments. The Greek Government have announced a bank holiday in Greece lasting at least until after the conclusion of the referendum on 5 July, and restrictions on withdrawals from ATMs. Withdrawals will be limited to €60 per day per account for Greek accounts. The Greek bank accounts of British residents are subject to those restrictions. Their UK bank accounts are not affected.
International payments into Greece are exempt from the restrictions that the Greek authorities have placed on the banking system. That means that UK Government payments, including state pension and public service pension payments, should be permitted, and I can confirm that those payments will continue to be made in the usual way. However, the situation remains fast-moving and uncertain, and we will keep it under constant review. I recognise that people may be concerned. I have asked the Department for Work and Pensions and public service pensions administrators to attempt to contact people who draw a British state or public sector pension from a Greek bank account. Those people will be helped to switch their payments to a non-Greek bank account if they wish.
Fourthly, there are an average of 150,000 British tourists a week in Greece in July. For the time being the Greek Government have announced that, as usual, tourists will be able to withdraw up to €600 on cards that have been issued outside Greece. However, the Finance Ministry could impose limits in the future, and the availability of ATMs that are stocked with cash may get increasingly patchy. I remind people that credit and debit cards are of course accepted only at the discretion of the business being paid.
I can confirm that as a result of the limited and potentially unreliable banking services, the Foreign Office is updating its travel advice as I speak. We recommend that travellers should take sufficient euros in cash to cover the duration of their stay, emergencies, unforeseen circumstances and unexpected delays. Obviously travellers should be careful and take sensible precautions against theft. The full advice is available on gov.uk, and travellers should check it regularly.
Finally, we are taking steps to help firms doing business with Greece. There are restrictions on the settlement of payments being transferred out of the Greek banking system. The Department for Business, Innovation and Skills is today publishing guidance for businesses that may be affected. In addition, I can announce that Her Majesty’s Revenue and Customs’ time to pay service will be available to help give breathing space to businesses experiencing cash flow difficulties as a result of events in Greece.
So let me be clear: British pensioners are being paid as normal, British businesses trading with Greece will be supported, and British holidaymakers will receive the advice and help they need in a rapidly changing situation. I want people to know that Britain is prepared.
To conclude, it is vital that the Government and people of Greece now act to resolve the current uncertainty and ensure economic and financial stability across Europe. Five years ago we came into office in the first flush of the Greek crisis. At the time Britain, too, was dangerously exposed—on the brink. Since then, with the British people, we have worked hard to repair our economy and ensure that we can deal with risks from abroad like the current one. If ever we needed a reminder of why we must continue working through our plan to deliver economic security at home, we have it today, and I will take further steps to secure our country’s future in the Budget next week.
Chris Leslie (Nottingham East) (Lab/Co-op)
These are serious times for Greece and the eurozone, and there are risks for Europe and the UK if an urgent resolution cannot be found. Given that the Greek banks are now closed, can I ask the Chancellor about the immediate implications for the UK economy and British citizens? Our exporters, pension funds and the 1 million British visitors to Greece need to know that the UK Government have a thorough contingency plan.
Regarding the impact on British citizens in Greece, how will holidaymakers travelling there this summer be able to obtain full information and updates about the best way to proceed, given the constantly changing situation? The Chancellor touched on that in his statement, but will he tell us what discussions British officials have had with the Greek authorities and banks to ensure that UK citizens will continue to be able to withdraw sufficient funds from the system, especially if the cash machines in Greece are depleted of banknotes? Will he also give us his assessment of the number of British citizens with deposits in Greek banks? They will be anxious today about whether they can get their money. Are the British embassy in Athens and our network of consular staff adequately equipped to cope with all eventualities? Do they have the resources to deal with inquiries from British citizens and companies in need of assistance?
Turning to the impact on our economy and our financial system, there have been varying reports of the exposure of the British banking system to the Greek economy. What discussions have the Treasury and the Bank of England had with financial institutions here and in the EU about the implications for our financial system? In particular, will the Chancellor give us more details of the conversations he has had personally with the Greek and other eurozone Ministers? What has he been doing to urge them to find a solution?
I understand that the Prime Minister has today chaired a Greece contingency committee. Will the Chancellor explain the day-to-day structure for monitoring emerging risks to the UK position? Which institutions are leading on each aspect of events, and how are the Government co-ordinating our preparedness for any interventions that are needed? What assessment have they made of the number of British firms and the volume of exports potentially affected by the situation in Greece and, in particular, of the exposure to export finance risk of firms awaiting payment?
Although non-eurozone countries are not directly involved in the negotiations with the Greek Government, the International Monetary Fund has of course provided £37 billion of support so far, about £1.7 billion of which has come from UK taxpayers. If there are wider ramifications for the eurozone economies in the months ahead, there will clearly be further risks for UK business and trade and for our economy. As the Chancellor knows, British business is highly dependent on a healthy and sustainable European economy, but our trade deficit with the EU has worsened in recent times. Does he agree that those vulnerabilities make it all the more urgent that we prioritise measures to boost economic productivity here in the UK as part of our defence against external economic turbulence? Our exporters need support and assistance, and I urge him to include measures in next week’s Budget to boost productivity and take account of their heightened susceptibility to such turbulence.
Given the gravity of the problems facing Greece and the wider repercussions for us and for the European economy, I believe that the Chancellor should pause and reflect that it undermines his position to make bogus comparisons between Greece and Britain. Nobody will take those comparisons seriously. The crisis in Greece has been building up for many years now, and billions in bail-outs have already been provided from eurozone economies. There has been considerable hardship for the Greek people, who still face economic distress. Does he agree that it is imperative for the institutions to continue to seek opportunities for a negotiated settlement with the Greek authorities during the week ahead, and for the Greek Government to accept their part in charting a course towards a long-term resolution and deal with economic reform and governance questions that cannot be ignored? This is surely a time for all concerned to pursue a responsible approach and avoid a disorganised and chaotic outcome that would be devastating for Greece and have severe implications for the wider European economy.
Mr Osborne
Let me deal with the specific points that the hon. Gentleman has raised. Our advice to the many British people who are planning to go on holiday to Greece is very clear. They should continue to check the travel advice on the Government website. As I have just explained, that advice has been changed, and we are advising people to take more euros with them than they might have been expecting to take.
The hon. Gentleman makes a point about our conversations with the Greek authorities. Clearly they have tried to, in some sense, protect tourists from their capital controls, because if people have access to a foreign bank account, they can withdraw up to €600 from the ATMs. But of course one has to think through a situation where the ATMs potentially start to run out of money, particularly in certain locations. That is why we are advising people to take more cash with them but also to be aware of the safety issues involved in that.
On the question about British citizens who have deposits in Greek banks, I hope I made it clear in my statement that deposits in branches of Greek banks, and indeed, in that sense, also the host bank, are not covered by the UK’s compensation scheme, but the deposits in the subsidiary are in the UK. If people are not entirely sure what their situation is, they should check with their bank, but that has been spelled out for them. On the support for the British embassy and our consular teams in Greece, the Foreign Secretary is here, we have discussed this and the Foreign Office has put in place contingency plans to step up the support it can provide on the ground should the situation deteriorate.
On the exposure of our banking system, it is less than 1% of the common tier 1 capital of the UK banks. As I said in my statement, it is fair to say that as a country and as a banking system we have dramatically reduced our exposure to Greece, as has pretty much every other bank in Europe. In terms of how this is co-ordinated across government, the Bank of England leads on financial stability issues, the Foreign Office covers the consular issues, and the Treasury is covering the financial stability issues and working with the Department for Work and Pensions on payments, but we are meeting regularly. We had the meeting today and we also had a meeting last week, which the Governor also attended. On businesses affected, advice is available on the Department for Business, Innovation and Skills website, and, as I say, HMRC’s time to pay scheme can help with cash flow. Only 0.6% of the UK’s exports of goods and services go to Greece, so it is a small amount, but of course there could be a considerable impact on individual firms.
The IMF was created after the second world war to provide support for economies that have been struggling. We took steps in the last Parliament to increase the capital available to the IMF—I might point out that the Opposition divided the House on that issue, but it was a sensible step to take. The IMF has precautionary balances, and let us be clear that no one has ever lost money lending to the IMF and providing support to the IMF. Of course the IMF is very important in this situation, not least because of the rigour that it brings, which is one of the reasons why quite a few members of the eurozone are absolutely insistent that the IMF is around the table.
The final point I would make is this: of course we would like a peaceful—if that is the right word—or less traumatic resolution of this crisis, but things have taken a turn for the worse because of the decision to hold this referendum and because the Greek Prime Minister said he was going to recommend a no vote. I would therefore suggest that at the moment, in the next few days, the ball is largely in the Greek Government’s court. Of course if things change, there is a very big role for the eurozone to play in helping to achieve a negotiated settlement.
The observation I would make is that five years ago we were much less well prepared to deal with shocks from abroad: we had a very high budget deficit, one of the highest in the world; and our banks were not as well capitalised as they should have been. We are in a stronger position as a result of the difficult decisions we have taken over the past five years and if the hon. Gentleman is willing to support the further decisions that we are going to take in the Budget next week, I look forward to his saying so next Wednesday.
John Redwood (Wokingham) (Con)
The European Central Bank has lent €89 billion so far to the Greek banking system, and that money is now at risk. Will the Chancellor confirm that, thanks to our prudent approach, UK taxpayers would not make any contribution to the recapitalisation of the ECB if that money has now been lost?
Mr Osborne
My right hon. Friend is right to point out that in effect what has happened over the past few years is that the private exposures to Greece have been converted into eurozone public exposures and, of course, into IMF exposure. That is part of what has happened. One key decision that we took in the previous Parliament was to get the UK out of these eurozone bail-outs. The previous Government had signed us up to those bail-outs, but the Prime Minister got us out of them and, as a result, dramatically reduced the UK’s direct exposure. But, as I have said, we are part of the financial system of Europe and we will be affected if there is a Greek exit.
Mr Dennis Skinner (Bolsover) (Lab)
Instead of comparing Greece with Britain, would it not make more sense to compare Greece with Ukraine? Both are debtor nations, yet Ukraine is allowed to continue to borrow money from the IMF and Greece is not. Why is that, and did the right hon. Gentleman discuss that matter?
Mr Osborne
It is fair to say that the IMF has provided considerable support to both Ukraine and Greece. Indeed, the combined support that has been provided by the eurozone and the IMF is considerably greater to Greece. The discussion was the extension of the current programme, and of a potential new programme. Those negotiations were under way, but the creditors in this case were demanding certain conditions. That is what happens when a country is part of the euro, which is why I do not recommend our joining it.
Mr Speaker
I call Mr—sorry. The right hon. and learned Gentleman took me by surprise. I call Mr Kenneth Clarke.
Mr Kenneth Clarke (Rushcliffe) (Con)
I am always quietly inconspicuous in this Chamber, Mr Speaker.
Will my right hon. Friend confirm that the IMF has always made advances to countries in financial crises conditional on a programme of reform aimed at minimising the effect on creditors and, above all, on restoring a competitive and effective economy to prepare for a healthier future? It would be quite irresponsible for the IMF or the European Central Bank to abandon that approach at the moment. The best outcome would be for the Greeks to vote yes in the referendum. The one thing my right hon. Friend has not touched on is the great hardship that could be caused to the Greek people if they vote no and their economy goes into total collapse. Are there any discussions going on about the way in which the friends of Greece can mitigate those consequence for the ordinary Greek population? There is no quarrel in this House with Greece or the ordinary people of Greece who are not responsible for the mismanagement by their Government.
Mr Osborne
My right hon. and learned Friend is right to remind us that the people of Greece have paid a very high price for the mismanagement of their economy by previous Greek politicians and Greek Governments. Of course it is now a matter for the Greek people to decide their future, and we should respect that. I made it clear in my statement that most people now consider this referendum as one on whether Greece leaves the euro. Of course there are considerable consequences of taking that step, but I do not think we should be telling the people of Greece how to vote. It is for the people of Greece to make that decision, but they should be aware of the consequences. That is the broad approach that we shall take. The discussion of what would happen if Greece were to leave the euro should probably happen at a later date, but there will clearly be issues over the support that the family of western nations can provide to that country.
Stewart Hosie (Dundee East) (SNP)
I thank the Chancellor for his statement and for early sight of it. I welcome what he said about private sector exposures to Greece being substantially lower than they were some years ago. Exposure to the banks is around £5.3 billion, down from £9 billion some years before. That would tell us that the risk of direct contamination is relatively low, but as we have seen today there is a risk to the banking sector across the EU, and the fall in bank stocks throughout Europe is witness to that. I welcome what the Chancellor said about the Government and the central bank being ready to ensure the financial stability of the UK, but it might be helpful if he said a little more about confidence today.
In terms of other exposure, we have rather modest exports to Greece, worth about £2.82 billion, or 1.2% of EU exports and 0.5% of UK global exports. That figure is modest but nevertheless important to the people whose jobs depend on those exports. Will the Chancellor say a little more about that? Perhaps export promotion could be stepped up to help find new markets for businesses that might find the Greek export market more difficult; or, as the hon. Member for Nottingham East (Chris Leslie) mentioned, export credit guarantees and other short-term cash flow help, should they be required, could be used.
Finally, notwithstanding what the Chancellor said about negotiations being at an end, will he confirm that the IMF has some leeway in when it declares that a repayment has been missed, in that the IMF’s managing director has up to 30 days to notify the board if a country does not make a repayment deadline? Does that not provide some flexibility to ensure that a deal can be reached and provide a strong incentive for discussions continuing beyond Tuesday, notwithstanding the forthcoming Greek referendum?
Mr Osborne
I thank the hon. Gentleman for his questions. I should say that this afternoon we have been in touch with the devolved Administrations in the United Kingdom to ensure that they are aware of the plans and to work with them on any issues faced by them and by citizens and businesses in Scotland, Wales and Northern Ireland.
The Bank of England and the Prudential Regulation Authority are, of course, monitoring extremely closely the situation with the four Greek branches in the UK and the subsidiary, although, as I have said, the subsidiary is protected by our compensation scheme and supervised by the Bank of England. There is, of course, advice available to businesses with export links to Greece, but there are capital controls in place so there are restrictions on the settlement of payments being transferred out of the Greek banking system. Businesses should be aware of that. Cash flow problems can be addressed by contacting HMRC.
As for the IMF, I do not want to prejudge the decisions of the managing director or the board. We will just have to wait and see what unfolds in the coming days. It is fair to say that the space for substantive negotiations before the referendum is pretty limited. Of course, we shall see what the outcome of the referendum is. I would merely observe that many of the senior figures in the eurozone have said that if Greece were to vote yes, negotiations would begin to try to find a satisfactory outcome for the Greek financial situation.
Mrs Anne Main (St Albans) (Con)
Greece, a small country of 5 million people, swept in with Syriza a Government promising to abolish austerity. Does my right hon. Friend think that there are any lessons to learn for a country much nearer to home with a population of about 5 million people that swept in a Government promising to abolish austerity?
Mr Osborne
The public will draw their own conclusions about that. Different countries are obviously different, but western democracies need to ensure that their welfare systems are affordable, their economies are competitive and their businesses can export and create jobs. That is a challenge for every single western democracy.
Mr David Winnick (Walsall North) (Lab)
In view of the intense hardship and suffering that millions of ordinary Greeks have already endured, why on earth should they agree to the further humiliation that is before them? In such circumstances, is it not clear that the Greeks should decide for themselves, as the Greek Government have rightly stated? It will be interesting to see whether they will agree to such humiliation being inflicted on them by voting against the Government’s recommendation.
Mr Osborne
I do not think anyone would presume to tell the Greek nation of all nations how to conduct a democracy. That is why I made it very clear in my statement that we respect the right of the Greek people to make decisions about their own future in an open and democratic way, and we do not presume to give them advice on that, but of course they need to be aware of all the consequences.
Mr Christopher Chope (Christchurch) (Con)
Does my right hon. Friend agree that if the Greek people wish to regain their sovereignty and once again become masters of their own economic destiny, they should be arguing to leave the eurozone and set up the drachma once again?
Mr Osborne
As I have already said, it is for the Greek people to make this decision, but my hon. Friend’s broader observations about the constraints of being in the euro are one of the reasons why he and I agree that Britain was right not to join and should not join in the future.
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
It is tempting to score domestic political points about the current plight of the Greek people, but does the Chancellor accept that the coming days will be very frightening and distressing for them and also for British people with friends and family in Greece? Will he assure the House that whatever the outcome of the referendum, Greece remains part of the family of nations and we will do what we can to mitigate the plight of the Greek people?
Mr Osborne
I said precisely that a few moments ago. We respect the decisions that the Greek people have to take. We also understand the real economic hardship that has been experienced by the Greek people because of the mistakes that previous Greek Governments have made, and the Greek people have borne the brunt of that. Whatever the outcome of the referendum and whatever the next few months hold for Greece, it is a very important part of the European family of nations. Greece has been an important ally of the United Kingdom for very many years and we will continue to stand alongside the Greek people during this difficult time.
Mr Jonathan Djanogly (Huntingdon) (Con)
If the ECB and/or the IMF failed to provide necessary liquidity, does my right hon. Friend think this could leave an opening for Russia? If that is the case, what are his security concerns?
Mr Osborne
It is not a great secret that we have not been entirely enamoured of the foreign policy pursued by the Syriza Government, but that has not affected these decisions.
Mr Douglas Carswell (Clacton) (UKIP)
The Chancellor has consistently called for more euro integration. He has lauded the remorseless logic of monetary union and called for fiscal, banking and economic integration. Only last month he called the euro a success. Does he still want Greece and others to wade further into this monetary mire? Might it not be right for the Government to support other member states having the currency freedom that we in this country enjoy?
Mr Osborne
Just as I do not particularly like other nations telling the British nation how to conduct its own affairs, I do not think we should go around lecturing others. They have chosen to form a currency; we chose not to join it. The point I have made is that there is a remorseless logic to being part of the eurozone that leads to greater political, fiscal, financial and economic integration. That is why I do not want to be part of it. I have also made the point that that integration, although necessary to secure the stability of the euro, has an impact on the UK as a large non-euro member. That is one of the issues that should be addressed in the renegotiation. We would not be having a renegotiation if we had not had a Conservative Government elected and able to put this issue to the British people in a referendum, and quite a lot of us in this House worked to achieve that Conservative Government.
Richard Fuller (Bedford) (Con)
What assessment has my right hon. Friend made of the financial risks based on Greece’s decision spreading to the sovereign debt of other eurozone countries? Can he assure the House that the Bank of England has done whatever it can do to ensure that if financial risk does spread, British companies and British banks are secure?
Mr Osborne
As I have said, Britain is much better placed than it was a few years ago; our banking system is much better capitalised. Of course, the eurozone and the European Central Bank have previously taken steps to try to contain the contagion, for example by setting up the outright monetary transactions programme and the European stability mechanism—in other words, various bail-out mechanisms that came into operation during Spain’s financial problems a couple of years ago—but I was very clear in my statement that a Greek exit from the euro would have an impact on Europe’s financial system and knock-on effects for the UK. I do not think that anyone should underestimate the challenge of establishing that a country could leave the euro. Those are all issues that we need to be alert to in the months ahead.
Mike Gapes (Ilford South) (Lab/Co-op)
Does the Chancellor accept that glib comparisons between Greece and other countries do not take account of the fact that even before the global financial crisis Greece’s debt-to-GDP ratio was 100%? It rose to 170% by 2011, which was much worse than in Spain, Italy or this country. Therefore, should he not concentrate on the specific problems of the previous Governments in Greece who created the situation and the dysfunctional coalition between the far left and the far right, which seems unable to make sensible decisions?
Mr Osborne
I was making the observation that the UK is far better prepared than it was five years ago, when we had a budget deficit of over 10% and an undercapitalised banking system—something I was well aware of, because the Greek crisis had its first big flare-up a few days before I became Chancellor of the Exchequer. We are in a better position, but I do not pretend that the UK will be immune from the impact of the financial problems in the eurozone.
Lucy Frazer (South East Cambridgeshire) (Con)
I welcome the extensive efforts that the Chancellor has outlined for protecting the British public. One of the measures he mentioned was that UK Government payments would still be made, including state pensions. If that money is being sent to Greek banks, is he taking steps to confirm that it will be ring-fenced so that, in the event of the insolvency of any Greek banks, it will not be lost to British citizens?
Mr Osborne
My hon. Friend raises one of the challenges we face. There are around 6,000 people in Greece who receive British pensions or British public sector pensions, and around 2,500 of them have Greek bank accounts into which the payments are made. We cannot protect people’s Greek bank accounts in such a situation—that is for the Greek authorities to do—which is why we are contacting the individuals concerned and saying that if they wish to have the payments made into British or non-Greek bank accounts, we will make that switch as soon as we can. We are ready to do that immediately.
George Kerevan (East Lothian) (SNP)
I put it to the Chancellor that there is another way in which the Greek crisis could impact on the UK economy: a Greek exit, or even simple market turbulence, could lead to a precipitant and lasting fall in the value of the euro, which would have an impact on British farm incomes because they are denominated in sterling. Will he speak with fellow Ministers to ensure that British farmers in that situation will be compensated?
Mr Osborne
It has long been the practice—it has certainly been my practice and, to be fair, also that of my immediate predecessors—not to comment on the value of the currency, and I do not intend to do so today.
Paul Scully (Sutton and Cheam) (Con)
The events in Greece are a stark reminder of the uncertainty that remains in the global economy. Can my right hon. Friend reassure my constituents that the Government’s long-term economic plan factors in and faces up to that uncertainty, rather than trying to ignore it?
Mr Osborne
I can give that reassurance to the residents of Sutton and Cheam, and indeed of the rest of the UK. This country’s budget deficit remains too large. We have taken important steps to strengthen our banking system, and now we must ensure that it remains competitive and healthy, which is why we are taking steps to exit from Government shareholdings. Of course, in the Budget and in the spending review this autumn we will take further steps to deal with our budget deficit and run a surplus in normal times so that we are better prepared for whatever shocks the world throws at us.
Catherine West (Hornsey and Wood Green) (Lab)
Will the Chancellor confirm that a solution to the Greek financial crisis depends on a long-term political negotiation to keep Greece in the EU, that our Government have an active role to play in that, and that failure to agree a political settlement will undermine any future argument we might wish to pursue for the integrity of the European Union as a whole?
Mr Osborne
It is fair to say that Greece’s membership of the European Union, as opposed to membership of the eurozone, was an important step in that country’s transition from fascist dictatorship to democracy and in entrenching that democracy, and I think that view is broadly held by the Greek people, whatever their views about the current financial situation or their membership of the euro. I repeat that whatever happens we stand alongside Greece as an important member of the family of European nations.
Mr Stewart Jackson (Peterborough) (Con)
Almost 20 years ago a number of us predicted the disastrous consequences that would be visited on small countries as a result of monetary convergence and the single currency, and so it has come to pass this week with Greece, which it seems is being smashed on the altar of German monetary policy. With that in mind, will the Chancellor give the House an undertaking that proposals for further future financial convergence—a single EU-wide corporation tax rate, which would damage the British economy—will never see the light of day?
Mr Osborne
I will tell my hon. Friend what I have to say about that: we are not going to sign up to some European corporation tax rate.
John McDonnell (Hayes and Harlington) (Lab)
Is it not ironic that the institutions that turned a blind eye to Greece’s economic situation when it joined the euro and then did nothing about profiteering through speculative lending to the Greeks throughout the period afterwards are the same organisations that are now withdrawing liquidity before the result of the referendum and therefore before the Greek people have made their decision? We are not members of the eurozone, but we are supporters of the International Monetary Fund. Therefore, was the Chancellor consulted about the timing of the withdrawal of liquidity in advance of the referendum and, if so, what view did he express?
Mr Osborne
The decision to which the hon. Gentleman refers was taken yesterday by the European Central Bank, and it was a decision not to expand the amount of liquidity assistance provided; it did not cancel the existing liquidity assistance. We are not in the eurozone, of course, so we are not part of the European Central Bank, but there have been close discussions and the European Central Bank is keeping the Bank of England directly informed about the decisions it is making.
Simon Hoare (North Dorset) (Con)
My right hon. Friend will remember the back story to the Don Pacifico incident. What advice will he, the Foreign Secretary and the Foreign Office be providing to British citizens residing in Greece or visiting Greece during the holiday season about their physical safety and security, because, whatever the result of the referendum, there could be periods of intense unrest across the country?
Mr Osborne
I will not attempt to say the Latin phrase that Palmerston used at the time of the Don Pacifico affair, but I will say that we of course stand ready to help British holidaymakers. The best thing that they can do is ensure that they are well prepared, and the best thing that we can do is ensure that the advice they need is provided. Greece is clearly one of the most popular holiday destinations; at the moment 150,000 British citizens go there every week in July. That is why we have changed the travel advice and said clearly that people should take with them the euros they need for their holiday, or at least not assume that getting cash out of an ATM will be straightforward. They need to think through those issues, which is why we are providing that advice.
Ian Paisley (North Antrim) (DUP)
Advising constituents to carry with them large amounts of cash obviously poses significant questions about security. What advice and guidance can the Chancellor ensure has been given to the Greek authorities to protect British people who are carrying large amounts of cash?
Mr Osborne
Of course, Greece has an effective police force. The advice we are giving to people is just the commonsensical advice that they should look after their possessions when they are on holiday, and of course people do that. It is all part of the full travel advice that is on the website.
Mr Speaker
Order. There is still a lot of interest but very little time. I will try to take a few more questions on this statement, but I give notice to colleagues that it will almost certainly not be possible to accommodate everybody. There are swings and roundabouts in these things, as Members know.
Mr John Baron (Basildon and Billericay) (Con)
Greece reminds us all that one can defy economic logic for only so long. Given that eurozone growth rates are well below global growth rates—in the economic slow lane—and that unemployment rates are that much higher, largely caused by the drive towards economic and political union, what cast-iron safeguards are we negotiating to ensure that we retain our sovereignty such that we do not get drawn into this ever-closer union?
Mr Osborne
As my hon. Friend well knows—the Prime Minister was explaining this at the Dispatch Box just an hour or so ago—one of the issues we are seeking to address in our renegotiation is Britain’s involvement in ever-closer union, which is not something that the British people are very comfortable with. I would make the broader observation, which relates both to the UK and to members of the eurozone, that we have to make the European continent, ourselves included, a competitive place to do business. We have to have businesses that can export around the world. We have to be able to make sure that jobs are being created in the European Union. A very important strand of what we are seeking to change in our relationship with the European Union is to make the EU more competitive for all its citizens, Greek as well as British.
Caroline Lucas (Brighton, Pavilion) (Green)
Since implementing austerity measures in return for loans has shrunk the Greek economy by a quarter and massively increased its debt-to-GDP ratio, as well as caused untold suffering, will the Chancellor consider increasing calls for the organisation of a European conference, similar to the London conference of 1953 for Germany, to agree a package of debt cancellation and restructuring, which is likely to be a far more effective way of addressing both the economic and the social crisis unfolding in Greece?
Mr Osborne
I make the broad observation that ultimately countries have to live within their means; we see what happens if they do not. On the Greek debt situation and the burden of Greek debt, eurozone members were in discussions about the terms of debt repayments and the like, but those negotiations were broken off on Saturday because of the unexpected announcement by the Greek Prime Minister on Friday.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
Does not the eurozone states effectively endorsing a plan for fiscal and banking union, as proposed by the five eurozone Presidents, regardless of the treaty that the Prime Minister vetoed in December 2012, underline the urgency for the Chancellor to deliver on the dilemma that he outlined in a speech on 15 January 2014, when he said:
“The…Treaties are not fit for purpose.”
He also said:
“If we cannot protect the collective interests of non-eurozone member states then they”—
meaning we—
“will have to choose between joining the euro, which the UK will not do, or leaving the EU.”
Can he explain why those words have been taken down from the Downing Street website?
Mr Osborne
I have absolutely no idea; I thought it was one of the better speeches I gave over the past five years. My hon. Friend will be glad to know that I repeated exactly those arguments, including the phrase about the challenge of Britain having to choose, in the Mansion House speech that I gave just a couple of weeks ago. That is certainly up on the Treasury website.
Helen Goodman (Bishop Auckland) (Lab)
A further collapse in the Greek economy would obviously be extremely bad for the Greek people and for our exporters, particularly in pharmaceuticals. Even the Financial Times this morning described the creditors programme as “economically counter-productive”, and we have learned that the US Treasury Secretary urged the creditors to take a more compromising stance. Did the Chancellor follow the American lead, and will he do so as the days go by?
Mr Osborne
I do not want to go into the private discussions we had, but we said very publicly that both sides needed to reach a compromise. We did not say that this was exclusively a challenge to the Greek Government; we said that the eurozone also needed to work towards a compromise. I think it is fair to reflect on the fact that the reason we are having this statement and the reason there are capital controls and the like is the unilateral decision by the Greek Government on Friday. We respect the vote in the Greek Parliament, and of course we will respect the decision of the Greek people, but that was the change in the dynamic that happened over the past three days.
Marcus Fysh (Yeovil) (Con)
In order to recover, Greece needs bigger debt relief than is currently on the table and massive pro-market structural reform and support. Neither the EU, the international institutions, nor Syriza currently offer those things. This problem presents serious ongoing economic and strategic risks for us in Europe and beyond. What are our Government doing to ensure that Greece gets what it needs?
Mr Osborne
I agree with my hon. Friend that the Greek economy needs to be more competitive. Clearly—I think this is the universal observation—the Greek economy needs important structural reforms. Ultimately, those have to be delivered by the Greek Parliament and by Greek Governments. Of course, we are happy to provide assistance. Indeed, over the past five years we have provided advice and assistance to the Greek Treasury and others about how to undertake those reforms. There is now the more immediate issue of the referendum.
Nick Thomas-Symonds (Torfaen) (Lab)
Many of my constituents who will be visiting Greece over the next few weeks will have heard the Chancellor’s advice about carrying a sufficient number of euros with them for the duration of their holiday. Given that this is a fast-moving situation, and that many people may be concerned about the safety implications of carrying large amounts of cash, will he undertake to monitor access to money in Greece on a daily basis to ensure that the Foreign Office advice on the website is as up to date as possible?
Mr Osborne
The hon. Gentleman asks a perfectly fair question. We have thought about this quite carefully. Clearly, it is a very uncertain situation. As things stand, the Greek Government have gone to considerable lengths to try to make sure that tourists can continue to access cash through ATMs and that the payments that they make with credit cards and the like are accepted by Greek businesses. It is an uncertain situation that is changing rapidly, and of course people could be on holiday when it does change, so we are suggesting to them that they be prepared. That advice will be updated whenever it needs to change; we keep it under constant review.
James Cleverly (Braintree) (Con)
I welcome the mitigations that my right hon. Friend has put in place to protect British citizens and the British economy, but I cannot see an outcome to the current Greek situation that will not have a detrimental effect on the British economy. Will he therefore assure this House that as part of the long-term economic plan he will include a commitment to expand and extend our trading relationships globally, particularly to fast-growth Commonwealth economies, to help spread our risk?
Mr Osborne
My hon. Friend makes a very important point. Britain is overly dependent on its exports to the rest of the EU. About 50% of our exports go to the EU. We have been working very hard to expand our exports to fast-growing economies in Asia, Latin America and Africa. Although, in general, UK export performance has been quite disappointing in recent years, that is principally because of the weakness of the European economy. Our export performance to many of these emerging economies has been very much better, and we want to build on that—particularly, of course, our links with the Commonwealth countries.
Stewart McDonald (Glasgow South) (SNP)
I offer the Chancellor this analysis: the class divide is with us in this debate. On the one hand, the rich people in Greece are moving their money out of the country, with the IMF lobbying on their behalf for further public sector cuts and against tax rises for the rich, while poor and working-class people in Greece are forced to live with access to only €60 of cash a day. So here’s the question: whose side is the Chancellor on?
Mr Osborne
I am not very impressed with anti-austerity crusaders who promise the earth and cannot deliver.
Craig Mackinlay (South Thanet) (Con)
The slide of the Greek economy has been long, slow and increasingly painful as it has lurched from one bail-out crisis to the next. The fundamental failure is, of course, the euro at its heart and I do not feel that a new deal now will do anything to solve that. Might a no vote next week be the best outcome, and will my right hon. Friend offer practical support to Greece when it inevitably and sensibly reinstates its own currency?
Mr Osborne
I completely respect my hon. Friend’s opinion, but it is better from my position to say that it is for the Greek people to decide in that referendum. Of course, whatever the outcome, my hon. Friend is absolutely right to say that we are there as a friend of Greece to help it at this troubled time whatever course it chooses to take.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
Successive Greek Governments must take responsibility for failing to deliver a sufficiently competitive Greek economy, but does the Chancellor agree that Greece’s creditors need to look at their own behaviour, too? The bail-out five years ago has fundamentally left Greece less able to pay its debts than beforehand. Surely the IMF and the European Commission must learn those lessons, too.
Mr Osborne
I think that the European Union in general has not taken sufficient trouble to make the European economy more competitive, less regulatory and a place where enterprise can flourish and private sector jobs can be created. That is one of the principal arguments we are having at the moment in European Councils.
David T. C. Davies (Monmouth) (Con)
Does not this unfolding catastrophe demonstrate very clearly what happens to nations when they cannot balance their own books and rely on borrowed cash? Does my right hon. Friend agree that we need to learn the lesson from this, pay down our deficit and not take any notice of Opposition Members who have done their best to put us in the same situation that Greece is in now?
Mr Osborne
I agree with my hon. Friend that countries need to pay their way in the world. Britain had a budget deficit of more than 10% when the Conservative Prime Minister came to office five years ago. As a result of the action we have taken—universally opposed by the forces opposite—we have made the UK much more secure to deal with these sorts of shocks, but the job is not finished and I am sure my hon. Friend will be in his place on Budget day as we set out the steps we are going to take to finish it.
Wes Streeting (Ilford North) (Lab)
Given the seriousness of the situation and the impact that a Greek exit from the euro would have not just on the eurozone economies but on ours, too, is not the Chancellor slightly embarrassed by the unnecessarily partisan tone he is taking in some of his replies? Will he say a bit more about the protections he is considering in order the limit the exposure of British businesses and people with interests, including family interests, in Greece?
Mr Osborne
I would not regard it as partisan to point out that we need to reduce our budget deficit, make sure our banking system is properly capitalised and have a more competitive economy. If the hon. Gentleman takes that as a partisan comment, that is more of a reflection on his party than on mine.
Peter Heaton-Jones (North Devon) (Con)
Many of my constituents in North Devon have raised with me time and again their opposition to the notion of the United Kingdom ever joining the eurozone. Does my right hon. Friend agree that the current chaos in Greece absolutely justifies their opposition, and will he once again take this opportunity to reassure my constituents that under this Government we will never join the euro?
Mr Osborne
I can absolutely give that assurance to my hon. Friend and his constituents in North Devon: we are never going to join the euro. Because of all the conditions that come with membership, we do not think it would be in the economic interests of the United Kingdom. We have consistently held that position. I pay tribute to the person I used to work for and who has now left the House, William Hague, who stood out against the consensus in the late 1990s and helped keep Britain out of the euro.
Nick Smith (Blaenau Gwent) (Lab)
The Chancellor has said that UK citizens with deposits in Greek banks are not covered by our UK compensation scheme. How many UK citizens are affected by that and how does he plan to help them?
Mr Osborne
As I said in my statement, there are four branches of Greek banks in the UK. They have total deposits of about £200 million, which is, of course, a significant sum of money, but it is not that large compared with many other banking deposits, and the number of account holders is relatively low. I have made it very clear today that those account holders are not covered by the UK deposit protection scheme. I should also say that most of those individuals are not British citizens.
Damian Green (Ashford) (Con)
My right hon. Friend rightly points out that Britain’s increasing economic stability is necessary, not least to withstand economic shocks from elsewhere, such as that under discussion. Does he think that any further measures are necessary to protect British financial institutions that may be holding Greek debt, which will clearly be of decreasing value?
Mr Osborne
UK banking exposure to Greece is dramatically less than it was in 2012, when there were very real concerns about a Greek exit from the euro. That is also the case with regard to the exposure of French and German banks to Greece, which, of course, has a knock-on effect on the UK. As I have said, less than 1% of the core tier 1 capital of the UK banks is in Greek debt, and I think they are well prepared for whatever eventualities unfold.
Derek Twigg (Halton) (Lab)
We all hope for a resolution in Greece, but clearly it cannot be right to force more cuts and austerity on the Greek people and increase the pain they have already suffered. The Chancellor said in his statement that
“we hope for the best, but we prepare for the worst.”
Could he tell us what “the worst” is for the UK?
Mr Osborne
Clearly, we are a large economy that is probably the most interconnected and open of the major economies of the world. We have a very large financial sector, so we are exposed to financial turbulence wherever it occurs in the world, which is all the more reason why we need a proper system of regulation and we have now put the Bank of England in charge of regulation. We also need properly capitalised banks—under that new system of regulation, our banks have been recapitalised—and we need to make sure that we are not carrying a very large budget deficit. We have halved the budget deficit and we will take further steps next week to reduce and eliminate that budget deficit. We are prepared for whatever the world throws at us.
Mr Peter Bone (Wellingborough) (Con)
Does the Chancellor agree that, on occasion, we have to tell friends things that they do not want to hear? In that regard, would it not be better to tell our friends in the eurozone that, certainly in the medium and long term, a Greece exit from the euro and the return of its national currency, which it could then devalue, would be the right thing to do?
Mr Osborne
Of course, there are occasions when we have to tell our friends things they do not want to hear, but it is also a good rule in life to pick our moment and I am not sure that this is the right moment.
Mr Speaker
Order. I am keen to accommodate the remaining interest, but only on the assumption that we can wrap this up by 6.30, so I appeal for extreme brevity, to be exemplified by the hon. Member for Denton and Reddish (Andrew Gwynne).
Andrew Gwynne (Denton and Reddish) (Lab)
The Chancellor said in his statement that eurozone authorities
“stand ready to do whatever is necessary to ensure the financial stability of the euro area”.
That may well be tested to the full in the coming weeks. Given that the lesson of the exchange rate mechanism is that pressure will undoubtedly be mounting on other European currencies and economies, what contingencies does he have in place to make sure there is no domino effect?
Mr Osborne
As I say, the primary responsibility lies with the eurozone and the European Central Bank, and they have put in place better mechanisms than they had three or four years ago. The European Central Bank has its outright monetary transactions mechanism, we have the European stability mechanism—in other words, bail-out funds—and the European Central Bank is also taking a supervisory role, so they are better prepared. However, I was very clear in my statement that however well prepared they are, a Greek exit from the euro would be a substantial financial shock, which would have an impact on the European financial system and on us. That is why we have taken steps to make sure our banking system is better prepared than it was seven or eight years ago.
Chris Heaton-Harris (Daventry) (Con)
There are no provisions in European treaties for a country to leave the euro, let alone to leave the euro and stay within the EU, so should Greece leave the eurozone, will not European treaties need swift and significant amendment?
Mr Osborne
As is often the case, my hon. Friend has gone to one of the interesting points in this whole issue. The best thing to do at the moment is to see how things unfold in the next few weeks, but it is fair to say that there is not an easy and clear mechanism for Greece to leave the euro.
Mike Kane (Wythenshawe and Sale East) (Lab)
In the tone of the questions asked by the right hon. and learned Member for Rushcliffe (Mr Clarke) and my hon. Friend the Member for Hackney North and Stoke Newington (Ms Abbott), Greece is, in its own right, a strong bilateral partner to the UK, independently of the eurozone or the EU. I would like to hear more detail of the counsel we have given Greece. More importantly, should not the message be that we stand in solidarity with the Greek people in their time of trouble, whether or not their Government accept that counsel?
Mr Osborne
The hon. Gentleman is right to say that Britain has been a long-standing friend of Greece and the Greek people. There is huge affection in Britain for the country and its people, as evidenced by the fact that so many people choose to spend their holidays there. There is such solidarity and friendship with Greece, but Greece has to make its own decisions.
On our contacts with the Government—I was asked about them earlier—I have of course spoken over the past few months with the Greek Finance Minister and our Prime Minister spoke to the Greek Prime Minister just a week or two ago.
David Mowat (Warrington South) (Con)
One aspect of all this is the amount of money that the IMF might be about to lose. That money was subscribed by some of the poorest countries in the world, including countries poorer than Greece. Does the Chancellor agree that it would be quite wrong for places such as India to take a hit for any of this? Has he had any discussions to that effect with the IMF?
Mr Osborne
As I said earlier, the IMF has preferred creditor status and it has precautionary balances—in other words, it can withstand losses—and no one has ever lost money by providing support to the IMF, so we should bear that in mind as we have these discussions.
James Morris (Halesowen and Rowley Regis) (Con)
Notwithstanding the steps the Chancellor has taken to contain the immediate crisis, does he agree that the broader lesson for Europe is that unless countries are determined to reform their welfare system, tackle public sector pensions and improve competitiveness, we may see other such crises in southern Europe?
Mr Osborne
Over the past five years, we in this country have of course taken steps to reform our welfare system to make sure it is affordable and to reform our public sector pensions so that we can go on providing assistance to our population and help the most vulnerable in our population. The broader point is that the people who suffer when an economy fails and a Government spend more money than they have are the poorest people in the country, not the richest.
Mr Philip Hollobone (Kettering) (Con)
Given their own predicament, how supportive have the Greeks been to the Prime Minister in his efforts to renegotiate Britain’s terms of membership of the EU?
Mr Osborne
To be fair to the Greeks, they have been quite preoccupied, but they have certainly not, to my knowledge, expressed any great opposition.
Mike Wood (Dudley South) (Con)
Would it not be devastating to the credibility of the eurozone if European institutions were seen to favour political considerations in relation to keeping Greece within the single currency ahead of basic economics?
Mr Osborne
I have always felt that good politics flows from good economics. Ultimately, what we all want to see are more jobs and investment in Greece and an economic policy that allows that to happen.
Chris Philp (Croydon South) (Con)
The Chancellor has already assured the House that, thanks to the Government’s actions, UK banks are strong enough to withstand any Greek crisis. Are any European financial institutions of concern to the Chancellor, and do UK pension funds and insurance companies have any alarming exposures?
Mr Osborne
Across the British financial system, there has been a very marked reduction in our exposure to the Greek economy and banking system over the past couple of years, so we are much less exposed to the direct consequences of financial problems in Greece than we would have been a few years ago. More broadly, that is also the case across the European economy. The biggest risk that we faced a few years ago was our exposure to economies and banking systems in other eurozone countries that had relationships with Greek banks, but they too have reduced their exposures.
Luke Hall (Thornbury and Yate) (Con)
We all urge the people of Greece to reach a resolution to the current situation. Does the situation not perfectly demonstrate why Britain needs a credible economic plan that keeps our economy secure when there is uncertainty abroad, as well as when there is stability?
Mr Osborne
My hon. Friend is absolutely right. The situation illustrates why you need a credible economic plan, why you need to make sure that your country is protected from shocks happening around the world and, in short, why you should fix the roof when the sun is shining.
Kevin Foster (Torbay) (Con)
The situation in Greece demonstrates that one cannot mix a single currency with numerous and in some cases reckless fiscal policies. We discussed that point during the Scottish referendum last year. Will my right hon. Friend reassure my constituents that the necessary steps are being taken to protect UK interests whatever the outcome of the forthcoming referendum?
Mr Osborne
I can assure my hon. Friend that we are taking such steps, and we are working closely with the Governor of the Bank of England. My hon. Friend’s broader observation about credible fiscal policy, whether in the United Kingdom or in the broader European economy, is well made.
Bob Blackman (Harrow East) (Con)
One of the options that the Greek Government appear to be pursuing is that of a Russian bail-out. What assessment has my right hon. Friend made of the impact of such a scheme on banks in London and the eurozone in particular?
Mr Osborne
As I said earlier, I do not think that anyone has been particularly enamoured with Syriza’s foreign policy, but what has been clear over the past few weeks is that it really needs to resolve the issue it faces with the eurozone.
David Morris (Morecambe and Lunesdale) (Con)
As the Government’s self-employment ambassador, I have had texts from a lot of people during this statement. They are worried about late payments by businesses in Greece and, more to the point, draconian steps that may be taken by Her Majesty’s Revenue and Customs. Will the Chancellor reiterate the steps that could help such small enterprises to flourish by being paid more quickly?
Mr Osborne
I very much commend my hon. Friend for the work he does. Let me reiterate that HMRC is ready to operate the time to pay scheme to help both the self-employed and small businesses—and, indeed, larger firms—who have problems because there have some kind of financial transaction with a Greek company and have been caught up in the Greek Government’s capital controls. There is advice on the Department for Business, Innovation and Skills website, and they can get bespoke advice by phoning the helpline.
Nadhim Zahawi (Stratford-on-Avon) (Con)
It is worth placing on the record my constituents’ gratitude to the Chancellor for taking us out of the eurozone bail-out mechanism. London serves as a centre for the Greek shipping industry. What assessment has the Chancellor made of the impact on that industry of the crisis in Greece?
Mr Osborne
Frankly, a lot of that industry is pretty international these days, and I suspect quite a lot of those involved in it have foreign bank accounts as well as Greek bank accounts. It is a very important industry, and it is one of the industries that can help the Greek economy if that economy is competitive. One of the big issues in Greece has of course been the competitiveness of the Greek ports in particular.
More broadly, I thank my hon. Friend for his support of the action we took during the last Parliament. More properly, I should credit the Prime Minister, who secured exit from the eurozone bail-outs at an important European summit.
Alan Mak (Havant) (Con)
Our economic and financial security and the protection of household budgets are of paramount importance to my constituents. Can the Chancellor reassure the House and my constituents that every step is being taken to urge a resolution abroad, and to protect taxpayers and savers here at home?
Mr Osborne
I can reassure my hon. Friend that we are taking steps not just to protect the UK from whatever the Greek crisis throws at us but, more broadly, to ensure our economic stability here at home. That will be an important part of the Budget that I will present to the House next week.
Points of Order
Mr Speaker
Ah, points of order. A joyous experience for all concerned. We will take Mr Salmond first.
Alex Salmond (Gordon) (SNP)
On a point of order, Mr Speaker. Earlier this afternoon, the Prime Minister was quite revealing—perhaps unintentionally—about his strategy in European negotiations, but a number of Members, not just myself, felt inhibited from asking him about Europe when we had colleagues across the Chamber asking about their constituents who were dead or missing in Tunisia. Under those circumstances, can you facilitate an early specific and perhaps more appropriate opportunity to question the Prime Minister precisely on European negotiations?
Mr Speaker
The record shows that the Prime Minister has regularly come to the House to update it on his policies in respect of the European Union. It is not for me specifically to facilitate such an occasion. However, I say two things to the right hon. Gentleman. First, the Prime Minister is here weekly at Prime Minister’s questions, and that might be a suitable opportunity for people from a range of parties to question him on that matter if they so wish. Secondly, if the right hon. Gentleman is keen to have a debate on foreign affairs or a debate specifically on Britain’s relations with the European Union and feels that he could grace us with his presence on the occasion of business questions, I promise that my eyesight will not fail me. I will see the right hon. Gentleman and feel my usual insatiable desire to hear him.
Mr Speaker
I saw the hon. Lady first. I am saving the hon. Gentleman up. It would be a pity a waste him at too early a stage of our proceedings.
Angela Rayner
On a point of order, Mr Speaker. As many Members know, I am new to this place, and I hope you can give me your wisdom and experience. This place is a little bit like Hogwarts to me: it has a lot of trapdoors, corridors and conventions. I believe that one of the conventions of the House is that, if a Minister or any other Member visits our constituency, they should at least inform us that they are coming. The Secretary of State for Health, who has been in this House a lot longer than I have, visited my constituency on Friday. I did not find out about it other than through the organisation that he visited. I just wonder whether you can give me some guidance on that, Mr Speaker.
Mr Speaker
I am very grateful to the hon. Lady for her point of order and the courteous terms with which she phrased it. Yes, the short answer is that there is a long-standing convention that Members notify each other in advance of what might be called public visits to each others’ constituencies. That is certainly, therefore, an obligation incumbent upon Ministers, a fact reflected in the content of the “Ministerial Code”. The hon. Lady has, at a very early stage in her career, discovered an important way to register her grievance with Government Front Benchers. She has done it through her point of order, the contents of which I feel sure will be winging its way to relevant Ministers almost before I have sat down.
Kit Malthouse
On a point of order, Mr Speaker. I, too, am new to this House and it struck me, at my desk this morning, that I may have erred. Earlier this month, I participated in an Opposition debate on housing. I did not, and should have, drawn the attention of the House to the fact that I have a modest investment in a specialist housing provider in the north of England. I apologise to you and to the House for this oversight, and I am grateful to you for the chance to correct it.
Mr Speaker
The hon. Gentleman has corrected the record. Each Member is responsible for what he or she says by way of declaration, but in general terms—I thank the hon. Gentleman for putting the record straight and for his courtesy—it is probably better, particularly in the climate of our times, to err on the side of over-declaration rather than under-declaration. I thank him for what he has said, and the House will do so.
Mr Gregory Campbell (East Londonderry) (DUP)
On a point of order, Mr Speaker. Last Wednesday, during Prime Minister’s questions, a number of incidents, which I understand are the subject of police investigation, occurred in Central Lobby. It was drawn to my attention shortly after those incidents that in attendance of some of those events was an abstentionist Member of this House, the hon. Member for Mid Ulster (Francie Molloy). He obtains significant sums for not attending this House, but he was present in Central Lobby and has given interviews subsequent to the incidents. I seek your advice on whether that Member will be subjected to any input by the police in the course of their investigations.
Mr Speaker
I react with caution to the point of order from the hon. Gentleman, to whom I am grateful for giving me advance notice of his intention to raise it. Certainly, Sinn Féin Members—it is to such a Member, clearly, that he is referring—have access to Central Lobby, just as any member of the public visiting the House enjoys such access. It is, of course, incumbent on all Members—those who have sworn in and those who have not—to ensure that the visitors they accompany behave appropriately and respect the rules on access. It is also, of course—this should go without saying—incumbent on Members themselves to demonstrate such respect. I cannot go beyond that relatively general statement, as I not familiar with the detail that the hon. Gentleman might have in mind, but I hope that that is a useful rubric.
If there are no further points of order and the House’s appetite has now been satisfied, we can now move on to the presentation of Bills.
Bills Presented
Mr Speaker
The hon. Member for Wellingborough (Mr Bone) is destined to be a very busy bee.
Railways
Presentation and First Reading (Standing Order No. 57)
Caroline Lucas, supported by Jeremy Corbyn, Ian Lavery, Kelvin Hopkins, John McDonnell and Hywel Williams, presented a Bill to require the Secretary of State to assume control of passenger rail franchises when they come up for renewal; and for connected purposes.
Bill read the First time; to be read a Second time on Friday 22 January, and to be printed (Bill 35).
Public Services (Ownership and User Involvement)
Presentation and First Reading (Standing Order No. 57)
Caroline Lucas, supported by Ms Margaret Ritchie, Jeremy Corbyn, John McDonnell and Louise Haigh, presented a Bill to promote public ownership of public services; to introduce a presumption in favour of service provision by public sector and not-for-profit entities; and to put in place mechanisms to increase the accountability, transparency and public control of public services, including those operated by private companies.
Bill read the First time; to be read a Second time on Friday 22 January, and to be printed (Bill 36).
Scotland Bill
(8 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
21:59 - The Committee divided: - Ayes: 192 / Noes: 376 - Question accordingly negatived.
22:14 - The Committee divided: - Ayes: 194 / Noes: 376 - Question accordingly negatived.
22:28 - having divided: - Ayes: 58 / Noes: 504 - Question accordingly negatived.
22:47 - The House divided: - Ayes: 0 / Noes: 0 - Question accordingly negatived.
Sir Edward Leigh (Gainsborough) (Con)
I beg to move amendment 124, page 14, line 14 , at end insert—
‘( ) The Scottish Parliament may determine the level of each threshold of income at which a Scottish taxpayer becomes liable for income tax at any of the rates set by the Scottish Parliament;”
This amendment allows the Scottish Parliament to decide at what threshold of income Scottish taxpayers should have to pay the basic rate or any of the other income tax rates to be set by the Scottish Parliament.
The Temporary Chair (Sir David Amess)
With this it will be convenient to discuss the following:
Clauses 12 to 14 stand part.
New clause 32—Treasury Review of the implementation of Scottish rates of income tax—
‘(1) The Treasury shall, no later than one year after the date on which this Act is passed, publish and lay before the House of Commons a review of the implementation of the Scottish basic rate and any other income tax rates for the purposes of section 11A of the Income Tax Act 2007.
(2) The Treasury review must include—
(a) a review of the revised fiscal framework;
(b) the tax year to which sections 12 and 13 of this Act will apply, and the day on which they are due to come into force;
(c) the number of staff assigned by the Scottish Government, Revenues Scotland and Her Majesty’s Revenue and Customs, to the project implementing the Scottish basic rate, and any other rates;
(d) a report on the identification of Scottish taxpayers who will be liable to pay the Scottish basic rate, and other rates;
(e) the rates and bands at which the Scottish basic rate, and any other rates, have been set by the Scottish Parliament; and
(f) a projection of the impact of the Scottish basic rate, and any other rates, on income tax revenues generated in Scotland and across the UK.’
This New Clause would provide for a review of the progress in implementing the new Scottish rate of income tax. This will include a review of the revised fiscal framework, a task that will hereafter be undertaken by the Scottish Office for Budget Responsibility.
New clause 54—Taxes on income—
‘In Section A1 in Part 2 of Schedule 5 (fiscal, economic and monetary policy) to the 1998 Act, in the Exceptions, after the entry for local taxes insert “Taxes on income.”’
This new clause is intended to devolve income tax completely to Scotland.
Sir Edward Leigh
My simple amendment would allow the Scottish Parliament to set tax thresholds, as any good Parliament should be able to do, and is a genuine attempt to elicit from a Minister the reasons why the Scottish Parliament is not currently allowed to set the personal allowance. I am a lawyer, but I do not claim to be a tax expert or an economist. [Interruption.] Well, it’s just the truth. I am not an expert tax lawyer or economist. This is a probing amendment to help us investigate a complex issue, to which we can always return on Report.
The House of Commons Library has illustrated the complexity of the issue:
“The Bill as it stands would allow the Scottish Parliament to set the bands of income at which different Scottish rates of tax would apply. Clause 12(3) states that where there is to be more than one Scottish rate, the resolution which sets these rates ‘must also set limits or make other provision to enable it to be ascertained…which rates apply in relation to a Scottish taxpayer.’”
That is not immediately terribly clear, but it continues:
“So, if the Scottish Parliament wished to, it could set a zero rate of tax over a specific band of income, in effect increasing the personal tax allowance to all Scottish taxpayers.”
Importantly, in its briefing on the Smith commission, the Institute for Fiscal Studies asked why the power to set the allowance was to be reserved. That is the question I am asking. The IFS, a reputable body, has asked it, and I am simply using the amendment to ask it again. I think most people would agree that setting tax and then spending the money raised is a prerequisite of a responsible Parliament.
It is not necessary to go over all the arguments I used on Second Reading or in Committee two weeks ago—they are on record—but suffice it to say that power breeds responsibility. The Scottish Parliament must take responsibility for its own destiny in the firm conviction that it is ready and able to do so. So why are we devolving bands and rates, but not thresholds? Is not setting the threshold at which people start to pay tax—the personal allowance—vital to the decision-making process? Setting a band or rate but not a threshold is like being willing and able to leap the bar in high jump without having any control over where the height is calculated from. It does not make any sense. What we are giving the Scottish Parliament is only half a power. Are not thresholds much the most interesting part of the equation? We spent a lot of time last Parliament debating that point in relation to the UK economy.
George Kerevan (East Lothian) (SNP)
Surely if the Westminster Parliament keeps the right to set the initial threshold, it can also vary it, thus taking away from the Scottish Parliament the ability to plan its entire budget, because the threshold could change overnight.
Sir Edward Leigh
That is a good point, and I agree entirely. It does not make sense. One Parliament might be trying to manage its own affairs by setting bands responsibly, but another Parliament could cut the ground from beneath its feet by changing the threshold. I do not know why the power has been reserved, but no doubt the Minister will tell us.
Nigel Mills (Amber Valley) (Con)
Does it not go even further? Without the Scottish Parliament having control over the rules and the tax base, the UK Parliament could create a load of new reliefs that would cost it a fortune. If we are going to devolve income tax, we ought to devolve the whole thing, not just part of it.
Sir Edward Leigh
As I explained, my personal view is that we should devolve the whole thing. It makes logical sense. As I said, setting the thresholds is often much the most interesting part of tax policy in modern Parliaments. When our friends the Liberals were in power with us—we remember those happy times—was not their proudest boast that they, as members of the Government, had lifted hundreds of thousands of people out of tax altogether?
There is an interesting argument here. For the record, I am dubious about lifting the threshold. It is expensive, and surely more, not fewer, people should have a stake in the income tax system. But that is my personal view, and I accept that there are countervailing arguments. For instance, lifting the threshold reduces the pressure on tax credits. I recognise that it is an interesting political debate.
Setting rates and bands without being able to set thresholds makes no sense. Of course, raising thresholds and personal allowances is dramatic and expensive, which is presumably why the Scottish Parliament is being denied the power, but leaving aside the need for and desirability of full control, does not full fiscal autonomy lead to full fiscal responsibility? The more autonomy a Parliament is given, the more responsible it becomes. Countries such as Belgium and Spain—not without their own separatist problems—provide exceptionally broad autonomy to their constituent parts.
That is certainly the case in the United States, where the states have full fiscal autonomy, including the power to issue bonds and the like—the whole lot, as far as I know. This country is definitely not the United States, despite the best efforts of Mr Blair, but if there is one aspect of America we should like to emulate, it is its vigorous civic culture. Its states, counties and towns have real power and the capability to respond to people’s needs and democratic desires. Surely we all want Scotland to have that capacity, just as we want the whole UK to have it. The fact that fiddling with thresholds is so expensive makes Governments and Parliaments niggardly about raising them—each £100 is inordinately expensive—but why should the Scottish Parliament be less responsible than the UK Parliament? Can anybody tell me why a responsible Scottish Parliament should not also be niggardly about that power and use it in a very conservative—small c—way?
Of course, full fiscal autonomy requires a set of support mechanisms through a formula-based grant. That should be based on need, not obscure variations on English spending, which is why I am opposed to the Barnett formula and want to replace it with one based on need—but that is a debate for another time. If the UK Parliament issued a sensible grant formula based on the specific needs of the Scottish Parliament, and if that were followed by full freedom for the latter to set personal allowances, bands and rates, I believe the Scottish Parliament would use that power responsibly and carefully. I contend that the more power we give the Scottish Parliament, the less it will be a grievance Parliament and the more the forces of canny, prudent Scottish financial conservatism will be unleashed. Indeed, the best way to encourage the growth of the Conservative party in Scotland is to give the Scottish Parliament more power. At the moment, all the pressure on it is to spend more money and blame the UK Government when we indulge in any austerity programme.
In the current situation, it is perfectly logical for the voters to choose whichever party complains the most and makes the biggest fuss. I do not blame the Scottish people for doing that. The current system leads to that sort of mindset, whereas the UK system leads to an alternative mindset—we want politicians in power who are careful about how they vary thresholds and bands. It is because Treasury Ministers have that power that people are careful about whom they elect, and Conservatives do not do too badly in that UK set-up.
With full home rule and full fiscal autonomy, the voter would be in charge and would choose representatives who would raise and spend money wisely rather than just go cap in hand to Westminster. That is surely what we want to achieve, so what is the objection? If it is said that the Barnett formula makes such natural freedom unobtainable, the solution is not the denial of power or freedom but the end of the formula. If the argument is that the Scottish tax system could undermine full UK fiscal responsibility, I find it unconvincing. For instance, the Scottish Parliament spends £37 billion and raises £30 billion—quite responsible, actually. The UK spends £732 billion and raises £648 billion. [Interruption.] I thought Scottish National party Members would respond in that way, but I could not resist helping them along.
The serious point that I am making is that the Scottish budget is very small compared with the UK budget. If we gave the Scottish Parliament full fiscal responsibility, it is extremely unlikely that it would upset our fiscal responsibility. The Secretary of State may, of course, be able to deal with that point. He has many more expert advisers than I do, and I will listen to the arguments that are made today and wait for his response. Perhaps he will indulge me, if not with a yes to my arguments then at least with a willingness to listen and, in time, to move. If he is not interested, we could return to the matter on Report.
I make my comments in the spirit of trying to be creative and helpful. We can return to these matters, but I hope that the Secretary of State will not just provide a throwaway line from the civil service brief but will try to respond to the arguments that are made. We are trying to create a responsible Parliament; let us give it full fiscal autonomy.
Stewart Hosie (Dundee East) (SNP)
It is a pleasure to serve under your chairmanship in this Committee, Sir David, and to speak to our new clause 54. I enjoyed much of what the hon. Member for Gainsborough (Sir Edward Leigh) had to say, apart from his description of the “separatist problem”, which we tend to call “national aspiration”—I think I know what he meant. I am conscious of the time, so I shall try to cover the debate as briefly as I can.
Paragraphs 75 to 79 of the Smith agreement covered issues of income tax, and stated that income tax would remain a shared tax and that both the UK and the Scottish Parliaments would share control of it. The agreement said essentially that MPs representing constituencies across the whole of the UK would continue to decide the UK’s budget, including income tax. That certainly makes sense with the very partial devolution suggested by the Bill.
Within that framework, the Scottish Parliament will have the power to set the rates of income tax and the thresholds at which they are paid for non-savings and non-dividend income only. As part of that, there will be no restrictions on the thresholds or rates that the Scottish Parliament can set. All other aspects of income tax will remain reserved, as the hon. Member for Gainsborough said, so that even such things as the definition of income could be changed by a UK Government, making subsequent and consequential serious change to the yield forecast by the Scottish Government. That is one reason why, with the partial devolution, we should all continue to vote on that component of income tax in the Westminster Parliament—and it is an even stronger reason, of course, for the devolution of all income tax.
The Scottish Parliament Information Centre analysis for the Scottish Parliament Devolution (Further Powers) Committee—for the rest of the evening, termed “the devolution committee”—found in its interim report on the draft Scotland Bill that draft clauses 10 to 12, now clauses 12 to 14,
“broadly seek to give effect to the extension of income tax powers recommended by the Smith Commission. These would give the Scottish Parliament the power to set rates and bands in relation to non-savings and non-dividend income…above the UK personal allowance.”
Clause 14 also deals with the interaction between income tax and capital gains tax. Currently, individuals who pay income tax at the higher rate also pay CGT at the higher rate. The clause sets out that the rate of CGT that applies to Scottish income tax payers will continue to be calculated using the UK income tax rate limits. That would create an imbalance should there be a change or proposed change for Scotland and people choose to do something in a different way.
There were, however, no draft clauses in relation to the corresponding adjustment in the block grant or the Scottish Government’s reimbursing the UK Government for costs arising from implementation or administration of the powers. Can the Secretary of State confirm that these recommendations do not require legislation?
The Scottish Parliament’s devolution committee interim report said in its conclusion about income tax powers that
“the essence of the Smith Commission’s recommendations has been translated appropriately by the previous UK Government into the draft legislative clauses”,
and that it had “no particular concerns” with “the drafting”. However, it highlighted the
“significant issues still to be resolved regarding the implementation of the new powers, such as an appropriate definition of residency…the details of the administration of the new regime (who collects the tax and how it will function…the need to avoid double taxation and the timing and phasing of the new powers on income tax relative to those already devolved under the Scotland Act 2012”.
Those are all matters that I am sure the Scottish Secretary will address. At paragraph 166, the devolution committee also recommended that
“details on the implementation of the new powers over income tax be produced before the Scottish Parliament is expected to give its legislative consent”.
That is extremely important. It concluded, too, that
“any final detail of the fiscal framework and the other matters we have considered is provided to the Scottish Parliament before the question of legislative consent to any new bill is considered”.
That is a view endorsed by the Scottish Government, and I understand that discussions on these issues are ongoing with the UK Government, in parallel with the passage of the legislation.
It is normal practice for the Scottish Parliament to consider legislative consent before the final stage of a Bill in the Commons; with the Report stage likely in the autumn, usual practice would suggest September. However, the devolution committee suggested 2016 as a more likely date, so when does the Secretary of State believe the Bill will reach Report?
Because of the lack of information on the various technical aspects of the delivery of the tax powers, beyond the wording of the Bill, the committee said:
“As yet, we are not able to conclude that we are content with the fiscal framework and no detriment arrangements as these details are currently being discussed between the two governments.”
Will the Secretary of State confirm that discussions are under way and update us on progress, particularly in respect of the no detriment and no advantage clauses—principles agreed by Smith before the committee reported?
The devolution committee also said:
“both the process of these negotiations and the outcome requires proper parliamentary scrutiny. We recommend both Governments reach an urgent agreement on just how this will be achieved and for the Scottish Government to report to the Committee on what arrangements it proposes to put in place for parliamentary oversight.”
Will the Secretary of State describe what actions his Government are taking in respect of parliamentary oversight, particularly if we do not—as may well be the case—get through the debate on all the clauses and groups of amendments tabled for debate today?
In their response to the devolution committee’s interim report, the Scottish Government made it clear that they were
“broadly content with the clauses in the Scotland Bill relating to taxation”.
It added, however:
“as the Committee recognised, there will need to be extensive discussions between the Scottish and UK Governments over the plans for implementing these provisions.”
I note at this point that there were changes between the draft clauses and the Scotland Bill. In paragraph 165 of the interim report, the devolution committee highlighted one area that required specific clarification, so I ask the Secretary of State to confirm—I am sure he will—whether clause 12(5) of the published Bill now contains a change to specify that a zero rate of income tax is possible?
It is also worth saying a little about the nature of the taxation powers, which has been touched on. They are very limited. Even if we include the VAT assignation, the Scottish Parliament would raise the equivalent of around 50% of devolved expenditure. However, excluding the VAT assignation, the figure falls to barely a third. That is important because many of the submissions to the devolution committee called for more. In its written evidence, the Scottish Trades Union Congress called in its recommendation 2.1 for the
“devolution and assignment of taxation amounting to…two thirds of Scottish public spending (over 50% of all spending in Scotland)”.
The Bill clearly does not reach that standard.
Sir Edward Leigh
That is a very important point. We always moan about tax avoidance. I have been talking to people in Scotland, and it appears now that wealthy people will be putting more and more money into dividends precisely to avoid tax. I cannot understand the logic of encouraging people to avoid paying tax by putting their money in dividends.
Stewart Hosie
I agree entirely. None of us should be encouraging tax avoidance or evasion—not least a Tory Government, which is why I am sure the Secretary of State will want to support the full devolution of tax on earned and unearned income. It is a jolly good idea.
However, whether the devolution of income tax is extended or not, issues of implementation must be fully resolved. I ask the Secretary of State to confirm that, as part of the fiscal framework discussions, the following issues are now being fully addressed: the timing of the implementation of the Smith provisions; the length of the transition period and how it relates to the transition period for the Scottish rate of income tax; how the costs of implementation will be met; whether there will be an agreement to revisit the memorandum of understanding between the Scottish Government and HMRC for the Scottish rate of income tax, to ensure that it remains fit for purpose; the enforcement and compliance regime under the Smith income tax proposals; how gift aid and pensions relief will be treated under Smith; how the block grant adjustment will work, although that is much broader than simply income tax; the forecasting of revenues, the interaction between the Office for Budget Responsibility and the Scottish Fiscal Commission and the detail of how we calculate the transfer of revenue; and the continued role of the National Audit Office in working in partnership with Audit Scotland.
The key issue is the forecasting that will drive the revenues that the Scottish Government will get and the block grant adjustment. There has to be a fair balance between the role and input of the OBR and the Scottish Fiscal Commission, particularly given that the OBR uses Treasury numbers to drive its calculations.
As I said at the outset, I am conscious of time; we have many groups of amendments to get through and others will want to speak. I hope that the Secretary of State can answer those important detailed questions on the proposed devolution. I commend amendment 54 to the Committee.
Ian Murray (Edinburgh South) (Lab)
I was not able to make it to the House earlier, Sir David; I would like to express my sympathies to everyone involved in the tragic events in Tunisia. Our thoughts are with the families all across the United Kingdom, but especially the people in Scotland who have been caught up.
I want to speak to new clause 32. Part 2 of the Bill devolves significant new powers to Scotland over income tax and other taxes, and it is a real opportunity to provide the powerhouse Parliament promised by the Smith agreement. Clauses 12, 13 and 14 make provision for transfer to the Scottish Parliament of the power to set rates and bands of income tax, including, as the hon. Member for Gainsborough (Sir Edward Leigh) was pushing for, the ability to set a zero rate. The full impact of that and other tax measures should not be downplayed.
Lord Smith himself outlined that the measures proposed in the agreement would create one of the most powerful devolved Parliaments in the world. When taking taxation and spending clauses together, Scotland would be only slightly behind the Canadian provinces and Swiss cantons. Likewise, according to the OECD, in exercising power over setting both the rates and bases of income tax, Scotland would rank above sub-central legislatures in Sweden, Norway, Finland, the US and even Germany.
The economic evidence suggests that fiscal devolution can work. It is our responsibility, and that of the Scottish Government, to make sure that it does—that is the genesis of our new clause 32. However, these are hugely complicated processes; anyone who has tried to read the fiscal framework analysis in the Smith agreement will know that. I note that the Scottish National party and its new friend, the hon. Member for Gainsborough, have tabled new clauses that would seek to devolve income tax in its entirety.
I should say at the start that those are perfectly legitimate arguments that have been debated at great length at both the Calman and Smith commissions. Labour disagrees, because we believe fundamentally in the pooling and sharing of resources across the United Kingdom; that is not a criticism of the SNP position, but merely a disagreement on a fundamental broad principle. We have rightly and repeatedly criticised the Smith agreement and the Bill on a number of occasions, particularly on Second Reading and in last Monday’s debate, but I agree with the hon. Member for Dundee East (Stewart Hosie): in this instance at least, the Bill and the Smith agreement have got it right. That is probably why there are so few substantive amendments to the income tax clauses. The Chartered Institute of Taxation has echoed that by saying that the commission has made a
“pragmatic set of proposals which shows a lot of thought has been given to balancing the desire of Scots for greater tax powers against the practical obstacles to devolution”.
It is worth reflecting on the Scottish Parliament’s current position on income tax. Since 1999, Scotland has been able to vary the rate of income tax by 3p in the pound. Despite the current clamour for more powers, that power has never been used—incidentally, I believe that it has now lapsed, which shows the problems with the fiscal framework. Notwithstanding that, under the Scotland Act 2012, and as a result of the Calman commission, the Scottish Parliament has been afforded control over the first 10p of the basic rate of tax. Obviously, the Smith agreement and the Bill go much further.
The Scottish Parliament will have total control over income tax rates and thresholds and complete freedom over the levels at which those rates and thresholds are set. That is significant as the estimated devolved income tax liabilities on income tax in 2013-14 amounted to almost £11 billion. That is a considerable sum, the collection and deployment of which confers a substantial degree of responsibility on the Scottish Parliament. If they wish, the Scottish Government—of any colour—can increase or decrease that liability.
Sir Edward Leigh
I entirely accept where the hon. Gentleman is coming from in saying that he wants responsibility to be shared throughout the United Kingdom. However, can he explain why we should share responsibility over thresholds but not, apparently, over bands or rates? I cannot see the logic of that.
Ian Murray
The Scottish Parliament will have a significant ability to adjust the zero rate in particular. I hope that the Secretary of State responds to that point, because the House of Commons Library was quite clear on it. However, there has to be some pooling and sharing. Income tax is the biggest tax that everyone pays. Everyone who works pays a proportion of their income in income tax, above the basic allowance. It is important that everyone has a stake in that game. We could get to a situation in which people who did not have a stake in that game asked what the United Kingdom was for. I fundamentally believe in pooling and sharing, and the Smith agreement struck a reasonable balance.
We need a full analysis of how all the proposals will work. That is why we tabled new clause 32. Some adjustment of the powers might be needed in the future. We do not yet know what effect the implementation of the Scotland Act 2012 will have, because it does not come into force until 2016. The question that the hon. Member for Gainsborough raises relates to what we are trying to achieve with new clause 32, because the report would examine the consequences of this transfer of powers.
Andrew Gwynne (Denton and Reddish) (Lab)
Is not one of the unintended consequences of the devolution of income tax to the Scottish Parliament that it will affect UK-wide facilities such as gift aid, which reimburses charities on the basis of the basic rate of income tax that is set at a UK level? If there were two different basic rates, might that not cause complexity for donors in tracking what they pay to HMRC and to Revenue Scotland? Does my hon. Friend think that that issue should be considered by the review that would be conducted under new clause 32?
Ian Murray
I am delighted by that intervention, because I was going to speak about that issue later. Given the time constraints, I will take that point out of my speech, because my hon. Friend has made it well. The Scottish Council for Voluntary Organisations has raised the relationship between income tax and gift aid. Although that matter is not mentioned in new clause 32, I hope that if there is a reporting mechanism, it will look not only at gift aid, but at pension relief. That is another matter that was not mentioned by the Smith agreement, but which has been raised by many of the organisations that have been in touch with us about the Bill. Gift aid is worth £1 billion a year to charities, so we must ensure that it is considered properly.
Stewart Hosie
The hon. Gentleman spoke about the principle of pooling and sharing, and I have heard that argument before. However, if it were a real principle, it would apply to the aggregates levy, landfill tax, air passenger duty and other small taxes that have been devolved. There is no principled reason why it is required to be applied to income tax. He rather gave the game away when he spoke about the ability to vary the rate by 3p either way, which was the original plan, and the ability to set the first 10p of income tax. Why does he think that so little is enough for a nation like Scotland? Why is he so afraid of giving our national Parliament all the powers it needs to tax income properly?
Ian Murray
What the hon. Gentleman is asking for is full fiscal autonomy. There are many amendments that will allow us to have a full debate about that later this evening, but I fundamentally disagree with that principle because the pooling and sharing of resources is important. The difference between income tax and the aggregates levy, landfill tax and all the other taxes he mentioned is that they are removable taxes, whereas income tax is not. We should be pooling and sharing resources, and we should therefore ensure that the significant sum of £11 billion is part of the overall matrix of the United Kingdom.
As I said at the start of my speech, I do not disagree with everything that the hon. Gentleman said, but we disagree on the fundamental principle of pooling and sharing. His speech was completely reasonable in terms of what he is seeking to achieve, but Labour Members simply disagree with the broad principle of not pooling and sharing. There is no right or wrong on these issues in terms of what should be devolved; the issue is whether one believes in these broad principles or not.
I find it difficult in these debates to have 56 SNP MPs braying at me from behind, when I am actually agreeing with them. I have no idea what they will be like when I disagree with them. I am paying a compliment to the hon. Member for Dundee East, which I do not do often, and he is still unhappy with my contribution. Never mind; given that they have signed most of our amendments to the welfare clauses, perhaps we will be much more collegiate tomorrow.
I was explaining new clause 32. The Scottish Affairs Committee report on the fundamental principles of the Smith agreement, which was published in March, said:
“The Smith Agreement represents the best of both worlds. It presents Scotland with much greater powers over taxation, meaning for the first time the majority of the money the Scottish Government spends will be paid for by its own taxation. This will make it more fiscally accountable to the people of Scotland for how it spends their taxes.”
I am confident that the income tax provisions in the Bill strike the right balance between reserved and devolved taxation, although I agree with the hon. Member for Gainsborough that some movement might be required in the future.
I believe that these clauses are in the spirit and the letter of the Smith agreement and the vow. The vow is quite concise on these issues. It says very little or nothing at all about taxation. One thing that it does say, which goes back to the pooling and sharing of resources, is that the Barnett formula should be maintained. The Bill and the Smith agreement are utterly in accord with that stand.
Mrs Anne Main (St Albans) (Con)
Last week, I supported the SNP on full fiscal autonomy and scrapping the Barnett formula, although I know the hon. Gentleman did not. The SNP Members all trooped through the Lobby to vote for that, so does he share my surprise that they have come back today with amendments that do not include it?
Ian Murray
Nothing ever surprises me, although I was a little surprised last week that the 56 SNP MPs went through the Lobby with the Thatcherite arm of the Conservative party. That was because full fiscal autonomy would deliver something that would be fundamentally damaging to Scotland. The hon. Lady is absolutely correct. [Interruption.] I thank her for waking up all the SNP MPs with her intervention.
The Smith agreement said:
“Income Tax will remain a shared tax and both the UK and Scottish Parliaments will share control of Income Tax. MPs representing constituencies across the whole of the UK will continue to decide the UK’s Budget, including Income Tax…Within this framework, the Scottish Parliament will have the power to set the rates of Income Tax and the thresholds at which these are paid for the non-savings and non-dividend income of Scottish taxpayers”.
That is exactly what the Bill does, and it is important to highlight two aspects of that quotation.
First, maintaining income tax as a UK-wide tax is critical to the continued pooling and sharing of resources. That facilitates UK-wide redistribution on the basis of need, which underlines the welfare state and the state pension system. The Church of Scotland expressed the same view when it argued for
“a degree of solidarity across the United Kingdom, where prosperity is shared and those with broadest shoulders can carry the extra weight of supporting those less fortunate.”
Secondly, the Smith agreement explicitly mentions the continuing right of Scottish MPs to vote on the Budget within the framework that it sets out. That is equally important, particularly given the Government’s proposals on English votes for English laws. Devolving income tax in its entirety, which the hon. Members for Dundee East and for Gainsborough are advocating, would place that right in doubt and create two classes of MP in this place. That risk was the subject of considerable debate in the Smith commission. As long as one believes in the pooling and sharing of resources, which we certainly do, Smith’s recommendation to retain income tax as a shared tax is critical. That is why we reject amendment 124 and new clause 54, which was tabled by the hon. Member for Dundee East.
New clause 32 concentrates on the implementation of the powers being transferred and, as I have said a number of times in this Committee, the use of those powers. What we are trying to achieve chimes with much of what the hon. Member for Dundee East said, when he laid out the concerns about how the proposals would be monitored, how the number of income tax payers would be determined, the “no detriment” policies across the United Kingdom and the complicated nature of the fiscal framework.
The report under new clause 32 would include
“a review of the revised fiscal framework”,
given its complicated nature. It would also include
“the tax year to which sections 12 and 13 of this Act will apply, and the day on which they are due to come into force”
so that businesses are able to plan. It would include details of the number of staff that both Governments would assign to the implementation of the new Scottish rate of income tax to ensure that adequate resources were deployed to make it happen. It would be useful if the Secretary of State responded to the particular concern that the staffing level to determine the Scottish rate of income tax might be deficient.
Tommy Sheppard (Edinburgh East) (SNP)
I am just trying to understand the point that the hon. Gentleman is making. As I understand it, this is an opportunity to discuss whether the Scottish Parliament should have enhanced powers over income tax. His position seems to be that, rather than take that step, we should have a review of the situation. I can understand the logic of having a review of the powers, but why does he think that the review would be better in the hands of the Tory Chancellor, rather than the representatives of the people of Scotland in the Scottish Parliament? Surely the time has come to allow the Scottish people to determine these matters for themselves, rather than a Tory Government who have only one single representative in Scotland.
Ian Murray
I think that the hon. Gentleman is confusing two issues. We fundamentally agree with the clauses relating to the devolution of income tax, but these are hugely complex matters, as is demonstrated by the complicated nature of the devolution of the 10p income tax provision in the Scotland Act 2012. The new clause would not prevent the Bill from proceeding; it would merely allow the Secretary of State to bring to the House a report on the progress of implementation.
There is another difficulty. The hon. Gentleman is absolutely right—the Scottish Parliament could produce a report and submit it—but I cannot, in the House of Commons, command a different Parliament to do something, which is why I am asking the Secretary of State to produce the report.
It is right for these issues to be raised. I hope that the Scottish Parliament will also examine them in great detail, and will present a full report to both Houses. Our aim is to protect Scottish taxpayers rather than to create a political divide. It is disappointing that, although we agree on the broad principles of the devolution of income tax, Members are trying to bring about division between us. We are trying to be a responsible Opposition in calling for a report on the implementation of income tax rates.
New clause 32 calls for
“a report on the identification of Scottish taxpayers”.
The aim is to ensure that individuals are either Scottish or UK taxpayers but not both, to prevent the double taxation that was mentioned by the hon. Member for Dundee East, and to deal with cross-border mid-financial year movements, which is important in the context of where people may live or work.
The review must include the rates and bands at which the Scottish income tax will be set, and a projection of the impact of the tax on revenues generated in Scotland and across the United Kingdom. That is primarily designed to ensure that Scotland does not become worse off over time owing to the relative tax bases and demographic or behavioural changes in the United Kingdom overall. Such a review would allow us to assess the transitional process, and to ensure that the projected rates and bands accorded with the principle of no detriment for both Scotland and the rest of the United Kingdom. That would protect Scottish taxpayers, as well as taxpayers in the rest of the UK.
Critically—the Smith agreement restates this—any updated fiscal framework should secure the Barnett formula, with the Scottish budget bearing the full costs of policy decisions that reduce or increase revenues or expenditure. That is crucial to the fiscal framework.
My hon. Friend the Member for Denton and Reddish (Andrew Gwynne) mentioned gift aid, and I hope that the Minister will be able to respond to what he said.
I think it important for the people of Scotland to know what their Government are doing about these substantial income tax powers, whatever the colour of that Government. Those powers are worth £11 billion, and they are fundamental to the working lives of people in Scotland. As I have said all along, this is about transparency: transparency in regard to whether additional powers should be devolved, and transparency in regard to the use and impact of those that are devolved. That is what our new clauses 1, 21 and 32 seek to foster.
All I ask is that the United Kingdom Government, and, indeed, the Scottish Government, approach the Bill in the same spirit of transparency and openness as us, and agree to new clause 32. We shall be pressing it to a vote later this evening.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
As others have said, the genesis of the clause lies in the report of the Smith commission. I have supported the commission since the day, indeed the hour, when it reported, but we cannot ignore the fact that the process was undertaken at great speed. Necessarily, given that five parties were engaged in the process, it involved a degree of compromise all round. It is for that reason that all of us undertook to ensure that there would be consultation following the publication of the report and, subsequently, the draft clauses.
In a debate in which consensus is not always easy to come by, I am pleased to note that there is consensus on the fact that the clause is a faithful replication of the agreement that was reached under the chairmanship of Lord Smith. However, the consultation that has been conducted since the publication of the draft clauses at the end of January has highlighted, and generated, a substantial number of important matters, some of which are technical and some of which go to the heart of the issue of taxation itself.
I suggest to the Secretary of State that further consideration may be necessary. He has the ability, through the good office that he holds, to bring all the parties together again to consider the representations that have been made during the consultation, and to consider whether, given the complexities and possible areas of conflict that could arise, it is actually worth implementing the tax power in the way that is currently envisaged. If the consultation is to be carried out in good faith—and, for my part, it always has been—there are sufficient matters about which we should be talking. That would still allow us—if it were necessary, and if it were possible to construct a consensus—to return to the issues on Report.
Nigel Mills
I rise as a reluctant supporter of the devolution of income tax to the different countries of the Union. I agree with the hon. Member for Edinburgh South (Ian Murray) that people throughout the United Kingdom should feel that they are paying the most important tax—the tax that puts the largest amount of money into the UK pot—and seeing it redistributed. We are where we are, however, and we are talking about devolving income tax to Scotland.
I fear that we have one foot in each camp, with part of the tax in this Parliament and part of it in the Scottish Parliament, and that we will end up in a real mess. I am not sure how it is possible to make a tax work when a Parliament can set the rate, the bands and the starting point, but not the actual rules. A particular policy issue in Scotland may mean that the Scottish Parliament rightly wants to incentivise certain employment and income activities. That may not be not a priority for the United Kingdom as a whole, perhaps for reasons of scale or owing to a different approach, but there will be no mechanism enabling income tax in Scotland to promote that certain activity. A new tax relief for people working in the offshore oil and gas industry, for instance, might not be a priority for the UK as a whole, but it might be a priority in Scotland.
The record of our income tax code is cluttered with examples of the use of the tax code to promote certain types of behaviour. I am not sure that we can secure the full and effective use of a tax code if our Parliament is not setting the rate and looking after local activities.
The flipside will be that tax avoidance as a result of a loophole may become material for the Scottish Parliament in the case of a certain piece of exploitation, but will not become material to the budget of the whole UK. It may be extremely important in Scotland to get that loophole closed, but in the UK there may be several others that are ahead of it in the queue, because it does not represent a large loss to the Westminster Parliament. An action that ought to be taken on something that has a material impact in one part of the UK will not be taken because of the strange disparity that exists.
If we are going to start devolving taxes, we should step back and have a look at what a federal UK tax system would be like. We should work out which taxes are federal and which are devolved, and then try to bring about some consistency in Wales, Scotland and Northern Ireland so that similar taxes can be devolved in the same way, rather than adopting a piecemeal approach in regard to corporation tax in Northern Ireland, income tax in Scotland, and so forth. I do not think that anyone in the country will know to which Parliament they are paying what tax, and who has complete control of it. That means that we will not get all the advantages that we expect, such as the ownership and the accountability that my hon. Friend the Member for Gainsborough (Sir Edward Leigh) mentioned.
I do not think that we are achieving the sharing and the pooling that the hon. Member for Edinburgh South wanted, the coherent use of income tax that the SNP wants, or the full devolution that would make sense. We appear to have become involved in a strange halfway fudge which we may regret in a few years’ time. I think it would be better to step back and try to get this right from the start, rather than trying to find a way of clearing up the mess.
I accept that there are always good reasons why the line is drawn where it is. We must be very careful about tax avoidance through the use of residency, or pretend residency. If I am working full-time in Scotland, to get the Scottish rate—which may be higher or lower than the rate in the rest of the UK—I shall probably have to go and live in Scotland. I suspect that I cannot achieve that artificially. If I have large dividend flows, I can probably pretend that I am in Edinburgh when I am in London and vice versa in order to obtain the tax advantage. I can see why there is an attraction in having one UK-wide passive income tax, rather than an active tax.
Ian Murray
The hon. Gentleman is raising the issue of what are known in my constituency as “willies”—people who work in London, live in Edinburgh. Those are people who take the trip down to London every Monday and go back on a Thursday evening. According to the House of Commons Library, the UK’s reason for not devolving dividend income is to prevent people from pushing money into dividend income and taking advantage of a differential rate.
Nigel Mills
Yes, as I was saying, I accept there are always reasons for drawing the line where we do, and trying to stop tax avoidance within a territory is a powerful reason. However, that has left us here with a convoluted tax system where we seem to be devolving part of it, and that is not a sensible approach. It would be better to have a federal income tax which everyone in the UK paid at a lower rate than they pay now and which covered all passive income, and then have a devolved income tax like the one in the United States. It has a state income tax that can be credited against the federal one. That may be a better, more sustainable system than the one we have.
Pete Wishart (Perth and North Perthshire) (SNP)
The hon. Gentleman is making a thoughtful speech and he has the ears of those on the SNP Benches. He is right that we have got a halfway house and we have got to get this resolved. That is what the Scottish people thought they were voting for when they voted for us in such numbers. Is there anything the hon. Gentleman can do to persuade his right hon. Friend the Secretary of State to listen to what Scotland has said, and to have the proper solution and ensure we do this right and get what the Scottish people voted for just a few weeks ago?
Nigel Mills
I have tried to convince the Treasury Minister, my hon. Friend the Member for South West Hertfordshire (Mr Gauke), of various tax reforms over the last five years with, I would have to say, somewhat limited success, so I am not sure my words will help. If we are to achieve a lasting settlement of our constitution, having these tax rules in the right place with everyone understanding them and believing them to be fair will be extremely important. I do not think my constituents will understand how Scotland can set a different rate of income tax from what they pay if Scottish MPs are still able to vote on the English rate of income tax because it applies to passive income and dividend income. I suspect we will get into a constitutional nightmare, and I can foresee a situation in which Scotland chooses a lower rate of income tax than we have in England, and the English taxpayer will, rightly or wrongly, see a subsidy going from England to Scotland through the Barnett formula and then SNP MPs coming here and voting for a higher rate of income tax than their constituents are paying. That is the nightmare we would hate to see.
We need to have a clear devolution of taxes and responsibility, not what I fear we have here: a halfway fudge that we will have to try to fix in a few years’ time.
The Secretary of State for Scotland (David Mundell)
May I start by agreeing with the hon. Member for Edinburgh South (Ian Murray) that we should put on record our thoughts for those people who have been caught up in the events in Tunisia, particularly those from Scotland who have perished? Although our debate has been curtailed today, it is right that that matter has been given such due consideration in this House.
I say to the right hon. Member for Orkney and Shetland (Mr Carmichael) that I have considered the various issues raised in the House in the first part of our Committee stage, and I will continue that approach through the further days in Committee.
David Mundell
I would like to make a little progress.
Since the Committee last met, I have had the opportunity to appear before the Devolution (Further Powers) Committee—to give it its full title—and to listen to its views and explain the Government’s stance. I can assure the hon. Member for Dundee East (Stewart Hosie) that that Committee will continue to play a full part in my consideration of the Bill as it progresses through the House, and I have assured the convener of that.
I had a very useful meeting with the Deputy First Minister to look at how we move forward, particularly in relation to the fiscal framework, and I am going to disappoint the hon. Gentleman, but in a good way, because the criticism that was forthcoming from the Committee to both me and the Deputy First Minister was that we both said the same thing to the Committee, which was that we are not going to give a running commentary on the negotiation of the fiscal framework. What I can say is that the list of issues that the hon. Gentleman referred to in his contribution will be part of the discussion of the fiscal framework. We will of course keep this House updated from a UK Government perspective, but it will be for the Scottish Government to keep the Scottish Parliament updated.
I am pleased to start with the clauses on income tax in today’s debate. These are often overlooked, meriting only a few lines in the comments received on the Bill from both Parliaments and from the Scottish Government, but that is because, as has been said, they command widespread support as delivering the central aspect of the Smith agreement in full.
The changes made by clauses 12, 13 and 14 will give unprecedented flexibilities to the Scottish Parliament on income tax and are a significant milestone in Scotland’s devolution journey within the UK. The Scottish Parliament will be able to set income tax rates and thresholds for earned income. This includes the ability to introduce new bands.
Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
Is the right hon. Gentleman aware of the most recent analysis by the Fraser of Allander Institute, written by Dr Jim Cuthbert? This is not an issue about the individual devolution of income tax; it is about the interaction that will occur between the way in which income tax is proposed and the Barnett formula and the Government’s proposal with the Holtham index, and the conclusion of that analysis is that, when likely shifts in relative population and shifts in relative tax base are taken into account, this will create significant negative dynamic effects. In other words, it will be all over the place and lack consistency, and it will be a source of conflict down the years. Surely, that needs to be avoided by taking a stronger look at making sure the right income tax powers are devolved?
The Temporary Chair (Mr David Crausby)
Order. May I remind the Committee that interventions should be brief?
David Mundell
Obviously I am familiar with Cuthbert’s views on a range of issues, and many of the points the hon. Gentleman refers to will indeed be dealt with in the fiscal framework, which is why that is important for delivering a stable settlement.
The Scotland Parliament will retain the receipts from the income tax it is responsible for. This represents a significant devolution of powers, with Scotland retaining around £11 billion of income tax receipts. That accounts for over 90% of income tax receipts collected in Scotland. This gives Scotland greater fiscal autonomy, with incentives to increase employment and increase wage growth.
I emphasise to Members that there are no restrictions on this power. If the Scottish Parliament wants an income tax system with a dozen different rate bands, these powers allow it to do that. Similarly, if it wants to set a zero rate of income tax, it can.
As I said on Second Reading, the devolution of the rates and bands of income tax means we will correct a fundamental imbalance in the devolution settlement. Since 1999, the Scottish Parliament has debated how public money should be spent but not how it should be raised. The Scotland Act 2012 started to change that, giving the Scottish Parliament more tax-raising powers. The Bill goes much further.
As things stand, the Scottish Government still receive the vast bulk of their budget in a block grant from this Parliament and choose how to distribute that budget according to their priorities. When the UK Government have taken difficult decisions to bring our public finances back into order, the Scottish Government have often condemned us for inflicting cuts. Although I believe those spending reductions were necessary to secure our economy and are far preferable to increasing taxation on working families in Scotland, it is true that the Scottish Government took a different view. These clauses will allow them to do something about it.
With control of the rates and bands of income tax in Scotland, the Scottish Parliament will raise over half the money that it spends. If the Scottish Government want more money to spend on their priorities, such as higher welfare payments, they will be able to increase taxes to raise that money. However, they will have to justify that spending to the hard-working men and women in Scotland who will be paying for it out of their wages every month.
George Kerevan
Following on from what the Secretary of State is saying, how could the Scottish Government ever be sure of their tax yield if another House were setting the threshold?
David Mundell
The Scottish Government already have to manage their finances by building in estimates of revenue. That is part of the system in which we operate and part of the decision to have a United Kingdom-wide tax. I will come on to that point in a moment.
The Deputy First Minister has confirmed that the Scottish Government are already considering using the tax powers that they will shortly receive under the Scotland Act 2012 to put up income tax. The powers contained in these clauses will increase the scope for action considerably. With the SNP in government, Scots might pay the highest income tax in the UK. Perhaps the party will dust down its old “penny for Scotland” policy, although now, with inflation, it might need a little more.
Stewart Hosie
Will the Secretary of State please tell the House which person in the Scottish Government has suggested that income tax is going up in Scotland?
David Mundell
The Deputy First Minister, Mr John Swinney.
Ruth Davidson, however, has set out the Scottish Conservative position by saying that Scotland would never have higher rates of income tax than the rest of the UK. If people elect Scottish Conservative MSPs next May, that is what they will get. Scots voted decisively to remain within a United Kingdom. The UK is more than just a name and a flag; it is a social and fiscal union in which risks and rewards are pooled and shared. The Smith commission looked closely at a range of tax powers and agreed on a package of devolution that enhances Scotland’s place within the United Kingdom. It strikes the right balance, by empowering the Scottish Parliament, while maintaining the UK’s strength and coherence. There is a good reason for transferring every power that we are devolving in the Bill, and a good reason for keeping in reserve everything that we are not devolving.
Turning to amendment 124, devolution of income tax is a significant step, but it is important to remember that in the independence referendum only last September, the Scottish people decisively opted for the security of being part of the UK family of nations, and part of that is a single, cohesive income tax system. That is why HMRC will administer Scottish income tax for the Scottish Parliament as part of its UK-wide management of income tax, thus minimising the burdens on employers and individuals. It is also why the Smith commission—which it is important to remember all parties present in the Scottish Parliament signed up to—specifically decided after careful consideration not to devolve the personal allowance.
Tommy Sheppard
Colleagues here are finding it incredibly depressing that on this, the third day of our debates on this important Bill, the Secretary of State still seems to be resisting completely any amendment to his point of view. What parallel universe is he living in if he thinks that the will of his party, which has one representative in Scotland, should prevail over the wishes of the majority of the electorate in Scotland, who voted decisively for our party and for more powers?
David Mundell
The world in which I live is one in which I have had a very productive discussion with the Deputy First Minister of Scotland on how we should take forward these financial measures and reach agreement on a package that will provide stability and financing for the Scottish Parliament within the United Kingdom. That is what I am committed to doing. Of course I will listen to the views expressed in amendments tabled in this House, and that is what we are continuing to do today. It is for those who are tabling amendments to make a case for their being accepted.
Sir Edward Leigh
We are dealing with my amendment, which relates to threshold points. Surely, if incomes in Scotland are generally lower, the Scottish Parliament would want to address the problem for people on lower incomes by lowering the thresholds. Would that not be the logical thing to do? I understand the Secretary of State’s point about the pooling and sharing of resources, but I have to ask the same question of him that I put to his opposite number: why is it okay to pool and share resources on thresholds but not on bands and rates?
David Mundell
As my hon. Friend knows, we had lengthy discussions in the Smith commission on the balance between the respective responsibilities, and it was agreed that while income tax should remain part of the wider UK tax regime, these specific significant powers would be moved to the Scottish Parliament. I believe that that creates the balance we were seeking.
David Mundell
No, I will not at this stage—[Interruption.] The hon. Gentleman is one of the most frequent contributors to debates in the House, and he does get to have his say, although not as much as his former leader does. The right hon. Member for Gordon (Alex Salmond) is a very frequent contributor.
The SNP’s new clause 54 goes further than amendment 124, tabled by my hon. Friend the Member for Gainsborough (Sir Edward Leigh). However, to go further than the powers set out in the Bill would break the concept of shared tax and be complicated for individuals and employers with activity on both sides of the border, as they would have to understand and comply with two potentially entirely different tax systems. The Law Society of Scotland agreed with us, saying of the proposed change:
“The administrative burden would increase considerably. The complexities regarding the UK savings and investment market may also be particularly problematic”.
That would not be in keeping with a stronger Scotland within the United Kingdom. It is not what the people of Scotland voted for last September, and I cannot accept the new clause.
On new clause 32, tabled by Opposition Front Benchers, I hope that I can provide some reassurance to the House. The new clause is intended to provide the House with a report on the implementation of the Scottish rate of income tax and the further income tax powers in the Bill. That is a laudable aim, but I can reassure hon. Members that current legislation already provides for annual reports on the implementation of devolved tax powers to Scotland.
Section 33 of the Scotland Act 2012 requires the Secretary of State and Scottish Ministers to lay before both Houses of Parliament and the Scottish Parliament annual reports that broadly cover the areas suggested in the new clause. Three reports have already been produced, the most recent in March, and HMRC’s accounting officer for the Scottish rate and the Comptroller and Auditor General have both given evidence to the Scottish Parliament on the progress of tax devolution to Scotland. Of course, Westminster Committees have the opportunity to call for evidence, too. Alongside that existing requirement and to ensure that Parliament can have confidence in the implementation and operation of the Scottish rate, the Comptroller and Auditor General is required to report annually on HMRC’s administration of the Scottish rate.
I can also tell the hon. Member for Edinburgh South that I am satisfied that adequate resources are being brought forward to deal with the issues relating to the transfer of these powers to Scotland and to HMRC’s involvement in that process. I would further reassure Members that reporting requirements are a feature of the negotiations currently under way between the two Governments on the fiscal settlement that accompanies the Bill.
I have set out the rationale behind the Government’s drafting of the Bill, which, as has been widely acknowledged, fully implements the Smith commission’s recommendations on income tax. The fiscal framework will be an important part of the discussions, and we are giving this exercise the focus and priority that it deserves.
Sir Edward Leigh
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clauses 12 to 14 ordered to stand part of the Bill.
Clause 15
Assignment of VAT
Question proposed, That the clause stand part of the Bill.
The Temporary Chair (Mr David Crausby)
With this it will be convenient to discuss:
New clause 20—Review of operation of VAT refund schemes in Scotland—
‘(1) The Treasury shall, within six months of the day on which this Act is passed, publish and lay before the House of Commons a review of the application of VAT refund schemes for businesses in Scotland.
(2) The review must include an analysis of the impact of the qualifying criteria for the VAT refund schemes—
(a) in Section 33 of the VAT Act 1994, and
(b) for Government Departments and the NHS,
on the level of VAT payable by Police Scotland and by the Scottish Fire and Rescue Service.”
Following the amalgamation of the (formerly regional) Scottish fire and rescue services and Scottish police forces into a single fire service (the Scottish Fire and Rescue Service) and a single police force (Police Scotland) respectively, they are no longer eligible for VAT exemptions under the VAT refund schemes mentioned. This amendment requires the Treasury to carry out and publish a review of the schemes in Scotland, and in particular in relation to the level of VAT payable by Police Scotland and the Scottish Fire and Rescue Service.
The Financial Secretary to the Treasury (Mr David Gauke)
Clause 15 makes changes to ensure that a proportion of the VAT that is attributable to Scotland may be assigned to the Scottish Government’s budget. The Smith commission set the objective that more devolved spending in Scotland should come from tax raised in Scotland. Control over setting VAT rates is not being devolved to Scotland, because EU VAT law does not allow for differential VAT rates within a member state. The changes made by clause 15 will, however, ensure that a proportion of the VAT that is attributable to Scotland may be assigned to the Scottish Government’s budget. Clause 15 sets that proportion at the first 10 percentage points of the standard rate of VAT and the first 2.5 percentage points of the reduced rate of VAT. On the basis of current VAT rates, that would be exactly half, representing, very approximately, £4.5 billion.
Clause 15 will link Scotland’s share of VAT to economic activity, providing incentives for the Scottish Government to promote growth. The Scottish Parliament and Scottish Government have considerable levers to do this, for example on skills and education policy, and it is now for them to set out how they will do that. Assigning VAT to Scotland’s budget will strengthen the financial responsibility of the Scottish Parliament, and strengthen its ability to pursue its own visions, goals and objectives.
Let me say just a word or two about new clause 20, although I am sure the hon. Member for Caerphilly (Wayne David) will be saying more about it shortly. It requests a review of VAT refund schemes in Scotland, with a particular focus on how they affect Police Scotland and the Scottish Fire and Rescue Service. In 2012, Police Scotland and the Scottish Fire and Rescue Service restructured in order to streamline and modernise. As a result, eight local police and fire authorities became one. The restructuring stopped the duplication of support services, potentially saving £130 million, according to the Scottish Government. Like other people and organisations, fire and rescue services and the police pay VAT on the taxable goods and services they purchase, but because they are largely not engaged in business activities they cannot recover this VAT through the VAT system in the same way as businesses do. However, there are, in certain clearly defined circumstances, existing schemes that refund some or all VAT.
Section 33 of the Value Added Tax Act 1994 was introduced to ensure that VAT is not a cost borne by local taxation. There are two long-established criteria for inclusion in this scheme. First, that a body must undertake a local government function—we accept that the successor bodies of the former fire and rescue service authorities do this. Secondly, the body must have the power to draw funding directly from local taxation. The Scottish Fire and Rescue Service is funded by the Scottish Government rather than through any legal call on local taxes, and so does not fit under that criteria. In 2011, the Scottish Government were explicitly advised of this consequence of changing from regional police and fire services to a single authority. The expected benefits in the Scottish Government’s business case far outweigh the loss of any VAT refunds, and so the Scottish Government understandably continued restructuring with that in mind. The restructuring was the decision of the Scottish Government, made with the full knowledge of the VAT consequences of their decisions. This is a historical request and is not a matter that the draft clause regarding VAT assignment should address. Having set out the background, in anticipation of the arguments we may hear from the hon. Gentleman, I urge him not to press his new clause to a Division.
Wayne David (Caerphilly) (Lab)
It is a pleasure to serve under your chairmanship, Mr Crausby.
The Smith commission’s report was very clear about VAT, particularly in paragraph 84. The Government have spelt out in the Bill how this arrangement will work in practice. The Opposition support the Government in implementing this part of the Smith agreement, but we have a real concern about the position of Police Scotland and the fire and rescue service in Scotland. A number of organisations have expressed concern about VAT relief schemes in Scotland, and I very much hope that the Government will accept our new clause 20 and that the review will be sufficiently broad based to cover a wide range of organisations, including charities.
I wish to focus my remarks on the situation, which has already been referred to in part, regarding Police Scotland and the Scottish Fire and Rescue Service. Surprisingly, none of the 43 police forces in England and Wales, or the Police Service of Northern Ireland, pays VAT—not even the National Crime Agency has to pay VAT—but both Police Scotland and the Scottish Fire and Rescue Service do. There is widespread indignation at this unfairness in Scotland. Sir Stephen House, Scotland’s chief constable, has said, in unambiguous terms:
“It simply isn’t correct. It is not right. It’s unfair and it shouldn’t be allowed to continue”.
The eight police forces and the eight fire and rescue services, before they were amalgamated, were exempt from VAT, but now Police Scotland has a huge annual bill—a bill that is unfair and unique in the whole of the UK. At a time when Police Scotland has no alternative but to make significant cuts, it is a liability that every year it has to put forward a forfeited bill of about £10 million—the figure for the Scottish Fire and Rescue Service is approximately £11 million.
Why has this situation arisen? The Government’s position was spelt out in some detail in a letter to Cathy Jamieson, the then Member for Kilmarnock and Loudoun and shadow Economic Secretary to the Treasury, on 9 March. The letter from the Financial Secretary explained that the fire and rescue service, and by implication Police Scotland, pays VAT on the taxable goods and services it purchases, but because these bodies cannot recover VAT through the system in the same way businesses do, there are special schemes in place. He then explained that there are two schemes relevant to fire and rescue services. The first, as set out in section 33 of the 1994 Act, made sure that VAT is not a cost borne by local taxation. There are two criteria for inclusion in this scheme. First, the body must undertake a local government function—and the Treasury did accept that was the case with the Scottish Fire and Rescue Service. Secondly, the Treasury claimed that the body must have the power to draw funding from local taxation. The Scottish Fire and Rescue Service is funded directly by the Scottish Government rather than through any legal call through local taxes. Hence, the Government have argued that a “key condition” of the section 33 VAT refund scheme does not apply.
That was the first refund scheme, but there is a second one, which is for Departments and the NHS. It is doubtful whether the Scottish Fire and Rescue Service would be in a position to claim refunds on outsource services, but the Treasury made it clear that the Scottish Fire and Rescue Service would not be eligible in principle because it is not a “central government” Department. To be honest, those reasons might be technically valid, but they are also morally suspect and unjustifiable. I am a great believer in the saying, “Where there’s a will, there’s a way.” Clearly, the situation in Scotland with regard to the Scottish Fire and Rescue Service and to Police Scotland is an anomaly, which applies to only one part of the United Kingdom.
I very much hope that the Treasury can muster the wherewithal to address that anomaly, and to do it through our proposed new clause 20.
Dr Philippa Whitford (Central Ayrshire) (SNP)
I note that Highways England and London Legacy, which was created after the Olympics, have both been granted VAT exemption. They also fall into the same group. Surely Highways England is in exactly the same boat, yet it is given VAT exemption. We are not talking about something that is chiselled in stone or set in concrete, so surely it can be changed.
Wayne David
Well, things can be changed through political will. As I have said, where there is a will to make that change, a change can be made. A way can be found, if there is the desire to do so. I very much hope that the Government listen carefully to what has been said this evening.
I must say that something else worries me, too. I refer again to the letter to Cathy Jamieson from the Financial Secretary. The penultimate paragraph says:
“In 2011 the Scottish Government were explicitly advised of this potential consequence of changing from regional police forces to a single authority as part of the proposed revised funding model for Police Scotland. At the time they took the decision to make these reforms they would have known they would no longer be eligible for the VAT refunds as a result.”
There we have it in black and white: the Scottish National party Government were warned that their plans to reorganise emergency services would, in effect, cost millions in VAT refunds. Yes, cost savings might have been made; but they knew the situation and they were prepared to see that loss occur. They still pressed ahead with their plans. This is in part a mess of the SNP’s own making, compounded by an indifferent and apathetic Tory-led Government here in Westminster. The sensible thing surely would have been for the Scottish Government and the UK Government to have come together and sort out this problem before Police Scotland and the Scottish Fire and Rescue Service were constituted on an all-Scotland basis. That is the common-sense thing that should have happened. But that is in the past.
Callum McCaig (Aberdeen South) (SNP)
Will the hon. Gentleman enlighten this Chamber as to whether the situation we have here is what the Labour party has in mind when it talks about the pooling and sharing of resources?
Wayne David
The hon. Gentleman is really stretching things to try to make that point. What I am suggesting is that for devolution to be effective, there needs to be a consensus, a coming together or an agreement on the best way forward. I quoted an excellent example. Both services would have materially benefited if both the Government of the day and the SNP Government had had the wherewithal to come together and work things out sensibly.
Dr Whitford
The SNP Government had written extensively to the Government to try to deal with that issue. Is the hon. Gentleman suggesting that Police Scotland and the Scottish Fire and Rescue Service should have been left in eight divisions?
Wayne David
No, of course not. What I am saying is that it would have been far better if the Government in Scotland and the Government in London had sat down maturely and worked things out for the benefit of services in Scotland rather than pursue a fixation with the idea that things had to be brought together on a centralised basis in Scotland, irrespective of the consequences. The Government were absolutely adamant on this. Presumably they could not find parliamentary time, or did not have the political inclination to bring forward an amendment to have a scheme that would have benefited everyone.
The sensible thing would have been to do precisely what I have said, but that is in the past. The important thing now is to move forward and resolve this situation. Our proposed new clause 20 calls for a review of the situation. It is a modest request, which I very much hope that the Government will accept. If they do accept it, it could provide an opportunity for everyone to get together and, hopefully, resolve the issue.
It has been suggested by the Scottish Council for Voluntary Organisations that VAT rebates should be devolved so that they better conform to devolved policy to support society and public services. A suggestion has been made that the UK Government could allocate a Barnett formula-based share of the VAT rebates to the Scottish block grant. That is one possibility, but, like all the other suggestions, it needs to be soberly and carefully discussed. It could be a part of the review that we propose. I hope that the Government will accept our amendment so that we can have that meaningful discussion and reach a decision for the benefit of Scotland.
Stewart Hosie
It is a pleasure to take part in this debate on clause 15 stand part and proposed new clause 20 in the name of the Labour party.
Let us turn to the way that the Smith commission has spoken about the assignation of a proportion of VAT. It said:
“The receipts raised in Scotland by the first 10 percentage points of the standard rate…will be assigned…All other aspects of VAT will remain reserved.”
The Scottish Parliament Information Centre analysis for the Scottish Parliament Devolution (Further Powers) Committee referred to it in its interim report on the draft Scotland Bill clauses. It said:
“Draft clause 13 [now 15] would give effect to the Smith Commission recommendation that the Scottish Government be assigned receipts from the first ten percentage points of VAT. With the agreement of both governments it also proposes to go slightly further by notionally assigning 2.5 percentage points of the reduced rate of VAT as well…The amount of VAT receipts attributable to Scotland is to be the subject of an agreement between the UK Government and the Scottish Government.”
It did point out that there are no draft clauses in relation to the corresponding adjustment to the block grant. Hopefully, the Minister will confirm that that does not require legislation. In effect, the Scotland Bill proposes the assignation of half of VAT receipts to the Scottish Parliament. However, that will provide no actual control of VAT.
The Devolution (Further Powers) Committee had no particular concerns with the draft clauses, but it did want details of the assignment of VAT revenues and the share of any benefits to be produced—the mechanics of the assignment—before the Scottish Parliament could be expected to give its legislative consent. The committee said:
“There is still significant uncertainty on how the assignment of a share of VAT revenues will be calculated and whether the Scottish Government will be able to reap the rewards of any economic stimulus that yields higher VAT revenues.”
It is also worth noting that the Devolution (Further Powers) Committee’s analysis paper, which set out the differences between the draft clauses and the published Bill, noted that:
“No further detail is provided on the assignment of VAT revenues, or the corresponding block grant adjustment.”
There are a number of technical issues for consideration notwithstanding the fact that there is no particular issue with the legislation as such.
The committee’s interim report considered the evidence on VAT assignment from a range of sources. It said that the bulk of the evidence received by the committee, while welcoming the principle, called for greater clarity in how the assignment of revenues would work. As the Institute of Chartered Accountants of Scotland told the committee:
“Clause 13 in the ‘Draft Scotland Clauses 2015’ regarding VAT delivers the mechanics of the assignment of VAT, but with the large caveat that it applies ‘where there is an agreement between the Treasury and Scottish Ministers’...The rules for agreeing this have not been provided and it may not be easy to identify ‘Scottish VAT’”.
I take on board what the Scottish Secretary said earlier about not giving a running commentary, but on that specific point—and I shall have more specific questions—at least I hope we can get clarity.
In oral evidence to the Scottish Parliament committee, Charlotte Barbour of ICAS elaborated:
“The assignment of VAT offers more opportunity for discussions on how that might be calculated. It slots in with the difficulties with the fiscal framework”—
we discussed those in the last debate—
“and some of the no-detriment issues”—[Scottish Parliament, Official Report, Devolution (Further Powers) Committee, 5 February 2015; c. 4.]
I mentioned those previously. The Scottish Trades Union Congress was broadly supportive of the assignment of VAT. Its deputy general secretary told the Committee that
“I am quite a fan of assigned revenue”,
but he took the point that
“it is not a power in the sense of being usable to promote particular behaviours”.
However, he said:
“A degree of assigned revenue clearly rewards the Scottish Government for economic growth and, in our view, the closer we get to an amount of revenue that is derived from positive actions undertaken by the Scottish Government, the better.”—[Scottish Parliament, Official Report, Devolution (Further Powers) Committee, 15 January 2015; c. 13.]
I do not think that any of us would disagree with that. We want responsibility, which rather prompts the question that given that there is no control over VAT, why assign only half of it? Why not assign it all? The Scottish Government could then quite rightly benefit, if there was a benefit, from the entire rise in VAT in Scotland rather than just half of it and could take responsibility if there was a shortfall, not just for half the shortfall.
Speaking to the committee, John Swinney, the Cabinet Secretary for Finance, Constitution and Economy, highlighted two issues for discussion with the UK Government, which are both important:
“One is establishing the analytical base for how VAT should be apportioned and the other is the policy question of guaranteeing that if those estimates are exceeded, Scotland retains the benefit of that improved economic performance”.—[Scottish Parliament, Official Report, Devolution (Further Powers) Committee 12 March 2015; c. 26.]
The former Secretary of State for Scotland also commented on the issue of VAT in a letter to the Committee, in which he said that he could
“confirm that VAT assignment will link the Scottish Government’s budget with economic activity in Scotland, providing incentives for growth. The amount of VAT to be assigned…will be based on an estimated share of the total VAT generated in the UK...The UK and Scottish Governments will need to agree a methodology”.
Will the Minister provide further details, not on the specific discussions with the Scottish Government but on the themes? What are the options for how VAT will be assigned? Will it, for example, be a consumption-based approach? How can we improve the robustness of the measure and the timescales, for example by improving the survey data? What will be the costs of implementation and how will they be met? Does there need to be a proxy measure over a transition period until the methodology is robust? Has any thought been given to indexation and comparable measures of growth? What has been said about governance and accountability, for example developing a separate strand to the memorandum of understanding with the HMRC on VAT to expand the role of the project board?
The question of the robustness of the survey data is vital. At present, VAT is estimated by the Scottish Government in the Government Expenditure and Revenue Scotland report, based on a household survey of expenditure, therefore missing tourism spend entirely. That is corrected by a percentage share adjustment, meaning that the Scottish Government estimate what percentage of UK tourism happens in Scotland, but if the Scottish Government managed to increase tourism spend through other actions, such as reducing air passenger duty, that would not show up according to the current methodology. We therefore need to agree a new robust methodology and, perhaps, an interim measure until that methodology is in place.
As the Minister has said, VAT cannot be varied within a state and we understand and respect that. So let me repeat the question: why give only half rather than all, unless to camouflage the fact that the tax over which Scotland will have control will be such a small share of our tax base? Could the assignation of VAT revenue be designed simply to make that number seem a little bigger?
Let me turn to new clause 20, on the subject of VAT on Police Scotland and the fire service. We heard the hon. Member for Caerphilly (Wayne David) describe the amendment, which proposes a review of the application of the VAT refund scheme for business in Scotland. It has been tabled with the intention, it would appear, of addressing the anomaly of the inability of the Scottish Police Authority and the Scottish Fire and Rescue Service to reclaim VAT. Although we agree that that is an inequitable position for both services, we do not necessarily believe that a review is the way to address it. Instead, the UK Government—as the hon. Gentleman said, where there is a will, there is a way—should simply amend the VAT status of the single police service and fire and rescue service in Scotland.
Stewart Hosie
In a moment. We think that the better approach to fix the problem might be through a forthcoming Finance Bill after the Budget in July, but nevertheless we are happy to back the new clause today if Labour presses it to a vote.
Wayne David
I was going to ask the hon. Gentleman if he was going to support us, but he has pre-empted me. It is very good that he will, because, of course, the SNP did not table an amendment on this issue. I thank him.
Stewart Hosie
We did not table an amendment because there was not an amendment that we could table to fix the problem. As I have just said, that requires an amendment to a Finance Bill. One might have thought that an experienced old hand like the hon. Gentleman might have known that and advised his younger and less experienced colleague, the shadow Secretary of State, on how things work. Having said that, and that we are happy to support new clause 20, I will sit down and hopefully we can move on.
Mr Alistair Carmichael
I rise to say a few words in support of new clause 20, tabled by the hon. Members for Edinburgh South (Ian Murray) and for Caerphilly (Wayne David). When considering schemes such as those that lie at the heart of the new clause, it is worth starting with the principle that underpins them. Is it, as the Financial Secretary to the Treasury suggested, the principle that local government finance should not go straight into Treasury coffers? I can understand that principle and it holds water in so far as it relates to the scheme for police and fire services across the UK, as originally envisaged. The difficulty for the Minister, however, is that there are other schemes of a similar nature that go beyond the ambit of police, fire and other rescue services. The hon. Member for Caerphilly mentioned one related to the national health service.
The principle that underlines such schemes is fairly sensible—that for public services to pay money back into the Treasury is essentially an exercise in robbing Peter to pay Paul. It only creates work for accountants and achieves no public good. There is a more fundamental principle at stake, however, in the proposal before the Committee and in the new clause tabled by the Labour party. That is the principle that there should be equality of treatment across the board and across the United Kingdom. The hon. Member for Aberdeen South (Callum McCaig) hit the nail on the head when he referred to the pooling and sharing of risks. I think I have perhaps a greater commitment to that principle than he has, but I must say in all candour to those on the Treasury Bench that if they are sincere in their belief that risks and rewards should be pooled and shared across the UK, whatever the technicalities this situation should not be allowed to continue. Whether it is done through the review in the new clause or through action in the forthcoming Finance Bill, amendments for the sake of the continued constitutional integrity of the United Kingdom should be produced in early course.
Mr Gauke
Let me address the issues that have arisen during the debate, starting with new clause 20 and the refund situation. It is correct to say that there is a refund scheme for Government Departments and the NHS. This scheme refunds the VAT incurred on certain outsourced services. It was introduced to ensure that irrecoverable VAT does not dissuade Government Departments from contracting out services where this results in greater efficiencies of scale. There is also —this is relevant to the discussion—a refund scheme in respect of matters that can draw funding directly from local taxation. The Scottish Fire and Rescue Service is funded by the Scottish Government, rather than through any legal call on local taxes, so it does not meet this criterion.
That was not the case prior to the reforms brought in by the Scottish Government. I stress that this was a choice of the Scottish Government, with their eyes wide open to the fact that the VAT refund scheme would not be available in the event of that reform. They decided, as they were perfectly entitled to do, to proceed with those reforms, notwithstanding that loss.
Peter Grant (Glenrothes) (SNP)
For 18 years, during which I was a member of both Fife regional council and Fife council, they were unitary authorities but we did not have a joint police board and we did not elect or appoint members from different authorities to a separate organisation in which the police were funded entirely by a budget decision of a single authority. In effect, they were operating financially as though they were the education service or the social work service. At that point they had the same VAT treatment as the police in Strathclyde or Lothian, which were managed by a joint board. Fife police did not have, in the Minister’s words, a legal call on the resources of the authority. They were funded because the authority thought it was the right thing to do, not because the police had the right to demand the funding from us. Will the Minister explain why the same position does not now apply to the Police Service of Scotland or the Scottish Fire and Rescue Service?
Mr Gauke
As I understand the situation that the hon. Gentleman set out, if services were funded through local taxation, the refund scheme was available. That is no longer the case, as the changes have been made. It therefore does not fall within section 33 as it currently stands. As the hon. Member for Caerphilly (Wayne David) acknowledged, it is technically valid that the refund scheme does not apply.
Many arguments are made in respect of the VAT refund schemes, and requests are made that they be broadened and applied to additional organisations. It is customary for the case to be made that charities, for example, should benefit from such refunds. That comes with significant fiscal cost. Now is not the time to run through the whole argument, but there may well be a case for reconsidering the position, but we should not look at it in isolation because of a particular decision that was made in one case. If there is a case to do that, the matter should be looked at in the round, not just on the basis of one case.
Dr Philippa Whitford
Is this not just a dry technical issue? This is the only police force and the only fire service in the whole of the United Kingdom that pays VAT and does not get it back. Members of the Front-Bench team agreed that it would be sensible to bring Police Scotland together and said that they would do the same. Surely now is the time to use some common sense and get rid of this anomaly—£33 million a year that could be going to front-line services.
Mr Gauke
But the reason for that is the decision that the Scottish Government took, with full information. This did not come as a surprise or as an unexpected consequence of a decision. It was a decision that the Scottish Government made, fully informed and understanding the situation. I am not criticising the decision because, according to the business case made by the Scottish Government, the benefits far outweighed the costs. But the costs were there and identified to the Scottish Government in advance.
Wayne David
I am sure the Minister would acknowledge that devolution is based on mutual respect. With the benefit of hindsight, does he agree that it would have been far better if the Government here in London and the Scottish Government had sat down and worked out a way forward?
Mr Gauke
A request was made of the UK Government and we provided information on what the position was. As I was saying a moment ago, there are many calls for an expansion of section 33 and the refund scheme. The cost of the scheme being widely expanded could be substantial. At a time when there are considerable constraints on the public finances, we have to be careful about responding to every request and claim, however reasonable it might be.
Ian Murray
I understand what the Treasury Minister says about the number of requests received for exemptions from section 33, but this is not a new exemption. There is a net gain of many millions of pounds a year to the Treasury from this change. Therefore the net effect of changing it back would be zero. We are not asking for exemption from section 33 to be opened up to charities. That is a separate debate. This is a case where the Treasury is a net beneficiary. How does Scotland get that money back?
Mr Gauke
As I said, a decision was made by the Scottish Government, believing that the efficiency savings were more than sufficient to outweigh the costs incurred by losing the section 33 refund. That was the basis for the decision, and the position in respect of section 33 was clear.
Ian Blackford (Ross, Skye and Lochaber) (SNP)
We keep hearing about respect. We all know why the Scottish Government introduced the change—it creates efficiency in the delivery of police and fire services in Scotland. A clear case has been made by many of my hon. Friends and by those on the Labour Benches as well. If there is a genuine feeling of mutual respect between the Government in Scotland and the Government in Westminster, all the Treasury has to do is make sure that we get the VAT back and we will invest it in front-line services to benefit the people of Scotland.
Mr Gauke
We respected the Scottish Government’s decision, because they were perfectly entitled to decide to reform the police and fire services in the way they did, but they knew what the consequences of the law of the land would be with regard to VAT. That decision was taken and it would be unreasonable for us to maintain the existing legislation, given that there are many demands on section 33.
Let me turn to clause 15. The hon. Member for Dundee East (Stewart Hosie) asked why we are simply assigning half of the VAT revenue, rather than all of it. That reflects the agreement reached by the five main political parties under the auspices of Lord Smith. It represents a balance between providing a sufficient incentive for Scotland to grow its economy, relative to the rest of the United Kingdom, in order to increase its revenue from VAT and exposing the Scottish Government’s budget to potential fluctuations in VAT receipts.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
For the benefit of the Committee, will the hon. Gentleman explain the difference between the agreement the UK Government have with the Isle of Man and what they are now proposing for Scotland?
Mr Gauke
The Isle of Man has different constitutional arrangements. What we are proposing is consistent with the conclusions reached by the Smith commission.
The hon. Member for Dundee East (Stewart Hosie) made a number of technical points about how that will work. I accept that a number of details will need to be worked out as part of the fiscal framework. There is a need to agree the methodology for estimating how much VAT is generated by Scotland and by the rest of the United Kingdom. The UK and Scottish Governments will also need to agree the operating principles, including mechanisms for verifying that the methodology has been applied correctly, how many adjustments might be carried out and arrangements for audit and transparency, including publication of results. It is worth pointing out that other countries operate similar systems and could provide a reasonable starting point from which to build.
Again, those considerations will be part of the fiscal framework, and I think that it is agreed on all sides that it would not be helpful to provide a running commentary on it. Of course, there have already been meetings with the Deputy First Minister and the Chief Secretary to the Treasury on some of those points. All I will say to the hon. Member for Dundee East is that the UK Government are determined to work constructively, as I am sure the Scottish Government are, to ensure that we reach an agreement that is fair and reflects the appropriate assessment that should be made.
Stewart Hosie
I thank the Minister for that answer; it is genuinely helpful, as he always is. However, will he confirm for the Committee that the agreement will be reached in good time for the Scottish Parliament to consider it fully before any legislative consent motion has to be passed?
Mr Gauke
It is kind of the hon. Gentleman to say that I am being helpful. In the spirit of continuing to be helpful, let me say that I certainly hope that that will be the case, but of course agreements will require both parties to act in a co-operative way, which I have no reason to doubt will be the case.
With those remarks, I hope that the Committee will support clause 15 and that I have said enough to persuade the Labour party not to press new clause 20.
Question put and agreed to.
Clause 15 accordingly ordered to stand part of the Bill.
Clause 16
Tax on carriage of passengers by air
Question proposed, That the clause stand part of the Bill.
The Temporary Chair (Mr David Crausby)
With this it will be convenient to discuss the following:
Clause 17 stand part.
That schedule 1 be the First schedule to the Bill.
Clause 18 stand part.
Mr Gauke
Clauses 16, 17 and 18 implement the Smith commission’s recommendations by fully devolving two taxes: air passenger duty and the aggregates levy. Those taxes will be switched off in Scotland and the Scottish Parliament will then have full competence to maintain, redesign or scrap them. The changes made by clauses 16 and 18 will switch off APD in Scotland and give the Scottish Government the power to charge their own tax on passengers departing from Scottish airports. The Scottish Government will be free to make their own arrangements with regard to the design and collection of any replacement tax. Alongside that, funding for the Scottish Government will be reduced by an amount equivalent to the APD that would have been raised in Scotland.
Clauses 17 and 18 and schedule 1 make changes to ensure that the UK aggregates levy can be fully devolved to Scotland. The Smith commission agreement stated that there would be full devolution of the levy to Scotland following resolution of the legal challenges against the levy. The changes made by clause 17 will give the Scottish Parliament the power to charge a tax on the commercial exploitation of aggregate. The clause also introduces schedule 1, and together they enable the existing UK levy to be disapplied to Scotland. These provisions allow the Scottish Government freedom in the design and implementation of any tax on the commercial exploitation of aggregate in Scotland.
Graham Stringer (Blackley and Broughton) (Lab)
Amendment 36 would, in essence, have opposed clause 16 standing part of the Bill, because I want the Committee to explore the specific issues related to air passenger duty and the more general principles about tax competition between Scotland and the rest of the United Kingdom that may well evolve from a discussion on air passenger duty.
Some of us who voted to set up the Scottish Parliament in the first place now think that, although it seemed a very bold decision at the time, it was less bold than it might have been and that if we had the benefit of being able to go back in time—we do have the benefit of hindsight—the proposals that the Government are making might well have been those that should have been put before the House after the 1997 general election, with us now moving towards full fiscal autonomy for the Scottish Parliament. It was a fundamental mistake to set up a Scottish Parliament with mainly spending powers and no tax-raising powers, apart from the plus or minus 3p on income tax.
Mr MacNeil
The hon. Gentleman is absolutely right. One of the mistakes is that there is no incentive for the Scottish Government to grow the economy. A great example that we have in the Hebrides is that the Scottish Government have put a road-equivalent tariff on to the ferries. This has grown the economy in the west of Scotland, but the increase in tax revenue is not going to the Government that funds it but to Westminster, which gives no extra cash and further incentives to roll it out further across the west coast. It is similar with childcare and a number of other issues.
Graham Stringer
The hon. Gentleman makes a pretty fundamental point about devolution. When the House was making a decision to devolve powers, it would have been sensible to settle on a grant basis that was fair between Scotland, England and Wales, which the Barnett formula was not, and then allow the Scottish Parliament to raise taxes on that basis, so that if it wanted better-quality services, it could have had higher taxes and, if it was more efficient, it could have had better services or lower taxes, and so on. That is a very clear principle.
Mr MacNeil
The important point I am driving at is that, if the Scottish Government had proper control of their taxes, they could have grown the economy more and that growth would have delivered far more than the zero-sum game of who has got and has not got what in the UK. It is the ability to grow the economy that tax powers would give that is really fundamental.
Graham Stringer
If the hon. Gentleman is saying that Scotland, or any other devolved authority, should benefit from the initiatives it takes and from its own efficiencies, I agree completely. We are moving that way, but the Bill does not move far enough. No Minister or shadow Minister has been able to explain to me, in any of our debates, why we should have the unfair funding in the Barnett formula.
Those are the basic principles. I now want to explore how, if taxation is devolved to the Scottish Parliament, the United Kingdom Government will respond to competition. Air passenger duty is a very good example. As I understand it, the SNP intend to reduce air passenger duty by 50% and then reduce it to zero. That is quite a sensible policy for the SNP to follow. For that matter, it is a sensible policy for the United Kingdom Government to follow, because a number of consultants’ reports have shown that there is almost certainly likely to be a benefit for the whole United Kingdom if air passenger duty is taken away.
Every other country in the European Union has moved either to very low rates of APD or, as in the Netherlands, to zero. It is therefore a sensible policy, but the Government do not seem to have a clear position on what they will do about the very unfair competition between regional airports.
Mr MacNeil
Air passenger duty is a perfect illustration of what I said earlier. If the Scottish Government decided to lower APD and that upped the rate of economic activity in Scotland, they should benefit from the fruits of that activity. The benefits should not go to Westminster, because it would not compensate the Scottish Government for that initiative.
Graham Stringer
On 20 January, the Chancellor of the Exchequer told the Treasury Committee, in response to a question asked by my hon. Friend the Member for Wythenshawe and Sale East (Mike Kane) about that very point:
“I think the best approach to dealing with this concern, which I think is perfectly legitimate, is to cross the political boundaries of our two parties to try to find a solution that helps these regional airports that can be affected by an air passenger duty decision north of the border.
HMRC has done some work on this and I think it anticipated that Manchester airport would lose around 3% of its traffic and Newcastle could lose around 10% of its traffic. That was work carried out a couple of years ago… I think you and I—I made the same offer to Ed Balls—could work to help regional airports in the north of England if the Scottish Government were to go down the road of dramatically cutting its air passenger duty.”
Further to that, the Chancellor told the House of Commons on 27 January:
“We have a couple of years to work this out—it does not have be done tonight or tomorrow—and we can work out a plan that protects the brilliant Newcastle, Manchester and other regional airports.”—[Official Report, 27 January 2015; Vol. 591, c. 726.]
What progress has been made on that? This is about a loss of 3% and 10% of business, which are not trivial amounts.
This will result in not only an economic benefit for Scotland, but in real competition, which will come in two forms: there will be competition for passengers on short-haul flights, for which APD is £13 per passenger, and for those on longer-haul flights, for which it is £71 per passenger. Obviously, the same amount is paid for the return flight. A passenger from Newcastle therefore has an incentive—this applies to large families in particular—to travel to Edinburgh or Glasgow in order to save some money. Someone travelling long distance from north America or China has the same incentive.
Mr Kevan Jones (North Durham) (Lab)
Does my hon. Friend agree that there is a knock-on effect on cargo? If the successful flight from Newcastle to Dubai were to be jeopardised in any way, the revenue earned from the airport through the transfer of cargo in that passenger aircraft would also be at risk.
Graham Stringer
I agree with my hon. Friend. There is competition not only for passengers, but to get airlines and aircraft to land. Given that a lot of cargo is carried in an aeroplane’s belly, if Newcastle, Manchester or Leeds Bradford loses a flight to Scotland, it will lose not only the passengers and the benefit they bring but the cargo carried by the plane. The United Kingdom already has experience of that with Belfast airport. The Northern Ireland Assembly managed to get the power to vary APD because it was in competition with Dublin airport, which was taking passengers and aircraft to travel from south of the border. That is well known to people who are interested in transport, but it is less well known that the impact was not only on Belfast, but on English and Welsh airports, as people decided to fly across the Atlantic from Dublin to save the £71.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
The hon. Gentleman is making a point about cross-border competition. Does he agree that there is another point about the longer-term sustainability of airports outwith that area, such as Inverness and Dundee? They need additional support and would benefit from the reinvestment in Scotland of the revenue generated by additional passenger traffic.
Graham Stringer
I agree with that perfectly sensible point.
The Government may have a number of possible solutions, and I hope that the Financial Secretary will be able to respond in some way. Manchester airport has made the case strongly to the Government that there should be an air passenger duty holiday on new long-haul routes, and that would be helpful. The Government could devolve decision making to other parts of the United Kingdom as well as to Scotland, although it would be difficult to find a mechanism for doing so. The Government could also agree to compete with Scotland, because if there is no competition, there will be an unfair loss of jobs through lowering the rate of air passenger duty.
Such solutions seem sensible to me, given the experience in the rest of Europe and, indeed, in the rest of the world. The tax was brought in not for environmental reasons, as is sometimes said, but entirely to deal with the hole in the budget after the 1992 general election. It is an inefficient tax: consultants have estimated that it costs the economy more than it brings into the Treasury in cash. Even if the Financial Secretary cannot give an absolutely definitive answer today, I hope he will assure us that he is willing to look at some of the sensible responses to this new competition in tax regimes.
Mr MacNeil
The hon. Gentleman has been very kind in giving way. The tax is about more than just a hole in the budget; it is actually a demand-management tool for Heathrow and perhaps for Gatwick as well. If airports are full, APD is a demand-management tool that might work. It is certainly not helping in Edinburgh, Glasgow or Manchester. The solution is not to worry about each other, but for us to be rid of it, and for the Government to keep the demand-management tool in airports that are already saturated.
Graham Stringer
I do not agree with the point the hon. Gentleman makes in his fourth intervention. Demand management is not the solution for our regional airports, which have huge extra capacity, but if I went down that line, I expect you would rule me out of order, Mr Crausby. I look forward to the Financial Secretary’s response.
Stewart Hosie
I will come on to the comments made by the hon. Member for Blackley and Broughton (Graham Stringer) in a moment.
The provisions relating to the devolution of air passenger duty—I will concentrate on the duty, rather than the aggregates levy or the further provisions in clause 18—were set out clearly in the Smith agreement:
“86. The power to charge tax on air passengers leaving Scottish airports will be devolved…The Scottish Government will be free to make its own arrangements with regard to the design and collection of any replacement tax, including consideration of the environmental impact.
“87. In line with the approach taken in relation to the Scotland Act 2012, if such a tax is introduced by the Scottish Parliament to replace Air Passenger Duty (APD), the Scottish Government will reimburse the UK Government for any costs incurred in ‘switching off’ APD in Scotland.”
Given that they simply would not collect it, I do not imagine those costs would be very high. The provisions also require:
“88. A fair and equitable share of associated administrative costs will be transferred to the Scottish Government. The…block grant will be adjusted”.
A wide range of organisations that gave evidence to the Scottish Parliament Devolution (Further Powers) Committee backed the devolution of APD, including the Institute of Directors Scotland, Glasgow chamber of commerce, the Scottish Chambers of Commerce and the Scottish Council for Development and Industry. As the report says:
“This was coupled with support for either a reduction or scrapping of this duty after devolution had taken place.”
The Scottish Parliament Information Centre analysis for the Committee, referred to in the report, found that:
“Draft clause 14”—
now clause 16—
“would make this a devolved tax, as recommended by the Smith Commission. It would give HMRC the ability to ‘switch off’ these UK taxes in Scotland from a date to be set by secondary legislation.”
As with many of the clauses we have discussed, there is no recommendation as to how the transfer would work or how the block grant would be adjusted, but, as I understand from other clauses, there is no requirement for legislation to achieve that. Essentially, the legislation delivers on the Smith agreement in the way anticipated. We have no concerns with the drafting of the clause, which did not change between the Command Paper version and the Bill.
In terms of the policy approach on air passenger duty, on which much of this clause stand part debate is centred, the Scottish National party supports the devolution of air passenger duty to the Scottish Parliament. We are pleased that the Scotland Bill will deliver this recommendation. We have previously set out our proposals to halve APD when control over the tax is devolved, and we fully intend to abolish it when public finances allow. We believe that taking that action will encourage greater tourism and investment in Scotland, boosting our economy and creating new jobs.
There are a substantial number of benefits for consumers from the reduction of air passenger duty, not least because the UK levies are some of the highest aviation taxes in the world—indeed, APD is relatively rare in other countries. APD is currently £71 for an economy class long-haul flight, which is extraordinary—that is over 2,000 miles. Abolishing APD would mean that a family of four, with children over 12-years-old, would save something under £300 per long-haul flight—a substantial saving by any measure. Reducing APD would therefore save consumers money, and, in certain circumstances, significantly reduce the cost of family holidays.
There are broader economic benefits from a reduction in air passenger duty. A report commissioned by Edinburgh airport in March 2015 found that a reduction in APD would bring considerable economic benefits to Scotland. The report argued that the Scottish Government’s policy of halving APD in the first instance would create new jobs, and that a failure to take action would cost Scotland tourists and tourism revenue. Its key findings included the fact that a 50% reduction would provide benefits to Scotland worth £200 million a year, meaning a £1 billion economic boost over the lifetime of a Parliament; and that a 50% reduction would bring considerable benefits to local communities, creating something in the order of 3,800 new jobs by 2020. On the other hand, it was estimated that we could lose out on about 1 million passenger journeys a year if APD was not reduced. Again, by 2020, that would cost the Scottish economy up to £68 million in lost tourism expenditure every year. It is clear, therefore, that devolving and reducing APD would have a considerable economic impact on Scotland and that failure to act would mean Scotland missing out on significant tourism and hospitality revenues.
We have heard what happened in the Republic of Ireland and Northern Ireland. Although the 2014 study by Ulster University was a little more ambivalent and suggested only a limited number of scenarios in which Northern Ireland might benefit, supporters of a reduction pointed to the success of this approach in the Republic of Ireland. As the BBC reported:
“Tourism NI chairman Howard Hastings said: ‘If you compare with our nearest neighbour in the Republic of Ireland, in the two years since they abolished air passenger duty, they've seen arrivals grow by 1.1 million passengers.’”
It is self-evidently a success, and if we can replicate that, we can deliver the benefits I have described. If we do not, we will face the cost of failure.
The hon. Member for Blackley and Broughton and others tabled amendments that are not being debated—although the debate has been very similar to the one I would have heard had we been debating them—and expressed concern that the devolution of APD to Scotland would disadvantage airports in the north of England, as travellers journey across the border to Scottish airports in order to travel to holiday destinations abroad. The SNP makes no apologies for championing Scotland, and we believe that the reduction and eventual abolition of APD would benefit Scotland’s economy and tourism sector in particular. Its devolution is also a cross-party commitment agreed through the Smith commission.
Attracting more tourists to Scottish airports by reducing APD could also benefit the north of England by rebalancing the economy away from London’s pull and bringing more visitors to the northern parts of these islands as a whole. If one considers Edinburgh to be a hub airport, I am sure that businesses in the north of England would rather spend an hour on the train from Newcastle to Edinburgh than four, five or six hours on the cross-London journey to Heathrow, let alone travelling to a hub airport such as Schiphol or Charles de Gaulle. Edinburgh is the ideal solution for people from Durham, for example.
A stronger Scottish economy will also bring significant economic benefits to the north of England, as new trade and investment opportunities arise. However, we are concerned about some of the UK Government’s threats in relation to APD—this relates to what the hon. Member for Blackley and Broughton said about competition. During the election, the Prime Minister astonishingly expressed concerns that a reduction in APD would “distort competition”. He said:
“The SNP government in Scotland is committed to using its new powers to cut and eventually abolish air passenger duty for flights from Scottish airports. That could distort competition and see business drawn north of the border with a huge impact on airports in the rest of our country so we’re reviewing the way air passenger duty works to make sure other cities don’t lose out”.
Devolving and amending APD is not a distortion of competition; it is competition.
The Prime Minister’s comments chimed with his so-called Carlisle principle. It was reported that the Prime Minister had
“outlined plans for an annual review of the impact of Scottish Devolution on the rest of the UK. He announced what he’s calling the ‘Carlisle principle’”.
He did that during a speech in Crewe—one would think he would go to Carlisle to do it, but Crewe it was. He said that the aim was to make sure that policies devolving more power to Scotland did not have a negative impact on other parts of the UK—in areas such as air passenger duty, tax rates, university tuition fees or energy policy. If only we had thought of that, we would not have abolished the subsidies for onshore wind.
The Prime Minister said:
“I want to set out a new principle—you could call it the Carlisle Principle—that we will make sure that there are no unforeseen detrimental consequences to the rest of the country from Scottish devolution, for either England, Wales or Northern Ireland.”
Will the Minister explain what the Carlisle principle—whatever it actually is—will mean in practice for the devolution of APD? I hope that when he gets up, he will say precisely nothing.
Mr Kevan Jones
It is a pleasure to serve under your chairmanship, Mr Crausby.
I do not oppose the devolution of APD to the Scottish Parliament, but as my hon. Friend the Member for Blackley and Broughton (Graham Stringer) said, it will have a dramatic effect on regional airports within the UK. The hon. Member for Dundee East (Stewart Hosie) mentioned the attractions of Edinburgh to north-east businesses that want international flights, but I have to say that they would sooner fly directly from Newcastle. As for the notion that people would fly to Edinburgh and then get on a train to travel south to our region, that would not be an alternative to flying directly to the north-east via Newcastle. Newcastle airport has been a success story for the north-east.
We hear much from this Government about rebalancing the economy. The north-east has taken the brunt when it comes to the loss of public sector jobs and it also has the highest levels of unemployment in the UK. There have also been knock-on effects from the Government’s decisions deliberately to divert funds from poorer regions such as the north-east to the Tory heartlands.
We have heard the Government’s rhetoric about growing the private sector. Newcastle airport has, I think, been a great example. A few years ago, I had the privilege of being a director of the airport, which is a great partnership between the local authorities in the region and the private sector. In 2012, the airport added value of some £640 million to the north-east economy, and under its master plan by 2030 it will generate some £1.3 billion for the north-east economy. It is currently sustaining 7,800 jobs, rising to over 10,000 by 2030.
The team at Newcastle airport now provides direct flights to Dubai and to New York, and those international flights will be put at risk if the Scottish Government go ahead with their plans. I understand that this is a devolved matter, and I understand the reasons why the Scottish Government want to reduce APD. Clearly, as my hon. Friend the Member for Blackley and Broughton said, the tax was brought in for environmental reasons that now make little sense when it comes to growing the country’s economy.
Alex Salmond (Gordon) (SNP)
I could be reading the amendment paper wrongly, but am I wrong to interpret the hon. Gentleman’s amendment 36, which has not been called for debate, as designed to delete the clause that would devolve air passenger duty? Several times, the hon. Gentleman said that he was not opposed to the devolution of APD, but I thought his amendment was supposed to delete the provisions that made APD a devolved matter.
Mr Jones
The reason for that is that I was advised to do so to get my probing amendment on the amendment paper. There is no intention to delete the provisions, and the amendment has not been selected. I would have thought that the right hon. Gentleman’s experience in the House would make him au fait with the procedures for ensuring that Members can get a subject debated.
The Scottish Government’s proposals on APD do not make economic sense. Reducing and abolishing APD will clearly grow airport traffic into airports in Scotland as well as grow jobs, yet that will be to the detriment of airports such as Newcastle’s.
Peter Grant
If the hon. Gentleman is concerned that further devolution to Scotland might make Scotland too successful, surely the answer is to see further devolution to the regions and great cities of England, not to stop further devolution in its tracks so that everything remains centred in London for ever and a day.
Mr Jones
I do not disagree with the hon. Gentleman’s thrust, but what the Government have proposed for the north-east is not clear: an elected mayor whose area would stretch from Berwick right down to the Tees. That is the only way we will get any sort of devolution to the north-east at all, and there has been no public debate about it.
Clearly, the measures on air passenger duty will grow jobs in Scottish airports. I accept the point made earlier about the more outlying airports. In this country, we seem to have a policy of looking at regional airports as we do the major city airports. However, it is clear that small airports and communities, whether in Scotland or the rest of the UK, need connectivity to the major hubs.
Dr Whitford
Prestwick airport, the oldest passenger airport in Scotland, is in my constituency. We are not even connected to London. There was a time when people could take transatlantic flights from it, but no longer. Rather than thinking that Scotland would steal from the north of England, can the hon. Gentleman not accept that the total number of tourist visitors could grow?
Mr Jones
I agree, but if air passenger duty were zero in Scotland and the same as it is now in Newcastle, Scotland would clearly have an advantage. I do not want to get on to how much Scotland is able to devote to its tourism promotion budget, something that we need more of in the north-east.
Mr Jacob Rees-Mogg (North East Somerset) (Con)
The hon. Gentleman seems to be setting out the most attractive form of tax competition. If Scotland gets rid of air passenger duty, there will be real pressure on the Chancellor to abolish it for the rest of the United Kingdom, and the whole economy will grow. It is marvellous to see the whole House moving in such a right-wing direction in its economic debates.
Mr Jones
On this very rare occasion, I agree with the hon. Gentleman. I would abolish APD altogether; it is a tax that, as the Scottish Government have recognised, stifles economic development. A PwC report says that the number of overseas visitors would grow by 7% if we abolished it altogether and that more money would come in from other taxes.
Scotland, for her own, sensible reasons, could halve and then abolish APD, leaving Newcastle at a great disadvantage. That would cost jobs; it has been anticipated that up to 1,000 jobs could be lost by 2025 if the situation remained the same, along with £400 million gross value to the economy of the north-east. One of the poorest regions in the UK cannot afford to be at such a disadvantage.
As my hon. Friend the Member for Blackley and Broughton (Graham Stringer) said, there seems to be a bit of confusion over the Government’s approach. He read out the Chancellor’s comment at the Treasury Committee sitting. The Chancellor seemed to be sanguine, giving the impression that if Scotland reduced its APD, airports such as Newcastle could happily soak up a 10% loss in traffic. I am sorry, but I have been a director of the airport and I know the management team well—I know how hard they have to work to attract every single flight and new route to Newcastle. A clear 10% loss would not be acceptable. My hon. Friend mentioned another point. The Chancellor also said that his personal view was that tax competition should be allowable. If that means putting the north-east at a disadvantage, the Government have to address that.
There has been some confusion. During the general election, the Prime Minister was asked by a local newspaper about unfair competition affecting Newcastle airport and—we should not forget the other airport in the north-east —Durham Tees Valley airport. He was questioned about reducing rates of APD for north-east airports to match the reduction in Scotland, as the Labour party in the region had been arguing. He said that that could be a positive suggestion.
What we need now is clear action. We have a new Minister for the northern powerhouse, the Under-Secretary of State for Communities and Local Government, the hon. Member for Stockton South (James Wharton). I understand that his constituency includes Durham Tees Valley, so whether he can persuade the Treasury to do something about the effect of the clause on the north-east economy will be an interesting test of his power. We hear a lot about the northern powerhouse. Those of us in the north-east think that it ends in Manchester.
It is important that the effect of the clause is addressed. If it is not, this unfair tax will not only cost jobs in one of the poorest regions of the UK, but stifle one of the few economic drivers in the north-east in Newcastle airport, which can grow not only business, but competition. As I said in an earlier intervention, Newcastle airport is important not only for passengers, but for cargo revenues. It enables companies in the north-east to export around the world. The direct flight to Dubai has meant that a lot of local businesses have been able to export products there directly and to grow.
I am interested to know the Government’s approach to this issue. If the clause is passed, we cannot have a lag that leaves regions such as the north-east being hit by the tax competition which the Chancellor seems to think is acceptable, but which the Prime Minister clearly wants to do something about. The ball is firmly in the Government’s court to ensure that this anomaly is put right.
Alex Salmond
I am grateful to the hon. Members for Blackley and Broughton (Graham Stringer) and for North Durham (Mr Jones) for the way that they have spoken about this issue. I am unconvinced by the argument that they had to table an amendment to delete the devolution of air passenger duty in order to make speeches. Speeches could be made on clause stand part. None the less, whatever the flow of logic, I am delighted that they have confirmed that they support the devolution of APD. I will be very supportive, in return, of some of the arguments that they have made.
As I have been through this issue in one guise or another over the past few years, I thought that it might be useful to remind the Committee of a little bit of history. The devolution of APD was proposed by the Calman commission. For Members who were not in the House at that time or who are not fully up on these matters, the Calman commission was the response of the Unionist parties to the SNP’s breakthrough in the 2007 election. We are still debating the devolution of APD because it disappeared from the legislative programme arising from Calman that was enacted in the last Parliament. It was proposed again by the Smith commission, which was the response of the Unionist parties, through the vow, to try to deflect the yes campaign in the final days of last year’s referendum.
Both those events, incidentally, have been overtaken by the fact that 56 Members of Parliament now adorn these Benches for the Scottish National party. No doubt, at some occasion in the not too distant future, we will be back debating the Government’s response to that latest political development. Surely history tells us—the hon. Member for Blackley and Broughton referred to this—that it would have been far better to have been more extensive and generous with devolution in the first place, and that we should not repeat the mistakes that the Government and the Unionist parties made in the past.
I had a meeting with Howard Davies a few years back when he was asked to chair the Airports Commission. I will be generous and say that it was set up to address the under-capacity and congestion at airports in the south-east of England—or perhaps it was to bash Boris’s proposal for an island airport. The point was to reconcile between Heathrow and Gatwick. We can be absolutely certain about two things in respect of the proposals that will come from the Howard Davies commission. First, we can be certain that, whatever the final adjudication, it will be some considerable time before either Heathrow or Gatwick emerges as the winner from the process. Secondly, we can be certain that, whatever emerges from the process, considerable amounts of public money, running into many billions of pounds, will be devoted, by one means or another, to expanding the capacity of those airports, which are severely congested at the moment.
The reason I mention this is that when I had my meeting, as First Minister, with Mr Davies—it might be Sir Howard Davies now, for all I know—[Interruption.] I am told that he is soon to be ennobled—other people have more information on these things than I do. Anyway, when I had my meeting with Sir Howard, I said, “Given that, whatever happens, your proposals will take some time to be enacted, would it not be a grand idea for you to propose, in the meantime, measures to relieve some of the congestion in the south of England airports? Perhaps reducing air passenger duty in Scotland, Northern Ireland and the north of England and, pro tem at least, diverting some of the business from those airports would relieve some of the extraordinary pressure on them.”
Mr Kevan Jones
Does the right hon. Gentleman agree that Scotland and the north-east, for instance, are losing business not just to London but to parts of mainland Europe? At Schiphol, for instance, air passenger duty has been abolished.
Alex Salmond
I do agree with that, but I also think that we must consider the motivation for the introduction of what appears to be a remarkably foolish tax. Any Chancellor looking at Heathrow, for example, would see a fully congested airport and an air passenger duty with an effective collection rate of 100%, whereas any Chancellor looking at the north of England, Northern Ireland or Scotland would see airports with substantial capacity where a reduction in APD could increase business, and, given increased revenues from VAT and other taxation, would see the magic formula for a Laffer curve emerging. I was going to turn to the hon. Member for North East Somerset (Mr Rees-Mogg) at that point, but when I mentioned the Laffer curve, he was busy having a conversation, just when he could have reached a peak of excitement.I think that it would be possible to achieve that Laffer curve, reducing the tax and increasing the revenue, and it seems that my view is shared on both sides of the Committee.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
Does the right hon. Gentleman not recognise that, whether the Davies commission decides on Heathrow or on Gatwick, the vast majority of the investment will come from the private sector? It will not be billions of pounds of taxpayers’ money. Does he not also recognise that there has been a campaign in the aviation industry to abolish APD altogether, and that the Treasury is hooked on the tax because it is worth £2.3 billion a year?
Alex Salmond
I agree with the hon. Gentleman’s first point only to the extent that there are people who argue that nuclear power does not require the investment of public money. I think he will find that, as the implementation of these proposals proceeds, substantial amounts of public money will be invested in the infrastructure to make it viable and credible. According to a recent study of transport infrastructure spending per head in various parts of England, the figure for the south-east of England was over £2,000 per head, the figure for the north-east was £26 per head, and the figure for the north-west was £200 per head. I do not have the exact figures, but I think that I have the relative parameters just about right—
Graham Stringer
The figures that the right hon. Gentleman has given are moving in the right direction, but the distortion is actually even greater. The capital expenditure figure is over 90% in London and the south-east, compared with single-figure percentages in Yorkshire and Humberside and the north-east.
Alex Salmond
I am never knowingly undersold. I accept what the hon. Gentleman has said. I was trying to moderate the figures slightly, in case the Committee found them incredible. However, they do tell us where we should be turning in the context of “distortion of competition”.
I am delighted that Members from the north of England have accepted that this tax should be devolved, and I am delighted that they have accepted the economic argument behind the direction in which the Scottish Government are moving. I think that the tax should be reduced at airports in the north of England as well, because they have substantial capacity that would increase revenue for us all. I am glad that their amendment did not become the basis of this conversation, because if the Scottish Government had opposed the devolution of part of APD to Northern Ireland, no progress would have been made. We are now on the verge of having APD devolved to Scotland, and I say to Members representing north of England constituencies that they should take the attitude that this should be the example for further devolution of a sensible policy which not only benefits one part of the country but looks at the economic opportunities in all parts of the country.
Unfortunately, I arrived for this debate at the end of the VAT fiddle discussion. I hope when the Minister replies on APD that, instead of his wholly disappointing and negative attitude to the embezzlement of VAT from the Scottish police service, he will return to the style of grace and imagination with which he usually so adorns the Dispatch Box, and this time recognise the opportunity for Scotland, and indeed the north of England, of making sure that this disgraceful tax is reduced and economic activity is increased.
Rob Marris (Wolverhampton South West) (Lab)
I do not share this cosy consensus. The hon. Member for Dundee East (Stewart Hosie) made it very clear in his usual honourable way—I have sparred with him many times—that if APD is devolved, the Scottish Government, if controlled by the SNP, will cut it markedly and have the goal of abolishing it. He helped the Committee by quoting the Prime Minister to the effect that there would be—these are my words, not the Prime Minister’s—a “beggar my neighbour” attitude downwards on APD. Call me old-fashioned, but I think environmental laws should be state-wide and international, and I consider APD to be an environmental law, which is why I voted for it years ago.
As ever, the SNP has been totally open with the House: it wants to see the number of airline passengers increase throughout the UK. That is an environmental step backwards. Fortunately, we have environmental laws internationally through the EU, for example on waste disposal and air quality, something on which the UK is, to coin a phrase, falling foul at present.
Mr MacNeil
Following the hon. Gentleman’s argument, does he want to increase the rate of APD or is he saying the Tories have got it at just the right rate?
Rob Marris
Yes, I would increase the rate of APD.
I was a Member of the House when the Climate Change Act 2008 was debated—there are several other such Members present, although we are a minority. There is in that Act a target which I think is UK-wide—I stand to be corrected on that—for an 80% cut in the UK’s CO2 emissions by 2050. I did not vote for that because I thought it was, to coin a phrase, hot air and, sadly, in the years since that Act has been passed, I have been proved right, as we see tonight.
Alex Salmond
The hon. Gentleman is not correct. Climate change legislation is devolved and the Scottish Parliament has its own Act in which the targets are even more ambitious and well on the way to being met.
Rob Marris
I am grateful to the right hon. Gentleman for that. Can he inform the Committee how on earth Scotland and the Scotland Parliament are going to meet those figures if they are intent on increasing the number of airline passengers?
Alex Salmond
Because, as one of the hon. Gentleman’s hon. Friends alluded to, one direct flight is better than two indirect flights.
Rob Marris
The right hon. Gentleman will know that the whole history of airline travel hitherto has been that it increases exponentially. It has done so, and if allowed to do so, will continue.
So I do not share this cosy consensus. I am not part of the airline and airport love-ins. As Members will know, airlines and their passengers already get a huge subsidy because of the low price they pay for airline fuel—kerosene. Members ought to bear this in mind when debating APD: no doubt the figures are lower in Scotland, but across the UK in any given year half the population do not fly. I believe that hon. Members have a completely distorted view of this matter. I suspect that I am one of the very few Members of this House who does not fly; I have not flown for years. I suspect that every other Member has a distorted view, based on self-interest. [Interruption.] It is not me who is causing a huge amount of environmental degradation through flying. The greenhouse gases emitted by aeroplanes at high altitude are far more damaging than the same amount of greenhouse gases emitted at sea level. Air travel is the most polluting form of mass travel.
In that context, I regret that the Government are devolving air passenger duty. Yes, I would increase it. The UK Government will live to regret this measure, because we are clearly heading towards the abolition of air passenger duty in Scotland and, eventually, through a process of “beggar my neighbour” downwards, across the rest of the United Kingdom. That will be another nail in the coffin of the doomed and uneconomic HS2 railway line. People will continue to fly south from Scotland and the north of England, and vice versa, rather than using the HS2 line. It is already uneconomic and, with the abolition of air passenger duty, it will become even more so.
Ian Murray
I do not want to detain the Committee for long, but let me just pose a few questions on what has been said about air passenger duty and the aggregates levy. I shall start with air passenger duty. Prior to the election, Opposition Members wrote to the Chancellor of the Exchequer asking what impact a rate of air passenger duty that was higher in Scotland than in England would have on regional English airports and Scottish airports. Will the Minister tell us what the Government’s movements have been on that impact assessment?
Hon. Members were berating my hon. Friend the Member for Wolverhampton South West (Rob Marris) a moment ago, but he has raised an incredibly important environmental issue. The issue has been raised directly by the Committee on Climate Change, which reported recently that Scotland had missed its climate change target by 4.5%, the third time in a row that it had missed an annual target. The report also asked the Scottish Government to assess the impact of carbon on the economy in relation to the slashing of air passenger duty. I cannot ask the Scottish Government this question directly from the Dispatch Box, but can the Minister tell me whether an environmental assessment has been carried out on the raising or lowering of the duty?
On the aggregates levy, will the Minister tell us what progress has been made on resolving the legal issues relating to state aid and when we can expect the levy to be devolved to the Scottish Parliament?
Mr Gauke
We have had a reasonably lengthy debate in which Members have not, for the most part, tended to differ on the substance of the clause on air passenger duty, although the hon. Member for Wolverhampton South West (Rob Marris) is never afraid of setting out a contrary opinion. In fact, some Opposition Back Benchers argued for the abolition of APD, which would cost about £3.2 billion, while others argued for increasing it. If there is a need for fresh thinking among Labour Members, we are hearing plenty of it this evening, even if there has not been much in the way of coherence.
Graham Stringer
The Minister is right to mention the revenue from air passenger duty, but is he aware that a number of studies—the most significant being the PwC study—suggest that the economic benefit to the country of the abolition of APD would be greater than £3.2 billion?
Mr Gauke
I am aware of those studies. I will not detain the Committee for long on this subject, but we do not agree with the conclusions of the PwC study. We do not believe that the benefits of abolition would be as significant as the study suggests.
The hon. Members for Blackley and Broughton (Graham Stringer) and for North Durham (Mr Jones) talked about the impact on regional airports of the devolution of APD to Scotland. We recognise the potential impacts and the Government are reviewing options for supporting regional airports to deal with the effects of devolution. We will be publishing a discussion paper on this later in the summer and our document will address many of the concerns raised during today’s debate by the hon. Gentleman. I will ensure that it is available to Members of this House.
Mr MacNeil
Does the Minister see any advantages in other tax revenues from the cutting of APD or does he think the countries that have cut APD have done it as a result of lemming-like behaviour?
Mr Gauke
There are arguments and different views as to the economic impact of cutting APD. We are legislating to devolve this to Scotland, and I am sure the hon. Gentleman will be supporting this legislation. That move is also part of the Smith commission arrangements. It has potential knock-on effects for regional airports, particularly those close to the Scottish border. As I say, we are reviewing our options there and will report later in the summer.
Jim Shannon (Strangford) (DUP)
One advantage of the reduction in APD that we have been able to achieve in Northern Ireland is on the main flight between Belfast Aldergrove and New York city. That flight is well used, it has made Aldergrove’s position more powerful and it has connected the United States and Northern Ireland—I could say more. That is just an example from Northern Ireland, and the effect of one flight could be replicated across the whole United Kingdom.
Mr Gauke
Again, the hon. Gentleman is making a particular case. There are particular circumstances applying to that flight to the US, especially the competition that existed from the Republic of Ireland, which was why steps were taken on that point. As I say, we will be setting out options—
Mr Kevan Jones
Is the Minister telling the House tonight that the Chancellor has changed his views? When he went before the Treasury Committee last year, he talked about the effects on Newcastle, which he said would be about 10%. He said:
“That was work carried out a couple of years ago, but in Newcastle’s case, its traffic was up 12% last year, so I think these are manageable.”
Is the Minister now giving a commitment that this will be looked at or is the Chancellor sticking to his position that a reduction of 10% would be acceptable and “manageable” for Newcastle?
Mr Gauke
Let me repeat what I said earlier: there are potential impacts of devolution on regional airports, the Government are reviewing options for supporting regional airports in the light of those effects and we will publish a discussion paper later in the summer. I understand that the hon. Gentleman, who has campaigned consistently on this matter, may be a little impatient, but if he will just bear with us for a little longer—
Mr Jones
I understand the constraints and I would not expect the Minister to criticise his boss. He said a discussion paper will be coming out, but what is the timescale going to be? Clearly if the Scottish Government move to reduce APD as quickly as they get the powers, that will have a direct effect on places such as Newcastle. What timescale is he looking at?
Rob Marris
Is it the Government’s view that the existence of APD has had any effect on the number of airline passengers flying to and from the UK, and within the UK, in each year since it came in? Do the Government think the existence of that tax has lessened the numbers, had no effect on them or, paradoxically, increased them?
Mr Gauke
I should put it as neutrally as I possibly can. We do not believe that the behavioural effects are as great as those set out in the PwC report, which is why we believe APD does raise revenue. There is a consensus—not a universal consensus—that it is right that we move on APD. On the point about regional airports, we will come back to that later in the summer.
May I also pick up the point on the aggregates levy? The hon. Member for Edinburgh South (Ian Murray) asked about the likely progress on legal matters. The European Commission was forced to reconsider its 2002 decision that the exemptions from the levy did not provide state aid following legal action by the British Aggregates Association. It announced its decision in March, finding that the levy as a whole was lawful, as were most of the exemptions. The Government are currently informally consulting trade associations on draft legislation to reinstate those exemptions—for example on slate and clay—found lawful by the Commission in March 2015.
With those points of clarification, I hope that the clauses before us can stand part of the Bill.
Question put and agreed to.
Clause 16 accordingly ordered to stand part of the Bill.
Clause 17 ordered to stand part of the Bill.
Schedule 1 agreed to.
Clause 18 ordered to stand part of the Bill.
New Clause 1
Independent Commission on Full Fiscal Autonomy
‘(1) The Secretary of State shall appoint a commission of between four and eleven members to conduct an analysis of the impact of full fiscal autonomy on the Scottish economy, labour market and public finances and to report by 31 March 2016.
(2) No Member of the House of Commons or of the Scottish Parliament may be a member of the commission.
(3) No employee of the Scottish Government or of any government Department or agency anywhere in the United Kingdom may be a member of the commission.
(4) The Secretary of State shall appoint as members of the commission only persons who appear to the Secretary of State to hold a relevant qualification or to have relevant experience.
(5) The Secretary of State shall not appoint as a member of the commission any person who is a member of a political party.
(6) Before appointing any member of the commission, the Secretary of State must consult—
(a) the Chair of any select committee appointed by the House of Commons to consider Scottish affairs, and
(b) the Chair of any select committee appointed by the House of Commons to examine the expenditure, administration and policy of Her Majesty’s Treasury and its associated public bodies.
(7) The Secretary of State may by regulations issue the commission with terms of reference and guidelines for the commission’s working methods, including an outline definition of the policy of full fiscal autonomy for the commission to analyse.
(8) The Secretary of State must lay copies of the report of the commission before both Houses of Parliament, and must transmit a copy of the report of the commission to the presiding officer of the Scottish Parliament.
(9) Regulations under this section must be made by statutory instrument, subject to annulment in pursuance of a resolution of either House of Parliament.” —(Ian Murray.)
This New Clause requires the Secretary of State for Scotland to establish an independent commission of external experts, appointed in consultation with the Treasury Select Committee and Scottish Affairs Select Committee, to publish a report by 31 March 2016 setting out an analysis of the impact of the policy of Full Fiscal Autonomy on the Scottish economy, labour market and public finances.
Brought up, and read the First time.
The Second Deputy Chairman of Ways and Means (Natascha Engel)
With this it will be convenient to discuss the following:
New clause 21—The Scottish Office for Budget Responsibility—
‘(1) Part 2 of Schedule 5 to the Scotland Act 1998 (specific reservations) is amended as follows.
(2) In Section A1 (fiscal, economic and monetary policy)—
(a) For the heading “Exception” substitute “Exceptions”—
(b) After that heading, insert—
“The creation of a body corporate, called The Scottish Office for Budget Responsibility, for the independent scrutiny of Scotland‘s public finances, including all tax and spending in areas for which the Scottish Government has legislative competence.””
This New Clause would provide for the creation of a Scottish Office for Budget Responsibility to exercise fiscal and budgetary oversight over Scottish Government competencies. The Smith Commission recommended that the Scottish Parliament should seek to expand and strengthen the independent scrutiny of Scotland’s public finances in recognition of the additional variability and uncertainty that further tax and spending devolution will introduce into the budgeting process.
New clause 23—Local Discretionary Taxation—
Individual local authorities in Scotland shall have the discretion to raise additional income by levying a tax, in addition to Council Tax and Non-Domestic Rates, on either residents, occupiers, property owners or visitors in the local authority or within a discrete area of the local authority.”
The power will enable local authorities to introduce tax(es) without the need to seek approval from Scottish Government, with the rates and reliefs being determined locally and the local authority being both granted powers to ensure that those on which the tax is levied have a legal obligation to pay and the local authority having the discretion to determine how the additional revenue is expended.
New clause 24—Tax and Economy Forum—
‘(1) The Secretary of State shall appoint a Tax and Economy Forum to conduct an analysis of the impact of the changes in legislative and executive competence resulting from this Act on the economy, labour market and public finances in Scotland and in the other parts of the United Kingdom.
(2) The Tax and Economy Forum may make recommendations for fiscal reforms within Scotland, to be considered by the Secretary of State.”
The new Clause would require the appointment of a Tax and Economy Forum to assess the impacts of fiscal devolution proposed within this Bill on Scotland and on the rest of the United Kingdom.
New clause 25—UK Commission on fiscal powers—
‘(1) Within 6 months of the day on which this Act is passed, the Secretary of State shall appoint a commission to examine the deployment of fiscal powers at local, devolved and United Kingdom levels.
(2) The commission shall comprise between 4 and 6 representatives of any of—
(a) the Scottish Parliament,
(b) the National Assembly for Wales,
(c) the Northern Ireland Assembly,
(d) local government,
(e) the House of Commons, and
(f) the House of Lords.
(3) The bodies mentioned in subsection (2) shall select their representatives in any way they see fit and the chief executive or presiding officer of each of those bodies shall inform the Secretary of State of the names of the representatives of those bodies, which may replace their representatives whenever the body concerned has determined to do so.
(4) Subject to subsection (5), the commission may determine its own quorum and methods of working and must publish a protocol setting out its own terms of reference.
(5) The commission shall keep the operation of fiscal powers under review, making reports and recommendations as it deems appropriate.
The purpose of this New Clause is to ensure that there is proper consultation between the different parts of the United Kingdom to ensure that new Scottish fiscal powers are deployed in a way that does not undermine the cohesion of the UK. The proposed Commission could also make recommendation regarding the future of devolved fiscal powers.
New clause 33—Full fiscal autonomy for Scotland—
‘(1) The Scottish Government and the Government of the United Kingdom must enter into an agreement (the “Economic Agreement”)—
(a) setting out a plan for implementation of full fiscal autonomy for Scotland, and
(b) establishing a framework within which the two Governments are to coordinate their economic and fiscal policies in the context of full fiscal autonomy for Scotland.
(2) Full fiscal autonomy for Scotland means that—
(a) the Scottish Parliament and Scottish Government have competence for determining revenues raised in or as regards Scotland through taxation and borrowing,
(b) the Scottish Parliament and Scottish Government have competence for determining levels of public expenditure in or as regards Scotland,
in accordance with the amendments made by this Act.
(3) The framework mentioned in subsection (1)(b) must in particular include arrangements for—
(a) facilitating fiscal coordination,
(b) overseeing economic cooperation,
(c) joint responsibilities in areas of mutual interest,
(d) safeguarding fiscal sustainability.
(4) In determining the terms of the Economic Agreement the two governments must seek to ensure—
(a) the maintenance of monetary stability throughout the United Kingdom,
(b) the maintenance and promotion of the single markets in the United Kingdom and the European Union,
(c) that they cooperate in the exercise of their respective functions relating to the administration and collection of taxes,
(d) an equitable and transparent approach to consequences, resources and rewards,
(e) that the Scottish Parliament and the Scottish Government retain the benefits of increased tax revenues delivered by successful policies pursued by them,
(f) that the Scottish Parliament and the Scottish Government have the powers necessary to manage the consequences of full fiscal autonomy for Scotland,
(g) that full fiscal autonomy for Scotland is implemented over a period of time, as the Scottish Parliament and the Scottish Government acquire capacity to carry out their additional competences.
(5) The Economic Agreement is to be entered into as soon as possible and the two governments must cooperate in good faith with a view to achieving that.
(6) As soon as possible after the Economic Agreement is entered into—
(a) the Scottish Ministers must lay a copy of it before the Scottish Parliament, and
(b) the Secretary of State must lay a copy of it before both Houses of Parliament.
(7) The two governments must from time to time review the Economic Agreement and make such amendments to its terms as they may agree with a view to ensuring that it continues to meet the requirements of this section.
(8) Subsection (6) applies to the Economic Agreement as amended as it applies to the Agreement as entered into.
(9) The Secretary of State may, with the agreement of the Scottish Ministers, by regulations modify this section.
(10) A statutory instrument containing regulations under subsection (9) may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”
This new clause would require the Scottish and UK governments to reach agreement on the delivery of full fiscal autonomy for Scotland.
Amendment 3, in clause 63, page 67, line 30, leave out subsection (3) and insert—
‘(3) Part 2 of the Bill comes into force at the end of 2 months beginning with the publication of the report of the Independent Commission on Full Fiscal Autonomy appointed under section (Independent Commission on Full Fiscal Autonomy).”
This amendment provides that Part 2 (Tax) will not come into force at the end of two months beginning with the day on which the Act is passed, in order to link the commencement of the tax provisions of the Act with the work of the Independent Commission on Full Fiscal Autonomy, appointed under New Clause NC1, which would be required to report by 31 March 2016.
Ian Murray
It is great to see you in the Chair, Ms Engel. Congratulations on your elevation to Deputy Speaker. It appears that in tonight’s debate there is a sense of déjà vu, as we debated full fiscal autonomy a few weeks ago. Given that the Committee stage of this Bill has been dominated by the SNP manifesto commitment to deliver full fiscal autonomy and bringing forward its watered down promise to deliver it this year, it is good that we have the opportunity to try to put it into this Bill. In fact, as we witnessed last week, the SNP’s hand had to be forced by its arch Thatcherite colleagues, when its Members went into the Lobby with the hon. Member for Gainsborough (Sir Edward Leigh). I said at the time that the worst possible scenario for Scotland would be the SNP demanding full fiscal autonomy and its being delivered by a majority Conservative Government. Those words were echoed—
Ian Murray
Let me just finish this point. Those words were echoed by Dave Watson, the head of campaigns at Unison Scotland, who said:
“An incoming Tory government faced with a big number of SNP MPs, saying, ‘OK, if that’s what Scotland voted for, let’s give them Full Fiscal Autonomy.’ The Treasury would be able to dump £7.5bn of the deficit on the Scottish Government and just walk away.”
The fact that the SNP has another fudged amendment this evening shows that it does not believe that full fiscal autonomy would be good for Scotland.
Ian Murray
Before the hon. Gentleman pops up to say, “Too wee, too stupid and too poor,” as he always does, may I remind the House that that was a phrase coined by the SNP Finance Secretary and no one else? It is worth putting that on the record, given that he always pops up to say that.
Lord Smith of Kelvin said in his report that one of the primary aims of the Smith agreement was to provide the Scottish Parliament with accountability—
Ian Murray
I said that I would give way, and I will do so when I have made a little progress, given the late hour.
Lord Smith said that the Scottish Parliament was a Parliament that spends resources but does not raise any, so there is no accountability or responsibility. The Scotland Act 2012 resolved that position a little with the devolution of the most immovable taxes and 10p of income tax—
Ian Murray
I will give way to the hon. Gentleman before he bursts a blood vessel.
Pete Wishart
I am very grateful to the hon. Gentleman for giving way. This rewriting of history is great and it is fantastic to find out the position of the Scottish National party, but perhaps he can explain the position of Scottish Labour. He abstained on full fiscal autonomy. Is that because he is uncertain, or is he perhaps now unsure about full fiscal autonomy?
Ian Murray
I am delighted by that intervention. What I did not want to do last week was rain on the parade of the Scottish National party as its Members went through the Lobby with the Thatcherite Conservatives to deliver full fiscal autonomy for Scotland. That is what seems to be wrong. The SNP is in full agreement with the hon. Member for Gainsborough (Sir Edward Leigh) again tonight on the subject of the devolution of the entirety of income tax. Perhaps the party has a right-wing agenda after all.
As we know, the Bill provides full control of nearly 50% of revenues and more than 60% of spending. According to the Library, that will be 65% if the devolution of housing benefit is agreed tomorrow, making it one of the most powerful devolved Parliaments in the world. The OECD ranked the Smith proposals and came to the same conclusion.
With that accountability and responsibility must come transparency and honesty. During the general election campaign, the First Minister and SNP candidates repeatedly said that they would vote for full fiscal autonomy this year. That was reaffirmed in the television debates. All the impartial and independent expert analysis of full fiscal autonomy shows clearly that that would devastate Scotland’s financial position. That is the genesis of our new clause 1. If the Scottish Government want to dismiss all the independent experts simply because they do not agree with them, let us set up an independent commission to consider the consequences on Scotland’s finances of full fiscal autonomy.
Martin John Docherty (West Dunbartonshire) (SNP)
Subsection (2) states:
“No Member of the House of Commons or of the Scottish Parliament may be a member of the commission.”
Is the hon. Gentleman saying that the Members of the unelected and unaccountable Chamber at the other end of this building could be members, such as the possible future chair, Baroness Goldie of Bishopton?
Ian Murray
The new clause is quite clear. I do not think it would be appropriate for Members of the House of Lords to serve on the commission—[Interruption.] Will SNP Members let me finish the sentence before they start braying from the Back Benches again?
The commission would specifically be designed to have no politicians on it from either Parliament, as well as no employees of the Scottish Government or the UK Government or of any agency related to them. It should be a commission of impartial experts in the field and if the Secretary of State wants to agree to the new clause, I am happy to take on board the suggestion that “no Member of the House of Lords” should appear in it, too.
Alex Salmond
On a point of order, Ms Engel. I am not sure that I heard the hon. Gentleman correctly, but he seems to be redrafting his clause during his speech. Would it be in order for him to redraft his new clause to include the House of Lords during his speech? Can he be that uncertain of his arguments?
The Second Deputy Chairman of Ways and Means (Natascha Engel)
The right hon. Gentleman knows that that is a matter of debate, so let us continue with that debate.
Ian Murray
The problem with the right hon. Member for Gordon (Alex Salmond) is that he does not want to debate full fiscal autonomy, as he knows that it is a bad policy. Let me emphasise that if the Secretary of State wants to accept the new clause, I would be more than happy to ensure that Members of the House of Lords were not on the commission. Let us be transparent and accountable in this place, rather than nitpicking about parts of the clause. The SNP do not want the scrutiny and that is the key to this argument.
Let us consider some of that scrutiny. The much-quoted IFS analysed full fiscal autonomy in Scotland and said that it would cost £7.6 billion next year and up to £10 billion by 2020. It has made it clear that that is over and above the deficit of the UK at the moment and the spending profile of the current Conservative Government. Let me emphasise again, as this has been misquoted by the hon. Member for Moray (Angus Robertson) on a number of occasions, that that figure is in addition to the current UK deficit.
The impartial analysis has been dismissed by the Scottish Government, so let us turn to another source of information, Her Majesty’s Treasury, which analysed these figures with results broadly in line with the analysis of the IFS. According to Treasury costings that I obtained through a freedom of information request, full fiscal autonomy would leave Scotland with an additional cash terms deficit of £7.7 billion in 2015-16, rising to £8.4 billion in 2019-20.
Mr MacNeil
The hon. Gentleman will be aware that between 2007 and 2009 the UK’s deficit quadrupled. Given the significance that he attaches to deficits and to one year, what significance does he attach to the quadrupling of the debt of a state in a two-year period?
Ian Murray
I am not sure I understand the intervention. We are debating a deficit in Scotland being £7.6 billion over and above any UK deficit, rising to £10 billion by 2020. If we are defending Scottish jobs and livelihoods, that seems not just economically incredible, but economic illiteracy. Hon. Members need not take my word for it. The Scottish Trades Union Congress general secretary, Grahame Smith, commented that the Scottish Government’s own accounts were
“a sobering reminder of some of the risks of full fiscal autonomy”.
That is from the trade unions in Scotland.
The Scottish Government sneaked out their own oil and gas bulletin, their first since May 2014, last week on the last day of the Scottish Parliament. It would be good to look at that alongside the independence White Paper. The bulletin was very much in accord with the Office for Budget Responsibility that was rubbished just a few days before. It showed that North sea oil revenues and projections have fallen drastically in recent times, so let us have a look at those figures. The Scottish Government’s own oil and gas bulletin of June 2015 estimated North sea tax receipts for the period 2016-20 to be £5.8 billion. The same scenario from the same bulletin 13 months earlier estimated the receipts to be well in excess of £26 billion. Even if we compare one year—say, 2016-17—revenues had fallen from a projected £6.9 billion to £1.1 billion, and the lower estimates are as low as £500 million.
These are the Scottish Government’s own figures—all in all, an 85% drop. That tells us two things. First, it blows apart the financial basis for full fiscal autonomy. Secondly, like my new clauses 1 and 21, it calls for a more robust and impartial analysis of the Scottish economy and public finances. That is why we tabled new clauses 1 and 21. New clause 21, alongside new clause 1, would provide for the creation of a Scottish office for budget responsibility to exercise independent and impartial fiscal and budget oversight over Scottish Government devolved competencies.
The Smith commission recommended that
“the Scottish Parliament should seek to expand and strengthen the independent scrutiny of Scotland’s public finances in recognition of the additional variability and uncertainty that further tax and spending devolution will introduce into the budgeting process.”
The new clauses would do just that and take away the politicisation of one of the fundamental underpinnings of the Scottish economy, the financing of Scottish public services and, crucially, though it tends to be forgotten in this debate, the livelihoods of everyone living and working in Scotland.
I would go further and ensure that the Scottish office for budget responsibility assesses and reports on individual party manifestos, so that the public can be confident that what they are being sold is both credible and desirable. This is about simple transparency and accountability. That transparency and accountability, as I have said, has not been forthcoming on the current manifesto commitment on full fiscal autonomy. If we had had a Scottish office for budget responsibility at the last election, it would have reported that FFA would be hugely disadvantageous to Scotland. It would have backed up the IFS analysis that showed that FFA did not work and that Scotland would need a real-terms growth rate of 4.5% per year at least between 2013-14 and 2019-20. The assistant general secretary of the STUC, Mr Stephen Boyd, commented exactly on this and said:
“The implication across the board is that taxes would be cut. There are a number of examples where the Scottish Government would be trading a real and immediate cut in revenue for benefits that may not be great in the long run.”
That shows that it would not be achievable in the figures from the IFS. The IFS’s conclusion is that FFA would incur deep, deep cuts in spending or huge tax rises.
It is easy to talk about figures, percentages and statistics, but this has to be about the everyday lives of ordinary, hard-working Scottish families. Inflicting a policy on Scotland that would leave a deficit larger than the entire education budget, or more than three quarters the size of the NHS budget, will not assist Scotland. We all reject the Conservative Government’s misguided austerity, which we know is ideologically driven, rather than an attempt to balance the country’s finances, but we must also reject any policy that would inflict harsher and deeper austerity in Scotland. [Interruption.] This is not, as some would claim—they are claiming it as I speak—about being anti-Scottish, anti-aspiration or anti-hope for the ingenuity, passion and entrepreneurial spirit of Scotland; it is a sobering response to a key manifesto commitment from the Scottish National party.
SNP Members dismiss the views of the IFS, the OBR and even their own GERS reports, but even Jonathan Portes, the director of the National Institute of Economic and Social Research, has said on FFA:
“If the SNP plan for full fiscal autonomy were to go ahead, then, as a number of commentators have said, that would lead to very, very severe austerity in Scotland.”
That is why Labour is against full fiscal autonomy; that is why we believe in the pooling and sharing of resources across the United Kingdom; and that is why the public voted to remain part of the United Kingdom.
George Kerevan
Does the hon. Gentleman not see that there is a contradiction in standing up and telling us repeatedly that full fiscal freedom would be bad for Scotland and asking for an independent budget review, which he clearly does not want to take account of? He wants an independent budget office, but he is telling us what it is going to say.
Ian Murray
That is a rather strange intervention. If Members read new clause 1 and new clause 21, they will see very clearly that what we are asking for is an independent commission to analyse the consequences for Scotland of full fiscal autonomy. If the SNP is so confident about its figures, it should back that proposal and then we will have the transparency, impartiality and independence of those policies. If it is so confident that it was not fiddling the figures, it should help us to set up a Scottish office for budget responsibility and let that body analyse its figures. However, it is clear once again that, when we shine the light of scrutiny on SNP policies, its Members want to talk about the process but not look at the impartial and independent evidence before us. If they are so confident, they will back new clause 1 and new clause 21 and bring much needed transparency, credibility and accountability back to the Scottish Parliament’s finances.
Stewart Hosie
We have just listened to one of the worst speeches I have heard in 10 years. The Labour party now has one argument: we have gone from being too small, too poor and too stupid for independence to being too small, too poor and too stupid for any powers at all. The hon. Member for Edinburgh South (Ian Murray) spoke about something that was “credible”. Credible? The Scottish people decided what was credible at the election in May, and they did not say it was his party. He spoke about right-wing, Thatcherite Tories, but it sounds to me like the core vote of the only Labour MP left in Scotland.
New clause 33, which stands in my name and those of my hon. Friends, would require the Scottish and UK Governments to enter into an economic agreement setting out a plan for implementation of full fiscal autonomy for Scotland and establishing a framework within which the two Governments co-ordinate their economic and fiscal policies in the context of full fiscal autonomy for Scotland. The Scottish Parliament and Government would have competence for revenue raised in Scotland through taxation and borrowing and for determining levels of public expenditure in or as regards Scotland.
We see the framework including arrangements for facilitating fiscal co-ordination, overseeing economic co-operation, safeguarding fiscal sustainability, and setting out the joint responsibilities in certain areas. In the agreement, the two Governments must seek to ensure the maintenance of monetary stability throughout the UK and the single market of the UK and the EU. They must also ensure co-operation in the exercise of all the respective functions relating to the administration and collection of taxes and an equitable and transparent approach to the consequences, resources and rewards. The Scottish Parliament and Government would retain the benefits of increased tax revenues as a result of positive policy impacts and would have the powers they need to manage the consequences of full fiscal autonomy.
I turn briefly to new clauses 1 and 21. New clause 1 would require that a Tory Secretary of State appoint a commission of between four and 11 members, none of whom can be a Member of Parliament, a Member of the Scottish Parliament or an employee thereof. It is backed by Labour and United Kingdom Independence party Members, so we have a Labour amendment backed by UKIP asking a Tory Secretary of State—
Stewart Hosie
No, no, no.
The new clause asks for a Tory Secretary of State to appoint a commission of the great and the good from the House of Lords to determine Scotland’s future. What a lot of absolute rubbish!
Ian Murray
On that point, Madam Deputy Speaker. For the sake of clarity, the Committee will know that the procedure of this House is that any hon. Member can sign any amendment they so wish.
Stewart Hosie
So we have confirmation—Labour and UKIP hand in hand, empowering the Tories to run the rule over Scotland again.
As for new clause 21 on a Scottish OBR, we already have one—it is called the Scottish Fiscal Commission. The consultation on its expanded power closed on Friday. One would have thought that Scotland’s sole Labour MP might actually have known what was going on.
New clause 33 would have the Scottish and UK Governments enter into an economic agreement that set up a plan for the implementation of full fiscal autonomy and establish a framework within which the two Governments would co-ordinate their economic and fiscal policies in the context of full fiscal autonomy. That would mean the Scottish Parliament and the Scottish Government having competence for determining revenues raised in Scotland through taxation and borrowing, and for all of the spending, paying compensation to the UK for shared services. This is the right approach to take. I am just disappointed that we did not have proper time to debate it rather than being subject to the nonsensical rant and talking Scotland down by the so-called shadow Secretary of State. By taking responsibility for key areas of Scottish life, we can improve the Scottish Parliament’s ability to deliver real progress for the Scottish people. New clause 33 does that. It rejects the miserablist approach of the Labour party, and I commend it to the Committee.
David Mundell
I do not need a commission to tell me what a disaster full fiscal autonomy would be for Scotland. The hon. Member for Dundee East (Stewart Hosie) set out the facts, and the facts are clear—a £10 billion black hole for Scottish taxpayers to fill. We do not need a commission to tell us that.
I do not accept the new clause on a Scottish OBR, because one thing that the hon. Gentleman said is correct—it is for the Scottish Government to determine for the people of Scotland how they will ensure independent oversight of fiscal policy. The UK Government would like legislation brought forward by the Scottish Government to be consistent with OECD principles for best practice in independent fiscal institutions. We therefore look to have those discussions during the negotiation of the fiscal framework.
I therefore reject the new clauses and propose that we pass the clauses as stated.
Question put, That the clause be read a Second time.
Madam Deputy Speaker (Natascha Engel)
I ask the Serjeant at Arms to investigate the delay in the No Lobby.
Pardon for Dic Penderyn
Ann Clwyd (Cynon Valley) (Lab)
I wish to present a petition on behalf of my constituents in the Cynon Valley, my hon. Friends the Members for Merthyr Tydfil and Rhymney (Gerald Jones) and for Aberavon (Stephen Kinnock), and people from all parts of Wales. On the instruction of Mrs Beryl Astbury and Mrs Pamela Lewis, descendants of Mr Richard Lewis, their solicitor Bernard de Maid has written to the Secretary of State for Justice requesting a pardon for Richard Lewis. I repeat Richard Lewis’s last words before his hanging on 13 August 1831, which reaffirm this miscarriage of justice: “O Arglwydd, dyma gamwedd.” In English, this means, “Oh Lord, this is injustice.”
The petition states:
The Petition of residents of Wales,
Declares that Richard Lewis (known as Dic Penderyn) was a Welsh labourer and coal miner who lived in Merthyr Tydfil; further that he was involved with the Merthyr Rising of 3 June 1831; further that during the riot, he was arrested and charged with stabbing a soldier, Donald Black, with a bayonet; further that the people of Merthyr Tydfil were convinced of his innocence and signed a petition for his release; further that despite this, he was found guilty and hanged on 13 August; further that in 1874, a man named Ianto Parker confessed on his death bed that he stabbed Donald Black; further that James Abbott, who testified against Richard Lewis at the trial later admitted to lying under oath; further that at Mr Lewis’ trial, the Prosecution suppressed evidence which would have exonerated him; further that the same evidence, which should have led to his pardon in 1831, was also suppressed by the trial Judge and the Home Secretary; further that there is strong feeling in Wales that Richard Lewis was wrongly executed, that his conviction should be overturned and that he should be granted a pardon.
The Petitioners therefore request that the House of Commons urges the Secretary of State for Justice to grant a pardon to Richard Lewis.
And the Petitioners remain, etc.
[P001530]
Post Office Horizon System
(8 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Andrew Bridgen (North West Leicestershire) (Con)
I pay tribute to the work carried out on this issue by James Arbuthnot, the former Member for North East Hampshire, and Mike Wood, the former Member for Batley and Spen, both of whom I worked with for more than two years in a working party in search of a fair settlement on this matter. Unfortunately, throughout the process we all lost faith and trust in the Post Office’s willingness to investigate the issue properly and thoroughly.
To give some background on how the Post Office has let down sub-postmasters and Members of this House throughout this process, let us consider how it has dealt with the matter from the outset. The Horizon accounting system used by sub-postmasters was introduced some 15 years ago. Almost immediately, a spate of discrepancies began to appear as sub-postmasters attempted to balance their accounts at the end of the day. From that time forward, there has been failing after failing on the part of the Post Office.
The Post Office has finally acknowledged that its help system for the Horizon software was completely inadequate, but even with that admission the Post Office continues in its failure to demonstrate any appetite to deal with issues arising from the Horizon system in a fair and transparent way.
Jim Shannon (Strangford) (DUP)
Is there not something disgraceful in the fact that criminal charges were pressed against these sub-postmasters and sub-postmistresses when the fault lay with the Post Office, yet nearly two years after the investigations those charges have not been lifted? The shadow hanging over their heads has not been lifted either. Does the hon. Gentleman not feel that it is time to bring that to an end?
Andrew Bridgen
The hon. Gentleman tells a tale which has been told too long to the working group. We need to bring matters to a head and I hope the debate tonight will give us an opportunity to do so.
The mediation scheme that was set up to handle disputes about the software system has not delivered what Members of this House had understood was agreed at its inception. It was flawed in a number of ways, the most significant being that it excluded those who had pleaded guilty.
Mr Ranil Jayawardena (North East Hampshire) (Con)
My constituent, Jo Hamilton, has her case in front of the Criminal Cases Review Commission. Does my hon. Friend agree that for those who pleaded guilty, the CCRC should be given powers to obtain all the papers that it needs from private sector organisations and full access to all Post Office files?
Andrew Bridgen
My hon. Friend makes a good point and he is right. Many people pleaded guilty on advice from lawyers or out of fear of losing their liberty in a lengthy and expensive court battle with the Post Office.
The House should know that the Horizon system has no adequate suspense account function, so it pushes the sub-postmaster who wants to balance his books when the books actually do not balance. This is false accounting and a criminal offence. However, I have seen correspondence that shows that the Post Office has advised sub-postmasters to keep any surplus balances that they discover at the close of business in their safe so that they can put them back when they have a shortage. That is also false accounting and is also a criminal offence.
A further flaw is the fact that issues of concern to the forensic accountants Second Sight, appointed by the Post Office at the request of the working group to assess independently the mediation cases, have been specifically excluded from mediation—for example, the absence or the ignorance on the part of the sub-postmaster of the contract they were under, and the failure of audits and investigation—despite the agreement of Post Office Ltd with Members of this House that the scheme would cover all these issues. This is resulting in what I believe to be 90% of the cases in dispute being excluded from the mediation scheme. This mediation has proven to be a shadow of what was agreed with Members.
I first became involved in this matter several years ago when my constituent Michael Rudkin brought his case to me. My constituent had 15 years’ experience as a postmaster and served as a senior member of the national executive. Indeed, he was chairman of the negotiating committee, the most senior post within the National Federation of SubPostmasters, responsible for national negotiations with Post Office Ltd and Royal Mail Group. In short, my constituent knew his job and the organisation inside out. He knew the organisation to the extent that on a visit to the Post Office headquarters in Bracknell, he was shown in error a room where operatives had remote access to the Horizon software and it was demonstrated to him how postmasters’ accounts could be altered remotely. The House should know that the Post Office has always maintained that it is not possible to alter accounts in a sub-post office remotely. However, it has recently admitted that this was not the truth.
In a debate in December I went into the details of Mr Rudkin’s case. To summarise, his post office branch had a loss in the accounts in excess of £44,000. He was absolved of any knowledge of this loss by Post Office Ltd but ordered to pay back the money at £1,000 per month from his salary. After he had paid back £13,000, Post Office Ltd started proceedings against Mr Rudkin’s wife for theft and false accounting. It also applied for a confiscation order to be placed on all his property and had his bank accounts frozen using the Proceeds of Crime Act 2002. This all occurred after my constituent had witnessed the operatives in Post Office headquarters demonstrating their remote access to the Horizon system.
My constituent has gone through the mediation scheme and his experience is that the professional advisers, Aver Ltd, Bill Cleghorn and Emma Porter, are very good. Second Sight has been extremely fair, professional and accurate in its analysis of both systemic and thematic issues within Post Office Ltd. However, the same cannot be said of the Post Office itself. I and my constituent have no faith in its ability to resolve the matter. It is said that justice delayed is justice denied, and this matter has simply dragged on for too long, with the Post Office seemingly looking for ever more reasons to delay the truth of the matter coming out.
Peter Heaton-Jones (North Devon) (Con)
In the past five days I have been alerted to a case in my constituency. Very briefly, the sub-postmistress emailed me to say:
“My post office has been audited today and has been closed due to financial discrepancies as a result, I believe, of the inadequacies of the Horizon system.”
That has left the village without a post office service, and obviously it is also putting an intolerable strain on my constituent. I would be grateful if my hon. Friend and the Minister considered the impact that that is having.
Andrew Bridgen
My hon. Friend is quite right. When we hear a Post Office spokesperson stating,
“I am really sorry if people have faced lifestyle problems as a result of their having been working in Post Office branches”,
we have to wonder whether the organisation is even aware of the misery it has caused. The fact that Post Office Ltd believes that honest, decent, hard-working people losing their homes, their businesses, their savings, their reputation and, worst of all, in some cases their liberty can be quantified as a “lifestyle change” only serves to show that the organisation is not fit to conduct an inquiry into the matter.
The Post Office mediation scheme has proven to be a sham, Second Sight has proven to be far too independent for the Post Office to stand, and the disdain that has been shown to Members of this House and to sub-postmasters is a disgrace.
Matt Warman (Boston and Skegness) (Con)
Does my hon. Friend agree with my constituents Mr and Mrs Hedges, who are sub-postmasters, that in this case the Post Office has treated not only them but this House with contempt?
Andrew Bridgen
Indeed. When we look at the cross-section of Members who have raised the matter, many of whom have served at the highest levels of Government, and who all believe that their constituents have been wronged, how can the Post Office believe that it can continue to sweep the matter under the carpet?
It is most interesting that after two years in which the Post Office has consistently claimed that its Horizon system software is robust and 100% reliable, I now have in my position an email clearly showing that the Post Office is now urgently seeking a replacement software system from IBM. I am sure that the Minister can draw his own conclusion from the happy coincidence that the investigation is now closed. It appears to me that it is indeed now sunset for the Horizon system.
It is therefore my belief, and the view of many Members across the House, that the matter must now be taken away from the Post Office and a judicial inquiry set up. The Post Office has abused its privileged position and sought to cover up its failings by way of a wholly non-transparent approach to the mediation process.
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
Concerns about the Horizon system are clearly of long standing. In the few weeks that I have been here I have heard from at least three constituents who have long-standing concerns about the Horizon system, and there are huge problems that are historic. I understand from one constituent that an injunction has been taken out against her for the sale of a property—
Madam Deputy Speaker (Natascha Engel)
Order. That intervention has been slightly too long.
Andrew Bridgen
I am not surprised to hear that from the hon. Gentleman. The management style of the senior management at the Post Office is Dickensian, and they have an almost feudal relationship with their sub-postmasters. This is now a national scandal. The Post Office has demonstrated that it is incapable of putting its own house in order, so it falls to this House and to this Government to do so for it. I therefore respectfully ask the Minister for a full judicial review into the Post Office Horizon system and the way in which the Post Office contracts with is sub-postmasters and sub-postmistresses.
Mr Kevan Jones (North Durham) (Lab)
I congratulate the hon. Member for North West Leicestershire (Andrew Bridgen) on securing this debate.
My constituent Tom Brown, a postmaster for 30 years, had a post office in Newcastle. In 2008, he informed the Post Office that there was a problem with his Horizon system, and it took away one of his base units to change it. He was told by the helpline—a euphemism because it has not been very helpful to many sub-postmistresses and sub-postmasters and has actually got them into more trouble—that the system would rectify itself. It did not. The next audit said that his figures were down by £85,000. He was arrested by Northumbria police, and his car and home were searched. Subsequently, the police dropped all charges as there was no evidence against him. Then, for some unknown reason, the Post Office took out a prosecution against him to take him to court for false accounting. That process took until July 2013, when he finally appeared in court for the third time. No evidence was put forward to the court, and after that the case was dropped.
This man has lost his home, his livelihood and his good reputation. He is one of the individuals who have gone through the mediation system, even though, as the hon. Gentleman outlined, the system is a sham. He was given four different dates that were all delayed. He described this to me as six hours of wasted time. The Post Office employed top lawyers from Newcastle to represent it. It again went through what it said was the evidence, and made no offer at all. The system is a sham. As the hon. Gentleman outlined, it has been a way of delaying decisions on these cases.
Mrs Emma Lewell-Buck (South Shields) (Lab)
Does my hon. Friend agree that the Post Office has failed to be transparent about this process? My constituent, Mrs Carter, a sub-postmistress, asked the Post Office to audit her branch to get to the bottom of the problem, but it refused to do so.
Mr Jones
I will go further than that. It has not only not been transparent; it has gone out of its way to delay cases and hide evidence.
My concern about the work done by Second Sight is that it suggests that if information is returned to the Post Office, evidence will go missing. That is why I totally agree with the hon. Member for North West Leicestershire that there needs to be an independent judicial inquiry into this—as he described it—national scandal. I am pleased that my hon. Friend the Member for Hartlepool (Mr Wright), the new Chair of the Business, Innovation and Skills Committee, is present for this debate. I urge him and his Committee to look at this as a matter of urgency.
The fundamental point is this: who controls the Post Office? This organisation is out of control. It has led to people’s lives being ruined and, as we have heard, in some cases to people being given prison sentences when clearly they are innocent. It is important that we get to the bottom of this. Without a judicial inquiry, I fear that this national scandal will continue and these people’s reputations will continue to be blackened.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (George Freeman)
I congratulate my hon. Friend the Member for North West Leicestershire (Andrew Bridgen) on securing this debate. I commend him and other hon. Members across the House for raising here and elsewhere the concerns of their constituents—sub-postmasters who face problems. I echo the tributes paid to the former Members for North East Hampshire and for Batley and Spen for their work on this issue. They, my hon. Friend and others can take a great deal of credit for raising this issue and encouraging the Post Office to take action to address sub-postmasters’ concerns and to improve business for the thousands of sub-postmasters and staff working in the network today. My hon. Friend kindly informed me before the debate of the points he wanted to raise, and I will try to deal with all his questions, but I want first to set out a little background.
Hon. Members do not need me to wax lyrical about the important role that post offices play in communities in providing access to essential mail, financial and Government services. I am sure that we all agree on and understand that. The Post Office is undergoing a very significant transformation programme to remove central costs, grow new revenue streams and modernise its extensive branch network. Already, more than half of eligible sub-postmasters have benefited from investment in their branches or have signed up to do so. These changes will help the post office network to survive in the digital age. The way we live and communicate is changing, and post offices need to adapt to that. The Government are supporting and investing in the Post Office to ensure that it can become sustainable for the long term and reduce its reliance on taxpayer subsidy. The network is now at its most stable for a generation. Having halted the closure programmes we saw under previous Governments, we are committed to securing the future of 3,000 branches that are the last shop in a local community.
The Government are, of course, the shareholder of Post Office Ltd, and in that role we make sure that there is a wide network of branches across the whole country, and we provide subsidy for the Post Office to do so. We also recognise, however, that it is a commercial business and we allow it to operate as such. Furthermore, as I am sure most hon. Members are aware, the vast majority of post office branches are operated not by Post Office Ltd, but by sub-postmasters. They are independent businesspeople who choose to contract with Post Office Ltd to provide post office services, usually from a small business such as a shop.
Small businesses are the lifeblood of the local economy in so many communities, and Post Office Ltd needs to ensure that it supports its sub-postmasters properly. I am pleased that the Post Office takes that role very seriously and that it has made significant improvements to the way in which it works with its sub-postmasters, not least following many of the cases that hon. Members have raised.
The Post Office already ensures that new sub-postmasters receive full training on all aspects of their role, including the Horizon system, through both classroom and in-branch training. There is also a dedicated helpline available to sub-postmasters to help resolve any issues they are having.
Wayne David (Caerphilly) (Lab)
I am listening carefully to the Minister, but surely he accepts that there is a fundamental problem with the Horizon system, because we have heard complaints right across the country from all sections of the population, as well as from the sub-postmasters themselves.
George Freeman
I will come to the quality of the system. It is difficult on the face of it to characterise either the training or the helpline as having been inadequate. The vast majority of people who use or have used the Horizon system since it was introduced 15 years ago have in fact done so successfully. However, there is always room for improvement and the Post Office has implemented a business support programme to that end, including improvements to training, with both classroom and new online training available 24/7; improvements to the Post Office’s support helpline, including new ways of identifying and proactively supporting branches in difficulty; and new processes to help sub-postmasters manage their branch and protect against fraud.
I now come to some of the points that have been made about the Horizon IT system. It is used by tens of thousands of people working in the post office network, performing more than 6 million transactions every working day in branches up and down the country, so it is essential that it functions correctly. Like any large IT system, it is subject to rigorous testing, independent audit and industry accreditation. Nevertheless, in the light of the concerns raised about serious glitches in the Horizon system, the Post Office commissioned an independent firm of forensic accountants, Second Sight, to investigate.
Second Sight produced two independent reports—one in 2013 and the other earlier this year—both of which found there was no evidence of systemic flaws in the system. That is an important point that I would like to reiterate in response to the shadow Minister’s point: there is no evidence of systemic flaws in the system. Second Sight’s reports have, rightly, pointed out some areas where the Post Office could have improved how it operates, particularly on the training and support that it provided in some individual cases. As I said earlier, the Post Office is acting on those points.
The general secretary of the National Federation of SubPostmasters, George Thomson, told the Business, Innovation and Skills Committee in the last Parliament that the NFSP
“represent 7,000 sub-postmasters…If there was a systemic problem…we would be absolutely inundated.”
He went on to say:
“Over the 15 years, the Horizon system has been fantastically robust.”
As well as improvements to training and support, the Post Office also launched a mediation scheme so that any current or former sub-postmaster who felt they had problems with the Horizon system could bring forward an application. They would have their cases thoroughly reinvestigated both by the Post Office and by Second Sight, and, if appropriate, proceed to mediation to seek to resolve any issues.
It is important to understand that the mediation scheme is independent of the Government. That is the right approach for something that is a contractual matter between two independent businesses, and we should remember that sub-postmasters are independent businesspeople who have contracts with Post Office Ltd.
Mediation is, of course, a voluntary process. Both parties need to consent to it, and for it to be successful there needs to be a reasonable chance of coming to a common understanding. Sometimes mediation will not be appropriate or will not succeed, but it is important to note that mediation cannot overturn a criminal conviction. I will come back to that point.
My hon. Friend the Member for North West Leicestershire and others have been critical of the mediation scheme and how it is progressing. He mentioned that 90% of cases are being excluded from mediation, but that statistic is not borne out by the information provided by the Centre for Effective Dispute Resolution, which oversees the mediation scheme and is independent.
Carolyn Harris (Swansea East) (Lab)
Given the number of postmasters and postmistresses who have been attending MPs’ surgeries to discuss this matter, does not the Minister agree that one miscarriage of justice is one too many and that the Post Office has to be accountable for this system?
George Freeman
I absolutely accept that the Post Office must be accountable for any miscarriages and I will make a suggestion at the end about how we might address that.
My hon. Friend the Member for North West Leicestershire raised the case of his constituent Mr Rudkin. As he will understand, I cannot comment on that or any other individual case, because their details are rightly confidential, but I reiterate an offer that has been made to all hon. Members who have a constituent in the scheme: Post Office Ltd has offered to meet to discuss individual cases in detail, provided the applicant gives their consent. I am aware that Post Office Ltd has repeated that offer to my hon. Friend in the last fortnight, and I hope that he and others will take up that offer. I would be delighted to convene the meeting in my office in the Department if that helps.
I will move on to the points that my hon. Friend made about whether there may have been miscarriages of justice where sub-postmasters have been prosecuted and convicted. The Post Office handles large amounts of public money every day and operates a trusted role in communities, so it is vital that it has processes in place to protect that money and guard against fraud or theft. The Post Office can bring prosecutions against an individual, but it is down to the courts to determine whether they are guilty.
If an individual has been convicted and feels that their conviction is unsafe, they should explore the legal avenues open to them. They should seek advice on whether they can appeal their conviction, or raise their case with the Criminal Cases Review Commission. That is the correct way to deal with these issues if people believe there have been miscarriages of justice. The House cannot overturn a court ruling; nor, indeed, can mediation.
Alex Chalk (Cheltenham) (Con)
It is of course for individuals to decide whether they plead guilty and there is of course an avenue of appeal. Is it not important to note, however, that for many of these people the time for an appeal will be long past, so they remain the victims of a grave injustice?
George Freeman
As I say, if any individuals feel that their conviction is unsafe, they can always explore the legal avenues open to them. Where large numbers feel that that is the case, as is alleged, it is perfectly possible for them to bring a class action together. I do not accept that there is a fundamental injustice in the process that prevents people from bringing claims. I accept, however, that it is absolutely vital, where there is a legitimate claim against the Post Office about how it has treated its sub-postmasters, that those claims must be looked at properly.
In the limited time available, I want to move on to the Post Office’s approach. Both tonight and elsewhere, my hon. Friend the Member for North West Leicestershire and others have raised the very serious dissatisfaction felt about the way in which the Post Office has handled relations with its sub-postmasters. When this debate was called, I spoke to the Post Office to understand the situation. I have received a letter from its chief executive, Paula Vennells, which I shall send to my hon. Friend and others who have spoken and place in the Library. The letter sets out just how seriously the Post Office has taken this matter. Ms Vennells says:
“We have gone to great lengths...because I was determined that, if there were problems with the Horizon system, these had to be identified and resolved.”
I will happily pick up any issues that my hon. Friend or others feel are not addressed in the letter.
As I have already said, the mediation scheme is rightly independent of the Government. It was established jointly by the Post Office and the Justice for Subpostmasters Alliance, working with Second Sight, and it is overseen by an independent chair, a former Court of Appeal judge. It is right that the details of individual cases should be confidential and that the Post Office respects that.
Andrew Bridgen
The Minister should be aware that one of the criteria given by the Post Office for removing cases from mediation was if a very large claim was involved. Those sub-postmasters who have suffered the greatest loss and the greatest injustice were therefore immediately excluded from the mediation system.
George Freeman
That is a very interesting point, which I will be happy to take up with my hon. Friend, perhaps in the context of what I am about to suggest.
Although it remains the case that there is no evidence that the Horizon system is flawed, if any individual feels that their conviction is unsafe, they can pursue the legal avenues available to them. I do not see any reason for the Government to intervene in this matter by instigating a full judicial inquiry. However, I am struck by the extent of the concern expressed tonight by Members from both sides of the House and during the lead-up to this debate, including some of the specific testimony heard tonight. I will be happy to convene a meeting in the Department, perhaps led by my hon. Friend, with the support of others from across the House—to deal with the point he has just made and one or two others that have been made this evening—and to invite the Post Office to come to that meeting with representatives of sub-postmasters to try to iron out the issues.
My hon. Friend has raised other points that are a matter for the Post Office, rather than for the Government. I have no doubt that the Post Office has listened closely to this debate and will be in touch with him to answer his questions. I agree with him that this matter has gone on for far longer than anyone would wish and, for whatever reason, has been the cause of huge difficulties, trial and unnecessary hardship for a number of the sub-postmasters who have been affected.
The important thing now is for the final cases in the mediation scheme to progress to mediation, and I urge all the parties involved to continue to work together to make that happen. That will help the individuals with cases remaining in the scheme to reach resolution, and it will mean that the Post Office can, working closely and collaboratively with its sub-postmasters, carry on with its essential role of serving communities.
I repeat that some of the points made tonight in the House merit investigation. I will happily convene a meeting in the Department to put those specific points to Post Office Ltd. The system may have generally worked well for the vast majority of users, but that in itself is no reason not to ensure that those who have been legitimately unable to deal with the system should not be penalised unfairly. They certainly should not be made the victim of criminal judgments when their crime is nothing more than being unable to cope with a new IT system. I look forward to raising those points with the Post Office.
Question put and agreed to.
Written Statements
(8 years, 10 months ago)
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Office for Nuclear Regulation (Report to Parliament)
(8 years, 10 months ago)
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The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)
My right hon. Friend the Secretary of State for Energy and Climate Change will today lay before Parliament an annual report to Parliament by the Secretary of State. The report sets out the use of the Secretary of State’s powers under part 3 of the Energy Act 2013, which created the Office for Nuclear Regulation.
Both my right hon. Friend the Secretary of State for Department for Work and Pensions and the Office for Nuclear Regulation have been consulted. The report discloses which powers have been used under Section 108 of the Energy Act 2013 during the last financial year (2014-2015). For completeness the report also refers to the exercise of powers in the first short reporting period of ONR from 10 March 2014 to 31 March 2014.
[HCWS65]
Magna Carta
(8 years, 10 months ago)
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The Minister of State, Foreign and Commonwealth Office (Mr Hugo Swire)
It is normal practice, when a Government Department proposes to undertake a contingent liability in excess of £300,000 for which there is no specific statutory authority, for the Minister concerned to present a departmental Minute to Parliament giving particulars of the liability created and explaining the circumstances; and to refrain from incurring the liability until fourteen parliamentary sitting days after the issue of the Minute, except in cases of special urgency. I have today laid a departmental Minute proposing to provide an indemnity of £24,000,000 in respect of the Foreign and Commonwealth Office-approved global tour of the Magna Carta and King’s Writ celebrating the 800th anniversary. This indemnity will last from 1 September until 31 December 2015 and will cover loss or damage of the documents in this period. The 800th anniversary of the sealing of Magna Carta provides a unique opportunity to support our diplomatic and economic objectives. This global tour supports the UK’s position as a mature democracy built upon the values it promotes globally, and our established position as a centre of finance, commerce and law. We have secured the agreement of the Dean and Chapter of Hereford Cathedral to use their 1217 Magna Carta and only surviving King’s Writ from Runnymede 1215 for this tour. If the liability is called, provision for any payment will be sought through the normal supply procedure. The Treasury has approved the proposal in principle. If, during the period of fourteen parliamentary sitting days beginning on the date on which this Minute was laid before Parliament, a Member signifies an objection by giving notice of a parliamentary question or by otherwise raising the matter in Parliament, final approval to proceed with incurring the liability will be withheld pending an examination of the objection.
[HCWS66]
Committee on Standards in Public Life (Report)
(8 years, 10 months ago)
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The Prime Minister (Mr David Cameron)
“Tone from the Top––Leadership, Ethics and Accountability in Policing”, the 15th report of the Committee on Standards in Public Life has been published by the Committee today. I have laid the report before the House and copies have been placed in the Libraries of both Houses.
It is also available online at: http://www.parliament.uk/writtenstatements.
[HCWS64]
Office of Nuclear Regulation ( Annual Report and Accounts)
(8 years, 10 months ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Justin Tomlinson)
Later today the Office for Nuclear Regulation’s annual report and accounts for 2014-2015 (HC 164) will be published. Having consulted the Secretary of State for Energy and Climate Change who is accountable for nuclear security and the Office for Nuclear Regulation, I can confirm, in accordance with Schedule 7, Section 25(3) of the Energy Act 2013, that there have been no exclusions to the published document on the grounds of national security.
[HCWS63]
Grand Committee
Charities (Protection and Social Investment) Bill [HL]
(8 years, 10 months ago)
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The Deputy Chairman of Committees (Lord Bichard) (CB)
My Lords, welcome to the Grand Committee on the Charities (Protection and Social Investment) Bill. If there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Lord Hope of Craighead
“(a) in subsection (1)(a) after “unwilling” insert “or unable”;(b) ”
Lord Hope of Craighead (CB)
My Lords, Amendment 6 is the sole amendment dealing with Clause 8 of the Bill, which is a comparatively short clause on the “Power to direct property to be applied to another charity”. As it appears in the Bill, Clause 8 makes one amendment to Section 85 of the Charities Act 2011, which is dealing with a different matter from the one that is of concern to me. Amendment 6 seeks to insert two words into Section 85(1)(a) of the 2011 Act so that the phrase,
“persons in possession or control of any property … unwilling to apply it … for the purposes of the charity”,
would also deal with those who say that they are willing to do so but are unable to do so.
The draft Bill, as it appeared before us in the Joint Committee, included the words that I am seeking to insert into Section 85. The description of the draft Bill can be seen in paragraph 141, read with paragraph 142, of the Joint Committee’s report. As paragraph 141 records,
“Clause 7”—
as it was in the draft Bill—
“would amend the 2011 Act to allow the Commission to direct the application of charity property in the event that the person is either ‘unwilling’ or ‘unable’ to do so, rather than just ‘unwilling’ as is currently the case. The explanatory notes to the Bill refer to ‘several cases in which financial institutions holding charity property were contractually unable to transfer it to secure its proper charitable application but would have been willing to do so.’”
In paragraph 142, we go on to say that,
“The evidence received by the Committee was supportive of this provision”,
and the footnote refers to Professor Gareth Morgan, the Charity Commission for Northern Ireland and the Joseph Rowntree Charitable Trust. Paragraph 142 continues:
“The Charity Law Association”—
which had made a number of very helpful comments on the wording of the draft Bill—
“did not oppose this change, but questioned whether the meaning of the term ‘unable’ was sufficiently clear and whether banks in such situations were really ‘unable’ to transfer charity money or just ‘unwilling’ to breach a contract to do so”.
Since the current Bill was published, I have had a meeting with William Shawcross of the Charity Commission, who has explained to me that he would much prefer that the words “unwilling or unable” were put in—in other words, that the words “or unable” were restored, as my amendment seeks. He explained that, from time to time, he encounters cases of this kind where a direction is proposed and the response is, “Yes, indeed, we are willing to do this, but for a variety of reasons we are simply not able to do so”. As he put it to me, it would be possible by sleight of hand to fudge the thing a little bit, as it were, and treat unwillingness on such a ground as being within the scope of the section, but he would rather that the section was really upfront about the fact that both situations that he encounters in practice were actually dealt with in the wording of Section 85, so that unwillingness, which certainly occurs and is a source of concern, was dealt with but inability—where the persons involved are perfectly willing to comply with the direction but for various reasons say that they cannot properly do so—was covered as well.
This is a very short point. I am a little puzzled as to why the draft Bill which survived scrutiny by the Joint Committee should have been altered in this way. I hope that the Minister will pay attention to the wishes of the Charity Commission, which would find it useful if the amendment were accepted. I beg to move.
Lord Watson of Invergowrie (Lab)
My Lords, as one who was a member of the Joint Committee under the excellent chairmanship of the noble and learned Lord, Lord Hope, I share his puzzlement as to why this change has been made to the draft Bill. I have no wish to repeat the words of the noble and learned Lord, but those of us in opposition do not fully understand why such a change should have been made and we invite the Minister to explain that if he can, and to say why, after the Joint Committee recommended acceptance of the draft proposal, and given that, as we have heard, the Charity Commission wants this change, the original wording of the draft Bill should not be reinstated. There is little more to say than that. I look forward to the Minister’s response.
The Parliamentary Secretary, Cabinet Office (Lord Bridges of Headley) (Con)
My Lords, I, too, will keep my remarks relatively brief, by reason of the conclusion that I have come to as a result of what the noble and learned Lord and the noble Lord have said.
The provision corresponding to Clause 8 in the Bill made reference to “unable” in the manner proposed by this amendment. The Charity Commission asked for the change following several cases where financial institutions holding charity property were contractually unable to transfer it to secure its proper charitable application but would have been willing to do so. As the noble and learned Lord said, the Joint Committee which considered the draft Bill supported the provision.
However, as is noted in the report, the Charity Law Association, while it did not oppose the change, questioned whether the meaning of the word “unable” was sufficiently clear and whether banks in such situations were really unable to transfer charity property, or simply unable to breach a contract to do so. Therefore the Joint Committee recommended that the Government consider the inclusion of some form of statutory protection for a financial institution in cases where compliance with a Charity Commission direction in these circumstances might constitute a breach of its contract with a charity. The Government therefore followed this recommendation and amended Clause 8 to provide for such statutory protection. Since the clause was aimed at dealing with financial institutions which are contractually unable to transfer property, this statutory protection was considered sufficient and the reference to “unable” was omitted.
The amendment tabled by the noble and learned Lord, Lord Hope, proposes to reinstate the reference to “unable”, as we have heard, and further examples have been provided as to when this would be needed beyond the contractual liabilities of banks. I also note what the noble and learned Lord said about his conversations with the Charity Commission. In light of this, I am happy to give further consideration to the amendment and to return to this on Report.
Lord Hope of Craighead
My Lords, I am grateful to the noble Lord for his remarks. It is worth adding that the wording of Clause 85(1) is quite general—it refers to,
“a person or persons in possession or control of any property”.
It does not confine the provision to banks alone. Although they may be the main aim of the provision, it is more widely cast, so whatever the banks may think is not the end of the story.
I hope that the noble Lord will bring forward something on Report without my finding it necessary to table another amendment to keep the matter alive. For the time being, however, in light of what the Minister has said, which I very much welcome, I beg leave to withdraw the amendment.
Baroness Barker
Baroness Barker (LD)
My Lords, Clause 9, which gives the power automatically to disqualify somebody from being a trustee, was the subject of perhaps one of the most contentious of the joint scrutiny committee’s discussions. It was certainly the point on which we received the greatest variety of opinion and which led to some of the most intense arguments from a range of witnesses.
I think that there was general agreement that there are some crimes which are of such seriousness that they should lead to automatic disqualification and that no charity would wish to have somebody who committed them serving as a trustee. We are talking about someone who had been found guilty of crimes of the order set out in Clause 9; for example, making false disclosures and false statements, and disobedience to a direction of the commission on an application to the High Court.
However, the discussion which really brought home the disquiet in the sector was on whether terrorism offences should be a cause for automatic disqualification. Part of the reason why many people in the sector have sought to question these provisions in the Bill, when you might have expected them simply to agree, is some of the past views of the Charity Commission and the way in which they have been expressed. In October 2013 and in early 2014, the current chair of the Charity Commission made statements about the biggest threat to British charities being terrorism. That was a major assertion to make. At that time and since then, there was and has been little evidence of abuse of British charities by terrorist organisations.
The particular problem with those statements was that the Charity Commission chose to make them during Ramadan, which is the biggest charitable fundraising period for Muslim charities. That caused needless and great offence, and the back-draught has coloured people’s vision or view of the power which is now to be given the Charity Commission in Clause 9. That said, there is agreement across the board that there needs to be a tightening up of the grounds on which people can be disbarred.
However, lying in the middle of the clause is the regulation-making power for the Minister—it is the Minister for the Cabinet Office, not the Home Secretary, I note—to add by regulation to the list of offences for which one can automatically be disqualified from being a trustee.
We heard a wide range of views from the witnesses to whom we talked, from the commission being of the view that the provision was necessary for its regulatory functions through to organisations such as ACEVO, which felt that, on balance, the power should be on the statute book but was not likely to feature large in the life of most charities. None the less, there was across the board a sense that charities were being unfairly targeted by the Government, without much evidence that they should be, and that the provisions which relate to terrorism offences are very wide.
Lord Hodgson of Astley Abbotts (Con)
My Lords, I understand the noble Baroness’s concerns on this point and why she feels this may be a loophole which may be abused by the Charity Commission. Nevertheless, we need to give the Charity Commission additional powers, as the noble Baroness said. It has produced quite extensive guidance on how it proposes to use the power, and I cannot imagine that if the Minister, whoever it was, was to propose a change under subsection (4), the sector would allow it to go by unchallenged. The sector would surely be up in arms if it felt that its independence or its freedom to appoint trustees was being infringed. I accept what the Joint Committee on the legislation said, but we are in danger of unnecessarily trammelling the hands of the Minister. These things will need to be looked at from time to time—for example, who would have thought about terrorist fundraising five or six years ago?—and no doubt there may be other issues in the future that will need to be dealt with.
Will the Minister say whether this is subject to the affirmative resolution procedure or the negative procedure? My ability to support the noble Baroness will depend slightly on his answer to that question.
Lord Hope of Craighead
My Lords, I shall add a few words based on the Joint Committee’s report. The noble Baroness, Lady Barker, is right that this is the clause which caused the committee most concern. We have before us, among other things, a very carefully worded memorandum from the House of Lords Delegated Powers and Regulatory Reform Committee, the meat of which is set out at pages 96 to 97 of the Joint Committee’s report. That Delegated Powers Committee draws attention to a number of problems that subsection (4) of new Section 178A gives rise to, including the risk of retrospective legislation bringing in offences that were not in the purview of the section when they were committed, without any provision for what would happen to people who were unaware that this might cause them to be disqualified. The committee considered various other aspects, but overall its conclusion was that subsection (4) of the new section should remain in the Bill.
Although the Joint Committee discussed this very fully, we reached the same conclusion, which was put in the report. We were content that the order-making power should be available in the form and subject of the procedures that were proposed, but I draw attention to paragraph 208, which contains the recommendation, that,
“when using the power, the Minister should be required to consult fully on whether it is appropriate and proportionate to include an offence within the list of disqualifying offences”.
The process of consultation would be directed to the variety of problems discussed by the Delegated Powers and Regulatory Reform Committee in its report. There is a question as to whether that requirement should be statutory, or whether it is enough that the Minister would be prepared to say that he would be content to follow what the Joint Committee recommended: that he would consult fully on whether it was appropriate and proportionate to include an offence within the list of qualifying offences. I speak only for myself, but if the Minister was prepared to give an assurance of that kind, that would go some way at least to meeting the noble Baroness’s concerns.
Baroness Hayter of Kentish Town (Lab)
My Lords, it is a sobering day even to discuss something with the word “terrorism” in it. I note that the House of Commons had a moment of silence at 3.30 pm, which maybe is a lesson for all of us.
On the amendment before us, the Committee will know that we have always been a bit jumpy about Henry VIII powers. However, it is very important to have this provision in the Bill because I did not move Amendment 7, which we dealt with on the first day of Committee last week, when we dealt with our attempt to include people on the sex offenders register on the list of those who are precluded—which, frankly, I take more seriously than someone who has got into a bit of debt and has an IVA. The Minister did not think that that was appropriate, and I hope very much that he is right and that we will not have a trustee who is on the sexual offenders register and then abuses someone, which would show that I was right and he was wrong. I do not want to be in that position, for fairly obvious reasons. However, if we find that the evidence is that we should have added those on the sex offenders register to those who are precluded from being a trustee, unless there is a waiver, this provision would allow the Minister, at that stage, to put right—unless we win the vote on Report—what would be an omission from the Bill.
There is always a problem with retrospective legislation, which would be the same now for people convicted for other things. Therefore, it will be important that the implementation date of any regulation is in good time to notify people so that they do not suddenly find themselves acting as a trustee and putting a charity at risk because of some new provision that then comes in. However, if it was something such as someone being on the sex offenders register, that is a known register and they would be able to be notified pretty easily that they could no longer act as a trustee. As a failsafe, albeit that any new measure should be by the affirmative procedure, we are content to see this power in the Bill.
Lord Bridges of Headley
My Lords, I am grateful to the noble Baroness, Lady Barker, for her explanation of this amendment, which was typically reasonable and eloquent. Subsection (4) of new Section 178A, inserted by Clause 9, would enable the Minister by affirmative procedure to make regulations to amend the list of criteria for automatic disqualification by adding or removing an offence.
The Joint Committee that undertook pre-legislative scrutiny of the draft Bill recommended that there be a requirement for any such regulations to be consulted on. The Government agreed and made provision, in subsection (21) of Clause 9, for there to be a requirement to consult on draft regulations where they add an offence.
The Delegated Powers and Regulatory Reform Committee’s first report of this Session stated that the committee was satisfied with the delegation and level of scrutiny in relation to this power when it had advised the Joint Committee on the Draft Protection of Charities Bill. It recognised that the Cabinet Office may in future need to take urgent steps to specify offences that should result in automatic disqualification, and considered that the affirmative resolution procedure would provide an appropriate safeguard.
The DPRRC, however, has raised a question about the commencement of new Section 178A and any regulations made under it. The last Government’s response to the Joint Committee’s report on the draft protection of charities Bill stated that we,
“commit to ensuring that sufficient time would be allowed before the commencement of such provisions”.
I will, therefore, happily provide a commitment to your Lordships that a disqualification would not take place under new Section 178A in relation to a person previously convicted of a specified offence until at least two months after enactment of the section and, in all but exceptional circumstances, until at least two months after the date that any regulations are made under subsection (4). We would want to ensure there was sufficient time to notify charities of the new offences.
When the Bill becomes law, we will publish an implementation plan that will set out when the different provisions of the Bill will be commenced. This will include the timetable for commencement of the automatic disqualification provisions under new Section 178A. The Charity Commission has said that it is planning a wide-ranging communications strategy in order to give those affected by automatic disqualification a fair opportunity to learn of the relevant changes before they come into force. Where we undertake any consultation, we will ensure that it is compliant with the compact.
I know that the Lords Constitution Committee has also considered the power to add offences. Its second report of this current Session states that this power to add new offences is not explicitly constrained in its scope, so perhaps I can provide some assurances to your Lordships on how the power would be used, and address a number of the points made.
First, while it may be considered unnecessary, I should nevertheless point out that there are no plans to exercise the power. Its purpose is to enable Ministers in future to amend the list of offences as new criminal offences are created which may be identified as appropriate for automatic disqualification, or criminal offences currently listed may no longer be appropriate, meaning the list needs to be updated. The prospect of a power to amend the list of offences was raised in consultation last year and was generally well supported by respondents, provided the power is subject to the affirmative procedure.
It should go without saying that, in considering any new offence to add to the list, there would need to be a clear rationale for adding that particular offence. The offence would have to be relevant to a person’s fitness to act as a trustee. We would set that out in consulting on the addition of any new offence. That consultation is a statutory requirement. Of course, the safeguards of the public consultation and the affirmative resolution procedure in Parliament—a point my noble friend Lord Hodgson of Astley Abbotts raised—should also provide a significant measure of assurance.
I hope that I have been able to give sufficient assurances to your Lordships on how this power would be used, and invite the noble Baroness to withdraw her amendment.
Baroness Barker
My Lords, I thank the Minister for that characteristically considered answer. It was helpful to have this fleshed out and to have statements on the record from the Dispatch Box.
As I tried to indicate in my opening remarks, and as the noble and learned Lord, Lord Hope of Craighead, indicated on behalf of the committee, there is a widespread understanding in the sector that this is necessary. There is not such a widespread understanding, but perhaps some relief, that some charities may be able to use the provisions of this clause to deter unsuitable people from becoming trustees. That may well be a good thing. It is simply that, within the current climate and context of the debate about the nature of terrorism legislation and its ever-widening grip on our lives, those of us in opposition are beholden to pressure the Government on these matters to make sure that we are not being unduly punitive towards individuals for all the wrong reasons.
I therefore take the Minister’s explanations and I listened to what he said about the extent to which there will be public consultation. With that in mind, I beg leave to withdraw the amendment.
Lord Watson of Invergowrie
My Lords, I argue that Clause 9 should not stand part of the Bill. I do so not because we do not wish this clause to stand part of the Bill but because we want to raise issues that have not had an airing through another amendment, and we have particular concerns over issues surrounding charities working in areas of conflict.
The Minister will remember that I raised that issue at Second Reading when I asked if he would speak with his ministerial colleague at the Home Office. I hope that he has now done so and will be able to make noble Lords aware of what that discussion produced. Again, I draw attention to the difficulties posed by current counterterrorism legislation to the protection of charities working overseas to deliver humanitarian aid. I accept that changes to the various laws that cover counterterrorism are not capable of being dealt with within the confines of the Bill. However, concerns were raised with the pre-legislative Joint Committee on these matters by several of those who gave evidence, in particular two umbrella organisations that cover NGOs that work abroad: Bond and the Muslim Charities Forum. They would welcome greater clarity from the Government, which would be helpful for all of us.
In response to the Joint Committee’s report the previous Government stated:
“Terrorism legislation is in no way designed to prevent the legitimate humanitarian work of charities, but it needs to be widely drawn to ensure that it captures the ever diversifying nature of the terrorist threat”.
That is understandable, not least in light of the unspeakably appalling events in Tunisia, Kuwait and France three days ago. However, in his evidence, the Government’s Independent Reviewer of Terrorism Legislation, David Anderson QC, told the Joint Committee that the use or suspected use of property for the purposes of terrorism was “monstrously” broadly defined in legislation. Coming from that source, such a comment carries significant weight, and you do not leave yourself open to charges of being weak or soft on terrorism—which we in the Labour Party most certainly are not—by seeking comment on a matter previously highlighted by the Government’s own Independent Reviewer of Terrorism Legislation.
Indeed, Mr Anderson pointed the Joint Committee in the direction of Australia and New Zealand, where specific exceptions exist in terrorism law to cover charities involved in the delivery of humanitarian aid. I am not comparing the UK to either of those countries with regard either to their size or the level of terrorist threat they face. However, given the similarities of the legal systems of all three countries, the possibility that such legislation might prove of value means that it should at least be examined. Again, I mention that the man who drew it to the attention of the Joint Committee can hardly be characterised as being other than committed to ensuring that the UK’s counterterrorism measures are as tight and effective as they possibly can be.
We acknowledge that the Charity Commission has been proactive on this subject and has meet with some of those NGOs faced with the kind of difficult circumstances to which I have referred, and the commission issues alerts and seeks to make charities as aware as possible of the risks involved. However, the current counterterrorism legislation, despite the fact that no prosecutions have been brought against UK NGOs that operate in conflict zones, is having a chilling effect on them, and undoubtedly makes it more difficult for those NGOs to deliver humanitarian aid.
The pre-legislative scrutiny Joint Committee highlighted this matter to the previous Government, who said in their response that they would,
“draw the Committee’s recommendation to publish guidance relating to prosecutions under counter-terrorism legislation … to the attention of the Director of Public Prosecutions”.
Given that three months have now elapsed and that—I think I can say this to the Minister—a clear line exists between the previous Government and the current one, will the Minister tell the Committee whether that has been done and, if so, what conclusions have emerged?
Finally, we believe that the commission and those charities which presently fear to tread in certain situations would welcome a form of words which went some way to providing more clarity—perhaps even legal certainty —on this important matter.
Baroness Warwick of Undercliffe (Lab)
My Lords, I support the probing questions of my noble friend Lord Watson of Invergowrie. At several stages in our pre-legislative scrutiny of the Bill, we became anxious about the breadth and vagueness of the powers which it bestows on the Charity Commission. These concerns were reinforced by a letter from the chairman of the Joint Committee on Human Rights, Dr Hywel Francis MP, in which he said:
“In the absence of further definition in the Bill itself, or other guidance, such broad and vague language significantly increases the power of the Commission and provides insufficient certainty to both individual trustees and charities about the possible consequences of their conduct”.
At each stage, when we had these concerns, we looked carefully at the evidence and concluded, as noble Lords will see from the report, that the powers were indeed justified in that they were likely to help to increase public trust and confidence in charities.
However, when it came to the inclusion of terrorism offences, as my noble friend has indicated, we received evidence that disturbed us. As noble Lords will know from our report, a number of witnesses expressed concerns over the difficulties presented by terrorism legislation in relation to the operational requirements of NGOs in challenging circumstances overseas. They were particularly concerned about charities operating in dangerous parts of the world for humanitarian purposes. My noble friend referred to the chairman of the Muslim Charities Forum, Dr Hany El-Banna, who told us that he thought counterterrorism legislation was,
“preventing us from having access to the neediest people”.
David Anderson QC, the Government’s Independent Reviewer of Terrorism Legislation, who has already been referred to, said concepts such as the provision of “indirect support” to terrorist organisations had,
“an impact on humanitarian charities, particularly when working abroad and when working in areas that are under the de facto control of a proscribed or designated group”.
He went on to say that charities operating in these areas ran the risk of falling foul of terrorism law by, for example, delivering relief to a general population which might include individuals or groups designated as terrorists. He suggested that an increased risk could deter charities and their trustees from delivering humanitarian support. Bond, the umbrella group, went on to suggest, in our words, that,
“the withdrawal of banking services exposed donor assets to greater risk because international NGOs had no option other than to use less secure money service bureaux or to carry sums of cash across borders”.
Nothing in what I have said undermines the need to deal with terrorism offences and to address legitimate concerns about the abuse of charitable funds in connection with terrorism. It does, however, raise questions about the uncertainty surrounding the application of terrorism legislation when it comes to charities operating in dangerous circumstances overseas. The pre-legislative scrutiny committee was offered the examples of Australia and New Zealand as places where Governments had addressed this issue and where specific exceptions in law existed to meet this point. We thought that this was worth pursuing, but when we raised it with the Minister for Civil Society, he said it fell outside his remit and was essentially a matter for the Home Office. He went on to say that it could be,
“chasing a problem that does not exist”,
since,
“no one has been prosecuted”.
I do not think that that is good enough. Clearly these charities are expressing real anxieties about the risks they might face and about the chilling effect of this legislation. The difficulties facing these charities are already enormous in Afghanistan, Iraq, Chechnya and Somalia, among other places. If it is possible to provide them with greater certainty in pursuing their important work and overcome this worrying and chilling effect, then we should try to do that.
Like my noble friend, I was disappointed with the Government’s response. The Government recognise that there are concerns, but points only to the problems of creating loopholes without even addressing the suggestion that they might look at the examples of Australia and New Zealand to see whether and how those countries have overcome this danger. I ask the Minister to think again and at least to consider whether other countries can provide some inspiration about whether there are ways to provide greater legal certainty.
Finally, the Government have said they will draw to the attention of the Director of Public Prosecutions our recommendation to publish guidance. I hope they will agree to do rather more than that and to put their weight behind the need for guidance to address the current uncertainty, which was revealed in our evidence and which the Government acknowledge.
Lord Hope of Craighead
My Lords, I draw attention to the last two sentences of paragraph 183 of the Joint Committee’s report, at pages 53 and 54. They refer to an exchange between me and the Minister speaking for the Home Office, the noble Lord, Lord Ashton of Hyde. I pointed out to him the difficulty faced, according to the evidence we received, by people who are trying to gain access to areas where people are in dire need of food, warm clothing or whatever else when somebody there is, in effect, a gatekeeper and refuses any transit to the areas where these people are without some form of payment.
One would of course support what the noble Lord, Lord Ashton, said as a general rule—one does not want people to pay money to terrorists for any reason—but the New Zealand legislation has addressed the problem by putting in the phrase “without reasonable excuse”. Something of that kind would go some way to addressing this problem, because a hard-edged refusal to contemplate any situation where money is paid by somebody—not to assist terrorist activity but simply to get access for a humanitarian purpose—would seem to be too severe. I would have thought that there is a need for some degree of flexibility, although like everyone else I recognise that this is a very sensitive issue and the last thing one wants to do is encourage terrorism. There is a conflict of two diametrically opposed interests here, and the hard-edged and uncompromising line, as described in the noble Lord’s reply when I put forward my suggestion, is prejudicing those who are in need of humanitarian assistance.
Lord Hodgson of Astley Abbotts
My Lords, having also been a member of the Joint Committee, I support the need for flexibility on this. I used the example at Second Reading of the Yazidi women who have been enslaved by ISIS and whom it is allegedly possible to ransom for $10,000. Clearly that money is going if not directly then indirectly to ISIS and these charities are faced with an incredibly difficult decision. On the one hand, morality drives you towards wishing to rescue these wretched women who are in a state of sexual slavery. On the other, there is the danger that if you do it, you may end up being prosecuted for the reasons that we have been discussing. I support the need to find some way through this thicket. Whether it is a DPP statement of guidelines or whatever else, I do not know, but we should not let it just ride through our Committee without having a real go at getting clarity as to how charities can operate, not only for the benefit of the individuals concerned but for the reputation of this country. Our soft-power reputation for making an important contribution to providing humanitarian aid in various parts of the world is important to us, and we need to spend time making sure that we maintain it.
Baroness Barker
My Lords, it is worth noting that this issue is not new. Anybody who can remember the 1970s knows that similar decisions had to be made then about whether charities raising money for organisations in Ireland were legitimate charities. I go back to the point raised by the noble and learned Lord, Lord Hope of Craighead, when he talked about reasonable excuse. If a charity is raising money in pursuit of its charitable objects, the question becomes how it pursues its charitable objects, not whether it is therefore deemed to be supporting terrorism. The Charity Commission, having raised the temperature around this issue, is under an obligation to work with the sector to come up with the guidance for charities, which is obviously necessary, on how they can pursue their legitimate charitable objects in the difficult parts of the world in which they have to work. This is not new, and it is not beyond the Charity Commission to facilitate an answer.
Lord Bridges of Headley
My Lords, this debate is clearly overshadowed by the horrific and terrible events in Tunisia, France and Kuwait last week. I, too, express my condolences to those who lost loved ones. I would certainly not wish to imply that anyone who raises the issues that we have been discussing is in any way soft on terrorists.
Rather than rehearse all the arguments about this clause, let me address directly the point about the so-called chilling effect that some have spoken of. I recognise fully that this is a concern for some charities operating in some of the most difficult parts of the world. I will come on to explain why I disagree with the need for carve-outs. My belief is that we need to develop a clear understanding of NGOs’ concerns and see examples of where difficulties occur. We also need to avoid seeing the Bill as a means to tamper with or revise counterterrorist legislation itself—not that any of your Lordships have suggested that, but it is worth bearing in mind.
The noble Lord, Lord Watson, asked what I have been doing about this since Second Reading. I assure him that I have not been totally idle. I have been turning over the stones and seeing what is going on, and it is clear that there is a considerable amount of activity within government. I will not bore the noble Lord with a long laundry list but several government departments and other bodies, including the Home Office, the Treasury, DfID, the Charity Commission and the Cabinet Office, have been engaging with NGOs to understand their concerns and to ensure wherever possible that their concerns are properly covered by and in guidance. In 2014-15, for example, the commission engaged with more than 100 charities that operate internationally, and it regularly meets the Disasters Emergency Committee.
In many cases, there is already detailed guidance dealing with the points that have been raised, although I fully accept it may well be the case that better signposting, better explanation and more discussion are needed. The Charity Commission has produced and published a range of specific guidance for charities on managing the risks of operating overseas and on the abuse of charities for terrorist purposes. This includes the risks of links to or association with terrorist activity or abuse. This guidance is published on the commission’s website and includes the requirements for charities under UK counterterrorism legislation and charity law.
What I am taking from this debate is that we need to have more communication with these charities in a more targeted way. The Government’s assessment is that neither existing terrorism legislation nor other legislation prevents organisations, including charities and NGOs, operating in the UK or overseas. The legislative framework is deliberately drawn widely to capture the ever-diversifying nature of the terrorist threat faced. The chances of prosecution of an individual for a terrorism-related offence as a result of their involvement in legitimate humanitarian efforts are considered to be low, as was referred to a moment ago, although this can be determined only on a case-by-case basis and on the particular circumstances of each case.
It is not possible to provide assurances to the charitable sector or to those engaged in humanitarian efforts about possible prosecutions, as doing so might obviously fetter the discretion of the Crown Prosecution Service. Equally, doing so could create a loophole that could be exploited by the unscrupulous. In the interests of fairness, every case must be treated on an individual basis by the independent prosecution authorities, subject to the evidence available and their judgment on whether it is in the public interest to proceed with a case.
There has been one recent case involving a charity and connected individuals being investigated on suspicion of breaching UK counterterrorism legislation. The alleged offence related to the charity’s humanitarian efforts in Somalia. The normal police and prosecution decision-making processes were followed, and the Attorney-General accepted the CPS’s recommendation that prosecution in this instance was not in the public interest. Therefore it did not proceed. Furthermore, the Government do not consider it necessary for there to be a carve-out or exemption for charities because there is no evidence of a significant number of prosecutions against them, which suggests that the protections already in place are adequate. For example, the public interest test, as set out in the Code for Crown Prosecutors, sets out the factors considered when prosecution is appropriate.
Some have argued that the disqualification provision should not apply to people designated under terrorist asset-freezing legislation, as this is not a criminal offence and is not subject to the same standard of proof. I disagree. The Terrorist Asset-Freezing etc. Act provides the Treasury with powers to freeze the funds and economic resources of those suspected of, or believed to be involved in, terrorist activities and restricts the making available of funds, financial services and economic resources to or for the benefit of such persons. These are highly targeted measures. The latest consolidated list of those designated under the UK’s terrorist asset-freezing legislation contains 23 individuals. Furthermore, if the case is serious enough to designate an individual under this legislation, it is impossible to see how such a person could be considered fit to serve as a charity trustee or manager. It would be an absurd position for an individual to have their own funds frozen but to be in a position to fundraise for a charity or to control a charity’s funds or activities. Nevertheless, as a safeguard, a person who was disqualified by virtue of designation would be entitled to apply to the Charity Commission for a waiver from disqualification, and the commission’s decision would be appealable to the Charity Tribunal.
“Disposal of assets
Charities may not, and may not be compelled to, use or dispose of their assets in a way which is inconsistent with their charitable purposes.”
Baroness Hayter of Kentish Town
My Lords, Amendment 12 stands in my name and that of my noble friend Lord Watson. It effectively just states the existing legal position. It is here to remind trustees of their existing duties for when the Government later mandate them to sell their charitable property under right to buy. As the Minister knows, the Opposition are not against right to buy. Indeed, we want those who desire to be home owners to achieve that. Likewise, the National Housing Federation and housing associations want to help tackle the housing crisis, but in their view a compulsory right to buy would make it more difficult. It is not the right way to achieve it.
In his maiden speech, the noble Lord, Lord Kerslake, said that forcing charities to sell off their property is wrong in principle and in practice. At a subsequent event, he said it would work entirely counter to the overwhelming priority of promoting new supply. The debate in the Chamber on Thursday saw Tories, Lib Dems and Cross-Benchers line up to condemn the proposal, and surely that will make the Government think again. Housing associations, which are mostly charities, provide 2.5 million homes for some 5 million people on affordable rents. They are rented privately, and many enable people with disabilities or care needs to live independent lives. Others are for shared ownership to help those on lower incomes to buy their homes. Housing associations build 45,000 homes a year and would like to build 120,000, matching what private builders are able to do. This aim could be undermined by them being forced to sell off their stock.
We know that civil servants warned Downing Street about the cost, which I think is at least £5 billion but could be more, and about the difficulties of replacing those sold, leading to a shortage of affordable homes. We know that in local government terms only one in 10 homes sold under RTB were replaced. Furthermore, any diminution of housing stock can harm housing associations’ borrowing powers. As the NHF has said:
“With a nation in the throes of a housing crisis, it is key that housing associations are in full control of the assets against which they borrow to build homes”.
The NHF obviously wants to increase home ownership, but it is concerned that the right to buy will make it more difficult to tackle the housing crisis. Right to buy could make it harder for the housing associations to deliver their charitable objective, which is, of course, providing for people in greatest housing need.
We know that housing associations lever in private finance in order to meet their charitable objectives and to manage their assets effectively. Forcing them to sell properties would give them less control over these decisions and, importantly for this Bill, would make it more difficult for them to meet their charitable purpose.
The National Housing Federation also worries that such interference sets a dangerous precedent for government intervention in independent charities. It cannot support giving government a role which should be the preserve of housing associations’ own charitable trustees. The NCVO similarly fears that the compulsory sale of charity assets through right to buy sets a worrying precedent of government interference in the running of independent charities. It would also, says the NCVO, contradict the rule that charities cannot dispose of assets other than in pursuit of their charitable objectives—in other words, using such assets for charitable rather than for political or private benefit. Hence, the NCVO supports Amendment 12.
There are other concerns about the policy, such as whether any bequests could be invalidated in the circumstances of a forced sale. We should remember the history of major providers of social housing. Peabody, close by here, was founded in 1862 by an American banker, diplomat and philanthropist, George Peabody, to,
“ameliorate the condition of the poor and needy in this great metropolis”.
Peabody’s mission remains much today as it was in 1862: to help make London,
“a city of opportunity for all”,
by helping people have a good home with a feeling of belonging which grows from involvement in the neighbourhood and the spirit of togetherness. Furthermore, Peabody strives to ensure that the landlord service is tailored to the individual, and residents are supported in their daily lives and in their aspirations. So not only would the forced sale of this property counter the bequest’s terms but, as those houses were sold on—perhaps let to the private sector—the charity’s aims could not be met.
During Second Reading, the Minister said that there was a precedent for housing association tenants accessing discounts to buy their own home. However, the preserved right to buy, which I assume he was referring to, applies to homes transferred from a local authority—and which thus have been built with public money—to a housing association. Charitable law is overruled in that case only because the charity was aware when it acquired these homes that right to buy applied. It is therefore a little misleading to suggest that this is similar to what is now being proposed, which will cover all housing association homes, whether donated to the charity, perhaps by special deeds setting out the purpose of the gift, or funded by money raised to house a particular client group.
The policy would reduce the supply of affordable homes. Given that such right to buy for housing associations would be funded through the forced sale of council properties, this would itself reduce the number of affordable homes. There are 2 million people on waiting lists due to the dearth of homes at affordable rents for low earners. Expecting the sale of a council home to both fund its replacement and reimburse the housing associations sounds to me like double-counting, and in London, of course, a complete impossibility.
The National Housing Federation, which is, of course, the expert in this field, calculates that the taxpayer’s money could be much better targeted at ending the housing crisis. On its assumption that there will be about 220,000 eligible tenants who could afford to take up the right to buy, the discount would be £11.6 billion—for 220,000 people. That amount could provide 660,000 homes for shared ownership, which would give three times as many people a foot on the ladder. Housing associations already help people to buy their own homes, with some 250,000 now in shared-ownership homes.
Lord Campbell-Savours (Lab)
My Lords, my noble friend has put a powerful case before the Committee. I have to say to the Minister that what he has to say will be circulated throughout the country and will be read by thousands of people and by many involved in the churches. Many would have been here to witness what he has to say if they had known this debate was to take place.
We had an early canter round the course last Thursday during a housing debate. Even on that occasion, with very little notice of the debate having been given, the speeches were circulated widely because everyone is waiting for the Government to take a decision to exempt at least certain categories. I am not going to refer specifically to the contribution that I made in that debate other than to say that I read out a letter from Mr Bill Bewley. I do not know whether the Minister has been given a copy of Mr Bewley’s correspondence. He shakes his head to indicate that he has not seen it. I hope that he or his civil servants have time to read col. 1758 of Hansard of 25 June on the debate on affordable housing. A number of contributions were made on this issue.
The amendment says:
“Charities may not, and may not be compelled to, use or dispose of their assets in a way which is inconsistent with their charitable purposes”.
I speak to this amendment on behalf of a charity whose function is mirrored by hundreds of charities nationally. The Government’s objective, as set out, would require that charity to dispose of its housing assets. These assets have been built up by volunteers working in small communities without remuneration. They have built houses in Keswick in the Lake District, where I was once the Member of Parliament, and where, until recently, I had a home. They are but one of 175 community land trusts across England. In this case, I am referring to the Keswick Community Housing Trust. By 2020, those community land trusts will build some 3,000 homes. Most of them are charities and they do not want to be forced to sell off their assets. They are not going to solve the nation’s housing supply problem but they will certainly make a meaningful contribution to resolving the crisis.
These community land trusts are local organisations, set up and run by local people unpaid to develop and manage homes as well as other assets important to a community, such as community shops, pubs or work spaces. Their primary objective is to develop homes that are genuinely affordable, not this nonsense that we hear in London in particular, where they talk about affordable rents being £1,600 a month or whatever. It is just ludicrous what is going on in London; what is described as affordable there makes a nonsense of the whole principle.
As I said, these community land trusts’ primary objective is to develop homes that are genuinely affordable based on what people earn in an area and to ensure that those homes remain affordable in perpetuity. I set out in last week’s debate the wages paid in Keswick over recent times and they bear no resemblance whatever to the so-called affordable rents that are being paid in many parts of the country. This housing trust in Keswick set out to provide affordable rents that people could actually afford—people who earn not £30,000, £40,000 or £50,000 a year but maybe £15,000, £18,000 or £20,000: a completely different market. That is where its concern is focused, but it is worried that the properties it has built will have to be sold off.
Last week I gave the House a description of what is going on in the Keswick community land trust in the Lake District. However, there are CLTs—community land trusts—in towns and cities around the country where the lack of affordable housing is just as much an issue as it is for popular rural communities such as Keswick. I am trying to make the point that the very purpose of CLTs like Keswick Community Housing Trust is to develop homes that are affordable for local people in perpetuity. These CLT homes are supposed to benefit not just one generation but every future occupier. That very purpose of a CLT motivates local people such as Mr Bill Bewley of Keswick CLT, whom I spoke of on Thursday, to spend thousands of hours volunteering their time to bring forward new homes.
Mr Bill Bewley is an active Quaker, and the Quakers are involved nationally in this kind of work, as are many other religious groups, which very often give of their time and form part of the membership of those trusts. In the case of the Keswick trust, it involved two people from the Church of England, one Methodist, one person from the Kings Church, a couple of Quakers, an Orthodox Christian and Catholics—in other words, a body of people who are committed by their religious beliefs and who get together and act in the public interest to produce houses that people can afford. Now they are fearful that their right to carry on with the brilliant work they do will effectively be removed because of a policy which they believe is ill-conceived.
Many community land trusts have developed homes for rent or are currently in the process of doing so. That work is going on all over the country. They are now vulnerable to the right to buy, either because they have had to register as a registered provider with the Homes and Communities Agency to receive an affordable homes programme grant or because they own the freehold of a site and have leased the properties to a registered provider; that is, a housing association. The right to buy will not only affect those homes because it goes against the ability of a CLT to ensure that the homes remain affordable, but it could have a chilling effect on the whole sector.
If this measure is introduced for CLTs we will not see landowners being willing to dispose of land on favourable terms. I will explain what that means. The churches in Keswick—in this particular case it was the diocese in Carlisle—said to the trust, “You can have this piece of land, and we will charge you only £10,000 a plot”. Therefore they took it, and spent £110,000 on 11 plots. If that land had gone on the open market—in Keswick, in the Lake District, where there are very strict planning rules and where land is at a premium—it would have fetched a much higher price. In the event that those properties will be sold off, the beneficiaries of that charity will be individuals. I think that is completely wrong, as do probably many Conservative Members of Parliament in the other place, who I understand have privately indicated their concerns to Ministers, because they are under pressure from the lobbyists.
A family in Keswick called the Speddings—a local family, well known in the area for their charitable work—have sold a piece of land to the local housing trust for £12,500 per plot. Again, they are effectively giving that land away. Why should the benefit of that charity be passed to individuals? It is staggering madness that the Government are embarking on by going down this route.
Baroness Warwick of Undercliffe
My Lords, I support my noble friend Lady Hayter in her amendment to reaffirm the independence of charities and of charity trustees. I declare an interest, in addition to others I have previously declared, as the chair-designate of the National Housing Federation.
The purpose of the Bill is to strengthen public trust and confidence in charities. The public will have that confidence only if charities are well run, live their values, fulfil their stated aims, deliver what they were set up to do and achieve value for the money entrusted to them to deliver services. Charity trustees have an obligation to act in accordance with their trust deed or governing document and to deliver their charitable outcomes for the benefit of the public. They are independent bodies, set up under a range of legal arrangements: they might be trusts, as we have learnt, companies limited by guarantee, incorporated by royal charter, or charitable incorporated organisations, all of which have different legal personalities.
Like my noble friend, I am concerned about one group of charities, housing associations, whose governance requirements might fall into any of the categories I just mentioned. However, they have one characteristic in common: all of them are independent of government at either local or national level, but they will be affected by a government policy, the right to buy, which could make them unable to deliver their stated aims, because they will be constrained in their freedom to make independent decisions about the use of their assets. As I have said, trustees have a fiduciary duty to use their charitable funds and assets reasonably and only in furtherance of the charity’s objects. They must avoid activities that might place the charity’s endowment, funds, assets or reputation at undue risk. However, the right to buy will ride roughshod over trustees’ responsibilities to take strategic responsibility for the disposal of their property assets.
I will not repeat the points I made in the debate about affordable housing on Thursday or the statistics highlighted so strongly by my noble friend, but I do want to emphasise the wide range of tenants and communities with which these housing associations work: those paying social and affordable rents, private renters, those with disabilities, those who need care and those in properties for shared ownership or outright sale. Housing associations are extremely flexible in response to tenants’ needs and, as has been said, are hugely ambitious to build more homes. It is clear that they will be critical to delivering the national response to the current housing crisis, yet they may be hobbled in trying to do so.
Trustees have to balance their charitable goals of building homes for those in greatest need with delivering homes right across the market. They have become extraordinarily adept at leveraging in private finance because finance companies have confidence in the trustees’ effective management of assets. If trustees’ control over their assets were to be undermined, that would make investors nervous and therefore less inclined to invest. Housing associations’ ability to build enough houses to meet national need will then be undermined.
To add to that downturn, there are nearly 2 million people on housing waiting lists and there is a real shortage of homes at affordable and social rent. While replacing homes sold, housing associations will have less capacity to build the new affordable homes needed. Meanwhile, local councils will be selling their high-value homes to fund the process and ostensibly replacing them one for one. But this has proved a challenging target in the past and there is every expectation it will be so in the future.
The charities Bill is not the place to sort out these policy problems, nor is it the place to decide whether historic charity law in all its variety might need to be tested. But it is the place to reaffirm the centuries-old principle of the independence of charities and the overarching duty of trustees to act only to fulfil the charity’s purpose. I urge the Minister to let that ring out loud and clear by agreeing to include the proposed new clause in the Bill.
Lord Bridges of Headley
My Lords, I thank all noble Lords for their contributions, which were clearly eloquent and heartfelt. I note your Lordships’ concerns and will ensure that they are brought to the attention of my honourable friend the Minister for Housing. I say that because the extension of the right to buy is being taken forward, as the noble Baroness just said, in another Bill, which is yet to be presented to the House. That Bill is the right place to have the debate on these issues. My noble friend Lady Williams of Trafford, the Parliamentary Under-Secretary of State for Communities and Local Government, explained to the House that our honourable friend in the other place—the Minister, Brandon Lewis—is already leading the engagement with the sector on our housing commitments as set out in our manifesto and is happy to meet Members of this House and others.
I turn specifically to the noble Baroness’s amendment. Under charity law, charities are already required to obtain the best price available when an asset is sold in most cases and the proceeds of the sale must be used to further the charity’s purposes. Amendment 12 seeks to prevent charities from using or disposing of assets in a way that is inconsistent with their charitable purposes. That would cause problems. Many charities hold property investments that are not directly used to further the charity’s purposes, some of which may not be consistent with the charity’s purpose. Instead, the investments are used to generate an income which is then used to further the charity’s purposes. What is relevant in this context is the income the charity can obtain, not whether its property is being used in a manner consistent with the charity’s purposes. Of course, many charities can and do use property assets directly or indirectly to further their purposes—but the point is that there are many that do not and which instead view property solely as a financial investment.
There is another problem with the noble Baroness’s amendment: it seeks to prevent charities being compelled to dispose of assets. There are already circumstances where charities can be compelled to sell an asset. They can be subject to compulsory purchase orders like any property owner. The Charity Commission and courts have powers to require charities to dispose of assets in certain circumstances and for the proceeds to be applied for the same or similar charitable purposes, although not necessarily in the same charity.
As the noble Baroness mentioned, there is also the preserved right to buy in relation to housing associations, which 630,000 tenants enjoy, and the right to acquire, which 800,000 tenants already have and which, when exercised, would compel the charity to sell assets. These existing rights would be undermined by the noble Baroness’s amendment.
I am sure that it was not the noble Baroness’s intention to frustrate with this amendment the existing right to buy, planning laws, or the powers of the court or the Charity Commission. I hope that she will accept that the proper time and place to debate the right-to-buy policy will be when the legislation on that subject is brought before the House.
Lord Campbell-Savours
On that matter, the Minister invited Members of this House and others to meet the Ministers involved in this whole debate regarding housing associations. Could he give us an assurance that he will approach the noble Baroness, Lady Williams of Trafford, to ask her to invite representatives of the community land trust network nationally to discuss this matter? All we need is an assurance that they will be invited to the department to meet Ministers before that Bill reaches the Commons.
Lord Bridges of Headley
My Lords, I am happy to give the noble Lord an assurance that I will raise this matter with the noble Baroness, Lady Williams of Trafford, and will draw her attention to his clearly heartfelt views. I repeat that I will pass on to my honourable friend the Housing Minister all the points that have been made to ensure that he considers them when developing the policy further.
Baroness Hayter of Kentish Town
My Lords, I thank noble Lords who have contributed to this debate. The Minister should really thank us for doing this now. If he has not picked up that this measure is going to be one of those things that will be extremely hard to get through this House, then he has heard nothing. I realise that he is new to the House, but if he listened to what was said on Thursday, including from his own party, he will know that this one ain’t going to happen. Therefore, I think that he will in the long term be grateful to us for having given due warning and enabled him to steer his colleagues off a track which will be highly bumpy for them.
If the Minister hears nothing else from today, he should listen to what my noble friend Lord Campbell-Savours said. These homes were built not just for one lot of lucky people; they were built not just for one generation but in perpetuity. He has given no answer on that point, because once you sell them off, they are gone. I was disappointed that the Minister said that it was all about income. No, this is not about income; it is about communities. They could be homes rented out, for example, to a community of retired actors or retired nurses—I think that there is a housing association near Bournemouth where all its residents were in nursing and worked in that community together. If you sell that off, you do not just sell off a house and have the money back; you no longer have that shared understanding of the people who have been given a stake in that way. No, it is not just about money and I am sorry that the Minister used that phrase.
This issue is not just about charities; it goes wider. Loan sharks are already circulating. Most of the people who can take advantage of this measure have to be fairly rich, because, even with the £100,000 that the Government are going to give you from local government, you still have to get the other £100,000. On the whole, you have to be fairly rich; it is not the £15,000-a-year earners that my noble friend referred to. So it is already the top end of that market who can use it. For the ones below who cannot, the loan sharks are there saying, “You’re going to get £100,000 if you get this, so how about this? I give you the money, you get the mortgage for the other £100,000, you take the £100,000 that is coming, and in three years’ time I’ll be back and we’ll share it out. I’ll get £50,000 and you’ll get £50,000”. We know those people are there. That is not particularly about the charity aspect, but if the Government do not understand that that is what happens, they have learnt very little.
“Regulation of fundraising
(1) All fundraising charities must be members of the Fundraising Standards Board and abide by their Code of Fundraising Practice.
(2) In section 64A of the Charities Act 1992, as inserted by section 69 of the Charities Act 2006 (reserve power to control fund-raising by charitable institutions)—
(a) in the title omit “Reserve”;(b) in subsection (1) for “may” substitute “must”.”
Baroness Hayter of Kentish Town
My Lords, this amendment is also in my name and that of my noble friend Lord Watson of Invergowrie. When we are discussing it, we refer to it by the shorthand “Olive’s Law” as it arises from the complaints about somewhat overpushy fundraisers in the wake of the tragic suicide of 92 year-old poppy seller, Olive Cooke.
As the Minister knows, hundreds have since reported how they, too, came under pressure, with particular concerns about the elderly, some with dementia, being targeted. At Second Reading, I referred to the Mail on Sunday story of the underhand methods of a private company which appeared to break every rule in the book to make money for itself as well as for charities that were employing it. Cold calling is a particular curse of the housebound and risks damaging trust in charities. We also see charities, having secured one donation, ratcheting-up demands, leading people to fear that if they give they will just be asked for more.
The issue is whether the existing self-regulation is working. Our view is that it is not. A third of fundraising charities are not even members of the Fundraising Standards Board, and charities or the private companies they use can continue to fundraise even if expelled from the board.
The Fundraising Standards Board self-regulation system, which is effectively funded and run by and on behalf of those it seeks to regulate, has, we say, failed to work. It has not done the monitoring to check up on its members. Indeed, without the tragic case of Olive Cooke and the exposé by the Mail, we might know nothing of these practices other than from the anecdotal complaints we all hear about in our personal lives. I was with some elderly friends last night, and without me even raising the question it was one of the things that kept coming up in conversation. However, it was not coming to us from the board that should have monitored this.
The Fundraising Standards Board has not publicised its existence, meaning that those with complaints never took them to it, and it has not outlawed unacceptable practices. This, of course, is not just my view. The Minister for Civil Society, Rob Wilson, calls this,
“a critical time for charity fundraising”.
He concludes:
“Charities’ hard won reputation is at serious risk”.
His “last chance saloon” warning was for charities to show that their fundraising was “beyond reproach” quickly, as they,
“do not have the luxury of time”.
He called on the sector to respect the wishes of householders who do not want to be disturbed at home and to respect “no cold caller” stickers on doors. He also acknowledged that many of us question the self-regulation model. Although it appeared that he favoured one last period of grace, he warned that the,
“window of opportunity … may not remain open for much longer”,
and advised the sector to change rather than,
“allow others to do it for you”.
I do not think that Minister had it quite right with that final warning, but I think he may have moved on since then.
We have concluded that the time has passed for charities to be able to choose whether they want to join the Fundraising Standards Board, or to abide by the code of conduct set by the Institute of Fundraising, by which the FRSB adjudicates complaints, and to put their own house in order—hence, the first part of Amendment 13, which would oblige large charities to belong, thus making their expulsion a matter for Charity Commission intervention. We do not have all charities in mind, but those raising more than, say, £1 million a year. On Report, we will find a form of words to either include a specific figure, or to have the figure set out in regulations, but the principle is clear.
The NCVO, which obviously speaks for many charities, usually prefers effective self-regulation to statutory regulation, as, normally, do we, because it is flexible, responsive, and cost-effective. However, it accepts that the regulatory regime must secure public trust and agrees that there is clear public concern over fundraising. It therefore agrees that self-regulation should be strengthened,
“to a point where an objective observer would say beyond doubt that the interests of the public are sufficiently represented”.
Sir Stuart Etherington of the NCVO said that,
“the correct regulatory regime is not one that is convenient for those who are being regulated, but one that … balances the interests of the public and the regulated … fundraising self-regulation can be successful … but … only … when it is … sufficiently robust and seen to be sufficiently robust”.
The NCVO concludes that change is required, including giving the Fundraising Standards Board a remit over large fundraising charities. It therefore supports Amendment 13, which would require charities to be members of the Fundraising Standards Board, and to abide by the code of fundraising practice. Crisis—which I think of as Crisis at Christmas, although it is a long time since it was called that—one of the charities which would be covered, favours a greater investigative role for the fundraising regulator, with action taken on identifying and dealing with bad practice. It would therefore favour the institute’s code of conduct applying to all large fundraising charities.
The public are with us. More than two-thirds agree that charities should be regulated more. That was before Olive’s case was publicised, so they already had concerns. We are not the first to identify the need to strengthen the regime. There is already a reserve power ready and waiting that allows the Charity Commission to regulate fundraising. It is time to implement this, hence the second part of the amendment, on which we have reason to believe the Government have now reached the same conclusion. Yesterday’s Sunday Telegraph reported that:
“Charities have been given until the middle of this week”—
tomorrow, 30 June—
“to curb their pressure selling techniques to raise money or face action from the charity regulator … Section 64A of the Charities Act 2006 gives”,
the Minister,
“a ‘reserve power to control fund raising’, including imposing ‘good practice requirement’ on charities”.
We want good charity fundraising to continue. We salute the British public, who give more than £12 billion a year—more than the Government’s aid budget. However, we owe it not just to Olive, but to all the many hundreds who have been hassled by charity fundraisers to stamp out malpractice. This amendment is the way forward. I beg to move.
Lord Hodgson of Astley Abbotts
My Lords, I have listened carefully to the noble Baroness, and I understand the frustration and disappointment that underlines much of her speech. Before I go any further, I remind the Committee of my tangential connection to Pell & Bales, which is involved in the charity fundraising sector.
My review had a whole chapter—15 pages or more—concerning fundraising. It is one of the areas which caused the most angst, difficulty and comment. The conclusions were that we need to drive forward ways to improve self-regulation because that is probably the most flexible and cost-effective way of regulating the sector, that there needs to be changes in the way that public charitable elections take place and that there needs to be a clear programme for implementing change and monitoring progress towards it.
I shall be making some relatively disobliging remarks about the charitable fundraising sector in the next few minutes. However, before doing so, there is a case for the defence which ought to be put on the record this afternoon. The first point is that charities must have the right to ask. If they cannot ask, then the amount of fundraising that charities will be able to do will fall dramatically. That is balanced by the right of the public not to be unduly hassled. It is that nexus which we are seeking to find in any fundraising regulatory system.
Secondly, the public do not really like any money being spent on fundraising. They would like every pound that they give to go straight to the beneficiary of the charity, not even to be used by the administration of the charity—hence the concerns about the salaries of chief executives in the sector. That is an issue which the sector has not been able to address. There is an argument for explaining to the public that, in order to have effective fundraising, it is possible that you will need to pay someone money for it. The statistics are that a direct debit signed on the street—the so-called “chuggers”—on average lasts for four years or 48 months, and the charities expect to pay 10 to 18 months of that for the work that is done to get the donation in the first place, which amounts to between 20% and 33%. The public would say that it is outrageous that it costs that amount of money, but from the charity’s point of view, they are getting 67p to 80p in the pound that they would not be getting otherwise. There is a difficult philosophical balance to be established.
Thirdly, the legislation is very uneven. The cash collection—the tin-rattling, as we might call it—dates from 1916, and the charitable collections door-to-door regulation dates from 1939, but local authorities have entirely different standards. Some local authorities will give permission in a week or two, others want two years’ notice, and of course in London local authorities do not do it at all as the Metropolitan Police are the licensing authority. Meanwhile, while we are agonising, quite appropriately, about charitable collections, commercial collections have no regulation whatever. They are free to behave as they wish.
Baroness Hayter of Kentish Town
Will the noble Lord accept that when I moved the amendment, I said that I was talking about charities that raise £1 million a year? It would be very nice if Mrs—I’ve forgotten her name—does—
Lord Hodgson of Astley Abbotts
That is absolutely right. The noble Baroness did say that, but her amendment says, “All fundraising charities”. I know she slightly shifted the ground in the middle of her speech, and I accept that.
What, then, is the problem? There is reluctance in the sector to accept that every problem is everybody’s problem. There is a tendency to push the pea round the plate and to blame another sector, so the chuggers in the street blame the telephone collectors, who blame the direct mail people, and so on. They say, “It’s not our problem—it’s somebody else’s”. There is also reputational pride in individual charities: “We don’t do that sort of thing—other people do that”. Therefore there is a real need for the sector to understand that it is judged by the weakest link, and unless it takes steps to remedy it, the sorts of results the noble Baroness talked about will occur.
Secondly, there is a failure to see that the alphabet soup of regulatory bodies—the IoF, FRSB, the PFRA and the Charity Retail Association—is confusing to the public. They often appear to be acting quite separately; the FRSB’s report on Mrs Cooke said:
“Fundamentally, the FRSB Board believes that the IOF Code must be strengthened”,
as if they are completely separate organisations, way away from each other. It seems much neater to collaborate and work closely together.
There are three things that we should encourage the sector to do. The public need a single point of entry into the system—whether they wish to approach it by phone, by email or by letter—by which complaints or concerns can be addressed. All the bodies involved in charity fundraising regulation and all charities need to pool their sovereignty into a single charity self-regulating organisation, called, say, the charity fundraising authority. That would be tasked with producing national guidelines and model rules with which local authorities should comply. If they do not comply they should explain why they are not complying. They should also provide internal best practice rules for fundraising, in particular about things like passing on names of donors to other charities, because the Olive Cooke case was about the pressure built up by repeated approaches from charities. The Government need to oversee this, either directly or through the Charity Commission.
This will be a challenge to the sector, which has not found it easy to accept change and responsibility for one another. I accept and agree that the situation is not satisfactory and action needs to be taken, but I wish good luck to whoever takes it on and suggest that they pack a tin hat.
Baroness Barker
My Lords, I agree to a certain extent with what the noble Lord, Lord Hodgson, said. He has wrestled with this particular issue for the best part of six years now and he bears some of the scars accordingly. There is no doubt that the voluntary and charitable sector is acutely aware that this particular case has raised this matter to a point where it can no longer be ignored or shunted around between different bodies. Some noble Lords were present at a national event held by the NCVO two weeks ago, at which Sir Stuart Etherington stated in terms to the great and the good of the voluntary sector there assembled that they cannot dodge this issue anymore and that the voluntary sector has to come up with some strong self-regulation. If it does not, it will find itself on the receiving end of regulation from government.
It really is quite tough for the voluntary sector to do that, not least because the noble Lord, Lord Hodgson, is right: there are completely different types of organisations doing different things in different ways, which are all subsumed under the catch-all of “fundraising”. It is sometimes the bigger organisations—the multimillion pound organisations—that have the resources with which to emulate practice in the private sector, which is sometimes pressurised but which actually works. That is the problem: emotional appeals and pressure work.
Equally, very small charities that work locally and in a face-to-face way, raising small amounts, quite often have a higher level of ethical practice because they have to: they work in communities where, if they work even remotely unethically, they do not raise money. There are then those charities that operate in the middle, which sometimes are some of the most innovative organisations of all but which would be the ones that would fall foul of regulatory requirements, just because they do not have vast teams of people overseeing their compliance.
A fundamental problem for charities is that when they are open and transparent about their fundraising costs, they put themselves in the firing line for all sorts of comment. It makes them incredibly reluctant to do that—not because they want to deceive anybody but because the very same people who have taken it upon themselves, quite rightly, to criticise in cases such as this take the charities to task for doing that. You cannot run a compliant, ethical and effective fundraising operation on thin air. You cannot do it.
The noble Baroness is right to do her bit to up the temperature on the voluntary sector at this moment, but I am not sure she is absolutely right with the amendment that she has put forward. I believe that the voluntary sector should be allowed one last chance in the last chance saloon to put itself right. The noble Lord, Lord Hodgson, is also right that there are too many different bodies all hovering around the same thing, clogging up the decision-making, and there needs to be a rationalisation of that. I would suggest that there should be a time limit, say of a year. If the voluntary sector does not come forward with a new code of conduct within that year, the Government would be absolutely right to step in at that point and exercise their powers.
Lord Bridges of Headley
My Lords, we are all understandably concerned about the reports of the fundraising activities used by a small number of charities. There is certainly no complacency on behalf of the Government on this issue; the debate and the possible disagreement are over what should be done. I hope, as the noble Baroness, Lady Barker, just said, that the self-regulatory bodies note the fact that everyone wants action to be taken and to be taken soon.
Last week my honourable friend from the other place, the Minister for Civil Society, Rob Wilson, addressed fundraisers and made it clear that the clock is ticking for them to get a grip on self-regulation. He said:
“I am giving selfregulation an opportunity to demonstrate it can work effectively and make the short term and long term reforms necessary. I urge you to take that window of opportunity seriously as the window may not remain open for much longer … Change is essential. You should embrace it and lead it, rather than wait and allow others to do it for you”.
The noble Baroness, Lady Hayter, cited a report in the Daily Telegraph. The Daily Telegraph is obviously a fantastic newspaper but I would not believe everything that I read in it. I am not sure where that particular date has come from, but I should stress that, as I have said, self-regulatory bodies have a relatively short opportunity to demonstrate that they are getting to grips with self-regulation.
It has been less than two months since poor fundraising practices were thrust into the media spotlight following the sad and tragic death of Olive Cooke. The extent to which she was influenced by poor fundraising practices is not entirely clear, but the issue, as the noble Baroness so rightly said, has clearly struck a chord with the public. Since then there has been a steady stream of media reports about unacceptable fundraising practices—whether direct mail, telephone fundraising or door-to-door fundraising.
As I said, I think almost everyone agrees that there needs to be change. The question is what change and who should lead it. It strikes me that there are three questions that need answering: first, whether the standards fundraisers have set themselves are high enough; secondly, whether the structures for self-regulation are the right ones; and thirdly, whether fundraisers and the charity trustees who oversee them accept the need for change to ensure that donors are treated with honesty, respect and decency.
On the first question, whether the standards for fundraisers are high enough, the answer is a clear no in relation to some fundraising practices. That is why the Minister for Civil Society met the regulators at the beginning of June and set them a challenge to improve standards in a number of areas. This work is continuing but it must bear fruit.
I welcome the announcement by the Institute of Fundraising, on 24 June, that it is strengthening its code of fundraising practice by requiring door-to-door fundraisers not to knock on doors that have a “no cold calling” sticker. However, that is something it should have done proactively some time ago. I know that several review groups have been established and are looking at various issues, including options for opt-in and opt-out, frequency of contact, and whether there can be a one-stop shop for people who want to come off all fundraising contact lists.
Baroness Hayter of Kentish Town
I thank the Minister, the noble Baroness, Lady Barker, and the noble Lord, Lord Hodgson. Before I respond—I hope I will take only a couple of moments—I have a particular view that some of this forgets who are the people affected. They tend to be vulnerable. It is not just charities that treat them that way. I shall very briefly tell the Committee something that happened over the weekend. I have an aunt and an uncle aged 91 and 93. My uncle’s Alzheimer’s is quite bad, and seven weeks ago he had to move into a home. Two weeks after that, my aunt, who is 91, had a very bad stroke. The NHS was completely brilliant, and she is back home. They are highly vulnerable people. This is not a story about a charity. It is about Barclays Bank, which on Saturday wrote to them informing them that it was going to close their account. It had failed to contact them—actually it had not tried—and was going to close their account. It said that,
“we will not be prepared to offer you any new banking services”,
and would not give them a reference for any other bank. If a body such as Barclays, which is regulated by the FCA, can so mistreat elderly people, my concern is that it is not just charities that are affecting them. The vulnerable are getting this from everywhere. Therefore the standards have to be particularly high. They are not for you and me. I have talked to lots of people around the House since we raised this, and they have said, “I’ve cancelled my standing order. I just can’t do those phone calls any more”. We are robust enough to cancel standing orders, to say boo, or in this case to get on to Barclays, which is emailing me at this moment saying “Please don’t mention our name”, “We promise we’ll put it right shortly” and “We didn’t really mean to send the letter”. It is outrageous behaviour. Like the charitable stuff, it is particularly the vulnerable who we need to protect. I think the only difference between us is whether we are in the last chance saloon. My view is that we are already there, and we need to get out and do something about it. I think what the noble Lord, Lord Hodgson, said was actually close to me, although he may not have thought that. By saying that there should be a single point of entry and that the Government should oversee the process either directly or via the Charity Commission—if I have got his words down correctly—that is one stage further on than the last chance saloon. Perhaps he and I should get an amendment together for Report because we really need that extra little bit now.
Lord Hodgson of Astley Abbotts
The danger about moving as the noble Baroness says is that when in two years from now there is a charge from the Government for regulating the sector, there will be an enormous outcry, so what looks attractive to begin with will be inflexible, expensive and even more unpopular than the present system. It would be better from every point of view, accepting all the points about vulnerable people, if the sector could be persuaded to take up the challenge, find the will, find the money and make it happen, because it will make it happen in an effective way. The problem at the moment is that it has not really accepted that there is a fundamental problem and thinks that if there is a problem, it is not its problem but somebody else’s.
Baroness Barker
My Lords, I would like to follow that up by saying that I think that the noble Baroness, Lady Hayter, is absolutely right that one of the big issues—in this field in particular, but it is a big issue right across our society that we have not got to grips with—is how we will include people with dementia in all sorts of aspects of our life. This is true in terms of the NHS, and social care, and here.
The voluntary sector ought to be the one place in our society where we can go and talk to the Alzheimer’s Society and ask what a proper code of conduct and practice might look like. It is self-evident from what the noble Baroness, Lady Hayter, said, that the commercial sector has not got this right yet. Organisations such as banks are the bodies in our society that should be at the forefront of dealing with transactions with individuals, even more than government. Banks have millions of transactions every day with millions of individuals, including older people. They clearly have not got it right. We should have one go in our sector at getting it right for everybody else. If that does not work, then by all means go down the route that the noble Baroness wants to go.
Baroness Hayter of Kentish Town
It is clear that the distance between us is very small. My worry concerns the idea that we will not have another charity Bill in this Parliament. If I had an absolute commitment that we would have another Bill in two years’ time, so that if we had not done it we could do it then, that would be fine, but my fear is that this will be the only such Bill and this is the chance that we should take.
Having said that, I agree with a lot of what the Minister said. In terms of his plea—or threat; I do not know—to trustees to take a more active interest in this, his words were well chosen. The words from the noble Lord, Lord Hodgson, on a single point of entry were very good, too. However, there must be some way of overseeing that it happens. Even if the noble Lord, Lord Hodgson, does not want to come back with a suggestion on Report, we will try to see whether there is a way that puts an extra little voomph—sorry, Hansard—behind this, so that we do not have to wait. The real problem is that we had to wait for Olive to know that this was going on. That showed the Fundraising Standards Board that it was not just a matter of standards but a matter of enforcement. One disagreement that I have with the noble Lord, Lord Hodgson, is when he says that it will be very expensive. I think that some money must be spent on this, because the Fundraising Standards Board, even if it is still self-regulated, must do some monitoring, and that always costs money. If we do not do that, the long-term problem will be that we no longer have this very precious sector, which I think all of us agree is one of the great prides of this country.
Having said that, we will seek a way to come back that gets maximum support. For the moment, I beg leave to withdraw the amendment.
Viscount Younger of Leckie (Con)
I believe that this may be a convenient moment for the Committee to adjourn until 3.45 pm on Wednesday 1 July.
House of Lords
Disabled People: Access to Work Fund
(8 years, 10 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Touhig
To ask Her Majesty’s Government what assessment they have made of the effectiveness of the Access to Work fund and what plans they have to help people with disabilities into work.
The Minister of State, Department for Work and Pensions (Baroness Altmann) (Con)
My Lords, last year Access to Work helped more than 35,000 disabled people to work, including almost 2,000 into self-employment. Disabled people and stakeholders consistently tell us of the effective support that Access to Work offers. A wide range of employment support programmes underpins our success. We are building on this by launching specialist employability support, expanding the Disability Confident campaign, extending work choice and expanding the use of our Access to Work mental-health support service.
Lord Touhig (Lab)
My Lords, an Access to Work grant is a lifeline helping disabled people to find a job and stay in work, so I am sure I was not alone in being surprised last week when the Minister for Disabled People seemed almost to boast about the fact that his department had underspent the fund’s budget by £3 million last year. In those circumstances, will the Minister tell the House why the Government are cutting the grant that disabled people can receive under the fund and why they have failed to publicise the fact that the fund even exists? How will this help the Government to honour their pledge to cut the number of unemployed people by 50%?
Baroness Altmann
My Lords, Access to Work is not being cut. We are introducing a cap, which means that the resources available can support growing numbers of people. We are determined to reduce the disability employment gap by half and to spend more money on these programmes. It is a demand-led programme. The cap will ensure that we can reach far more people, and, indeed, we did just that over the past year.
Baroness Thomas of Winchester (LD)
Does the Minister accept that when the bulk of personal independence payment reassessments start in October, when thousands may lose their Motability cards, the Access to Work scheme is likely to be overwhelmed by disabled people trying to get to work, particularly in rural areas?
Baroness Altmann
As I said, Access to Work is a demand-led scheme. Nobody has ever been turned away from it. The reforms to PIP are about taking money away, but not from those who need it. Therefore, the reforms will deliver a more dynamic benefit system whereby we can tailor support to meet people’s needs as they change over time, and Access to Work will be available to more people.
Lord Low of Dalston (CB)
My Lords, as the Minister said, the Government aim to halve the disability employment gap so that hundreds of thousands more disabled people who can work, and want to be in work, find employment. This is an ambitious aim, and I wonder how far the Minister believes it will be assisted by capping the amount that an individual can receive from the Access to Work programme. A cap at one and a half times the mean average salary may sound generous, but it could limit the effectiveness of the scheme for those with the greatest obstacles to labour-market participation, such as deaf people who need the support of a sign-language interpreter. Will there be any flexibility in the administration of the cap to cater for cases such as these?
Baroness Altmann
I reassure the noble Lord that the cap for existing claimants will not be introduced until 2018, and we will work sensitively with all those affected to ensure a smooth transition from the support they currently get to an alternative form of support under the new arrangements. More than 35,000 people are currently in the Access to Work programme and 200 will be affected by the cap. As I said, nobody currently receiving more than the cap will lose any of their support until we have worked through the programme of transition over the next three years.
Lord Fink (Con)
My Lords, does the Minister agree that misconceptions about people with disabilities, particularly mental health problems, could cause them real difficulties in finding a job? What are the Government doing to help to remove this sort of stigma, particularly among employers?
Baroness Altmann
I agree with my noble friend, and that is why the Government’s campaign to make Britain disability-confident is so important. For individuals with mental health conditions, we provide a wide range of support across our programmes—and there are many such programmes—targeted at supporting work for both employers and individuals. We are very conscious that all disabled people who wish to work have a right to support from the Government to help them to do so.
The Lord Bishop of St Albans
My Lords, perhaps I may press the Minister a little about the very real concerns of many people in the deaf community about the use of British Sign Language, not least because currently four-fifths of the highest-value awards are paying for BSL services. Indeed, the DWP’s own figures show that almost 90% of the users who will be affected by the cap that is to be brought in are deaf. How do the Government plan to continue to support and encourage deaf professionals on a par with the hearing community in the light of this cap?
Baroness Altmann
I reassure the right reverend Prelate that we will continue to support deaf people and people with hearing loss. Specialist teams will help customers and their employers with advice on adjustments and technological support and with personal budgets so that users can manage their support flexibly themselves when the scheme is rolled out later in 2015-16. We are also in discussions with relevant stakeholders about how best to plan the implementation. As I said, existing customers will be protected until 2018 while we work through the transition.
Baroness Wilkins (Lab)
My Lords, how will the department monitor the impact of the cap on Access to Work funding from the day it is introduced?
Baroness Altmann
We will carefully monitor all our programmes. Access to Work is one of the many programmes that we have introduced and are planning to roll out to protect the disabled and help them to work if they want to, as many do. Last year, we ensured that nearly a quarter of a million more disabled people had work. That is a tremendous success, and our programmes are working.
Baroness Sherlock (Lab)
My Lords, it has been rolled out. It is already out there, and the Government are limiting the budget. Will the Minister follow up on the questions asked by the noble Lord, Lord Low, and the right reverend Prelate? Of the 200 people affected, 90% are deaf. They will not be protected in the long run; they will lose the money to pay for their interpreters. Advice is helpful. Interpreters are essential. How will the Government protect them?
Baroness Altmann
We are introducing a range of programmes. Access to Work was never designed to be an unlimited-cost programme. We will ensure that all those who are potentially affected by the cap will have more flexible support to help them as they require it.
Vehicle Excise Duty: Carbon Dioxide Emissions
Lord Brabazon of Tara
To ask Her Majesty’s Government whether they plan to change the basis on which Vehicle Excise Duty rates for new cars are calculated by carbon dioxide emissions alone.
Lord Ashton of Hyde (Con)
My Lords, the Chancellor keeps all fiscal instruments under review. Any changes are announced at the appropriate time.
Lord Brabazon of Tara (Con)
I congratulate my noble friend on that Answer. The Budget will be with us shortly, but will the Chancellor bear in mind that the present system strongly favours diesel cars, whereas we now know that nitrogen oxide emissions are far more harmful than CO2 emissions? Will the Government consider moving to a system that takes emissions of both gases into the equation? While they are about it, will the Government look at the testing regime? At present, this is a laboratory-based system, which bears little relationship to what one actually gets out on the road.
Lord Ashton of Hyde
My Lords, the Government do not explicitly promote diesel cars. The current tax system, introduced in 2001, covers the purchase of cars with low CO2 emissions, regardless of whether they are petrol or diesel. I hope I can be a little more helpful on my noble friend’s question about testing. I am pleased to report that work has been going on for some time, at European and international level, to provide better testing. Although they will still be laboratory tests—so that they can be replicated around the world—a more accurate database will be included, which will more accurately simulate actual driving conditions.
Baroness McIntosh of Hudnall (Lab)
My Lords, will the noble Lord reconsider the answer he gave on whether the Government promote the use of diesel cars? I drive a diesel car, which I am rather ashamed to admit now that I know about the particulates that are emitted by it. However, that diesel car pays no road tax and, currently, no congestion charge. That may not be active promotion but it is certainly implicit promotion.
Lord Ashton of Hyde
I was referring to vehicle excise duty which, under the system introduced in 2001, simply addresses the amount of carbon produced. It does not promote one form of car over another: it just incentivises less carbon.
Baroness Kramer (LD)
My Lords, given the goals of tackling climate change, getting clean air and developing an ultra-low-emission vehicle industry in this country, where we have a chance of becoming a leading manufacturer, would it not be wise to continue to make sure that VED benefits are targeted at the ULEV sector so that we do not lose the advantages we have gained, since we do not yet have a sustainable market?
Lord Ashton of Hyde
The noble Baroness is correct that we should encourage vehicles that produce low emissions. The Government are investing in a wide range of measures to help improve air quality. Since 2011, the Government have committed more than £2 billion in measures to reduce transport emissions. These measures will address both nitrous dioxide emissions and particulates.
Baroness Jones of Moulsecoomb (GP)
My Lords, perhaps I may suggest to the Minister a way round this. The Supreme Court has suggested that the Government should produce a national plan to fix our air pollution problem. Something on the vehicle excise duty could go very nicely into that plan and make quite a lot of headway.
Lord Ashton of Hyde
The noble Baroness’s interest in this subject is well known and I agree with her that there are many things that could be done. However, it is about more than just vehicle excise duty—55% of nitrous dioxide emissions come from sources other than transport. However, I take the point about the Supreme Court judgment. We are committed to working towards full compliance with that and are reviewing the UK air quality plans, which will be finalised by the end of 2015. Consultations will take place before that.
Lord Tunnicliffe (Lab)
My Lords, Defra, in its policy paper dated 8 May 2015, states:
“Air pollution, for example from road transport, harms our health and wellbeing. It is estimated to have an effect equivalent to 29,000 deaths each year and is expected to reduce the life expectancy of everyone in the UK by 6 months on average, at a cost of around £16 billion per year”.
Does the Minister stand by that statement and does he agree that all future government modelling of the economic impact of changes to vehicle excise duty must consider these very significant costs?
Lord Ashton of Hyde
The noble Lord makes an important point. I agree with what Defra said; that is why the Government are investing more than £500 million between 2015 and 2020 to support the uptake of ultra-low-emission vehicles, with the aim of all new cars having no tail-pipe emissions by 2040.
UK: Number of Households
Lord Green of Deddington
To ask Her Majesty’s Government what was the increase in the number of households in England and Wales between 2010 and 2014; and, over that period, what were the number and proportion of households where the head of the household was not born in the United Kingdom.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Williams of Trafford) (Con)
My Lords, the most recent statistics for England, published on 27 February, include an estimate for England of 22.7 million households in 2014 compared with 21.9 million in 2010. This represents an increase of 0.8 million households, equating to a 3.6% increase over that four-year period. Government data show that, in 2014, 15% of heads of households across England and Wales were born outside the UK.
Lord Green of Deddington (CB)
My Lords, I declare an interest as chairman of Migration Watch. I thank the Minister for her reply, which suggests that we are now forming new households at the rate of about one million every five years. Does the noble Baroness agree that the proportion of new households that have an immigrant head is a major factor in housing demand? Is she aware that, today, the Office for National Statistics has published a table showing that almost all households in the last four years were headed by someone born overseas? Finally, will she make sure that future publications by her department make absolutely clear the impact of immigration on housing, a major concern to the British public?
Baroness Williams of Trafford
My Lords, I thank the noble Lord for furnishing me with a figure beforehand of an increase of two-thirds. I have asked the ONS to look into this figure and if he is agreeable, I will confirm it in due course. In terms of supply and demand, we are focusing on both those things. We are doing many things to address the demand on housing in this country from overseas, including tightening the rules for family and student visas.
Lord Lamont of Lerwick (Con)
My Lords, does my noble friend agree that the country has benefited from both skilled and, to some extent, unskilled immigration, but that the appropriate measure of the extent to which this is so is not GDP growth but GDP per capita? Judged by that standard, the evidence is somewhat doubtful. Does she further agree that GDP growth reflects nothing but population growth, is of no particular economic advantage and, as the noble Lord, Lord Green, has pointed out, merely adds to the pressure on infrastructure and housing?
Baroness Williams of Trafford
There is no doubt that there is pressure on housing demand from all sorts of sources, including immigration. The point that I was trying to make is that we want skilled people to come here to fill some of the skills gaps, but we do not want people simply coming here to look for work without having secured a job.
Lord Paddick (LD)
My Lords, would it not be a far more positive approach to stop blaming immigration for the lack of housing and to start building more homes?
Baroness Williams of Trafford
My Lords, we are building more homes. In fact, nearly 800,000 homes have been built in this country since 2009. However, I agree that, yes, we are in danger of blaming immigration for everything.
Baroness Farrington of Ribbleton (Lab)
My Lords, does the Minister agree that the term “head of household” was dropped in relation to the electoral register many years ago because it was often interpreted as meaning men? Secondly, does she agree that in looking at the figures of people who were born overseas, it is important to distinguish the multifarious reasons why people are in that category? For example, until 30 years ago a British mother outside the EU was not able to pass on British citizenship unless the child was born in Britain, whereas a British father could. Can we not have a great deal more accuracy when we are looking at this issue?
Baroness Williams of Trafford
My Lords, I agree with the noble Baroness that we tend to look at things in rather a blanket way, that “head of household” suggests a certain person—namely, male—and that the reasons for immigration are many and varied. I am an immigrant myself: my family came here in the 1970s because my father got a job here. One reason may be to flee persecution. The noble Baroness is absolutely right.
Lord Forsyth of Drumlean (Con)
My Lords, could the Minister answer my noble friend Lord Lamont’s question about whether GDP per capita is a more sensible measure of growth? In particular, what percentage of GDP growth is accounted for by immigration?
Baroness Williams of Trafford
My Lords, I do not have those figures to hand but I am very happy to write to the noble Lord and furnish him with them.
Lord Roberts of Llandudno (LD)
My Lords, are the one-third of hospital doctors who were born overseas considered when heads of household are calculated? Surely that would transform our whole idea of the value of people coming to this country.
Baroness Williams of Trafford
The noble Lord makes a very valid point about acknowledging the contribution to this country that immigrants make. As I said in my previous reply, my father came here as a doctor from Ireland. People who come to this country to fill those sorts of highly skilled jobs make a very valuable contribution to our economy.
Baroness Royall of Blaisdon (Lab)
My Lords, how do the Government think that the sale of housing association homes is going to assist with the housing crisis?
Baroness Williams of Trafford
My Lords, the sale of housing association homes is going to assist in the sense that for every one that is sold, a new one is going to be built.
Baroness Williams of Trafford
The Government are very committed to that target.
Lord Hunt of Kings Heath (Lab)
My Lords, on the value of migrants to the health service, does the Minister not think it bizarre that the 2012 Immigration Rules now state that unless nurses from other countries who come to work here earn more than £35,000 a year, after six years they will have to go back home? Is that not, as I say, a bizarre change for the Government to make when we are crying out for nurses both from overseas and from this country?
Baroness Williams of Trafford
My Lords, nurses, doctors and other health workers are vital to keeping the NHS going and we would not want to do without them.
Advertising Standards Authority
Baroness Deech
To ask Her Majesty’s Government what is their assessment of the performance of the Advertising Standards Authority.
The Parliamentary Under-Secretary of State, Departments for Business, Innovation and Skills and for Culture, Media and Sport (Baroness Neville-Rolfe) (Con)
My Lords, the Government support the system of co-regulation for broadcast and self-regulation for non-broadcast advertising enforced by the Advertising Standards Authority. Overall, we believe that this regulatory system has worked well for both consumers and advertisers, and I support the Government’s assessment in the 2013 digital communications policy paper that it is an exemplar of successful self-regulation.
Baroness Deech (CB)
My Lords, I declare an interest as a partly successful recent complainant. The Minister will know that the ASA is a self-regulating body and is funded at one remove by the industry. In those circumstances, does she think that it is acceptable for such a body not to have to observe the rules of natural justice when hearing complaints? There is no obligation to share material with both sides. The authority sometimes fails to seek expertise and evidence when necessary, fails to give adequate reasons for its judgments, fails to follow precedents and makes its own appointments. What assurance can she give us that the governance of this body will be brought into line with that of other complaints-handling bodies? Should it not be on a statutory basis, ensuring that justice is done to both sides?
Baroness Neville-Rolfe
My Lords, the system has been proven to work well for more than 50 years, and of course the ASA Council is chaired by the noble Lord, Lord Smith of Finsbury, who after a review in 2014 put in place a new strategy aimed at being more proactive and efficient. I think that that has improved the speed of response and customer satisfaction. ASA rulings are subject to review by the Independent Reviewer of the Rulings of the ASA Council, and if an interested party remains unhappy, they have recourse to the courts through judicial review. There are pluses and minuses to this type of system, but I believe that the advantages outweigh the disadvantages.
Baroness Eaton (Con)
My Lords, what is the policy of the ASA on getting expert advice when an advertisement has been complained about, particularly when the matter involves difficult scientific or political issues?
Baroness Neville-Rolfe
My Lords, the ASA can engage external expert advice on a case-by-case basis. I think that it is on occasions when claims are capable of objective assessment and the evidence provided would merit such external expertise. Of course, the ASA itself has a bench of experts, but it is possible for it to bring in extra scientific expertise if it needs to do so, and no doubt advisers on political issues, although the make-up of the council probably means that it is quite experienced in these matters.
Lord Smith of Finsbury (Non-Afl)
My Lords, as chairman of the ASA, can I ask the Minister if she agrees that, taken as a whole, the ASA’s work is a good and effective example of self-regulation and co-regulation? Last year the authority dealt with 37,000 complaints about 17,000 advertisements, and its work resulted in almost 3,500 ads being changed or withdrawn. While of course we will never get absolutely everything right, we have a strong and independent review process in place which in fact worked very effectively in relation to the case brought by the noble Baroness herself.
Baroness Neville-Rolfe
I am very grateful to the noble Lord for setting out these facts so clearly and succinctly. I would add that the flexibility of the ASA, which he has not mentioned, is a big advantage—the way it was able to jump in in the 1990s and take on online ads and look at those showed that. It also ensures a strong industry stake in maintaining the system, ensuring high levels of consumer trust and, of course, good enforcement, because the industry is involved in making this a success.
Lord Palmer of Childs Hill (LD)
My Lords, the Minister has given details about what has been done. Can she tell us that they are satisfied that the ASA meets the criteria of the EU Directive 2006/114 which, as I am sure the Minister knows, requires the UK to provide,
“effective means … to combat misleading advertising”,
with recourse to the courts. Despite the eloquent responses of other noble Lords, the ASA is not a court.
Baroness Neville-Rolfe
Yes, my Lords, EU Directive 2006/114 concerns misleading and comparative advertising to traders in the UK, and by agreement the ASA administers the UK advertising codes. The system works well. It is a good, collaborative arrangement, with good back-up.
Baroness King of Bow (Lab)
Does the Minister agree that one of the problems here is that the ASA is called the Advertising Standards Authority, when it is not in fact a statutory body at all. As we have heard, the ASA is a body funded by the advertising industry, which rules on complaints against the advertising industry. I am a great fan of the noble Lord, Lord Smith, but surely not even he can change the fact that self-regulation rarely works. Does not its lack of statutory independence fatally undermine whatever credibility the ASA may have?
Baroness Neville-Rolfe
My Lords, I cannot agree with the noble Baroness. The system works well for all the reasons that the noble Lord, Lord Smith, articulated. We should stick with it and make sure that it continues to improve—which, I understand, is exactly what the Council is trying to do.
Baroness Oppenheim-Barnes (Con)
I wonder whether my noble friend would agree—and certainly the noble Lord who is in charge—that gambling is still a big problem. As someone who could easily be on the verge of becoming a compulsive gambler in the middle of the tennis season, I point out that there is an advertisement that says, “If you know whether the person who won the first set is going to win the match, press the button. It’s a free vote and we will pay you if you win”. I can only confess that my finger is starting to itch when they do that. Other people must be in the same position; they must go the whole hog and stay there, losing more money than they possibly can afford. Please would they pay special attention to the gambling advertisements?
Baroness Neville-Rolfe
My Lords, the noble Baroness is right. Of course, this is not a matter for the ASA alone. Regulations governing gambling, marketing and advertising are shared with Ofcom and the Gambling Commission. The Government are committed to ensuring that people, particularly the young and vulnerable, continue to be protected from being harmed or exploited by gambling—and also, of course, people in the later stages of life.
Cities and Local Government Devolution Bill [HL]
Lord Shipley
“Access arrangements to combined authority meetings for the press and public
(1) The Secretary of State shall, by regulations, provide that, where a meeting is held—
(a) between a mayor established under the provisions of this Act and the relevant combined authority;(b) by the leaders of a combined authority;(c) by an overview and scrutiny committee of a combined authority,arrangements must be made, so far as is reasonably practicable, to allow reasonable access to the meeting for the public and the press.(2) For the purposes of this subsection (1) “so far as is reasonably practicable” means to the extent possible to allow transparency of proceedings and decisions, while taking into account—
(a) the need for unencumbered advice from officials, and(b) the need to protect commercial confidentiality.(3) For the purposes of subsection (1), “reasonable access” may include but is not restricted to—
(a) attending and viewing the meeting,(b) taking notes of the meeting, and(c) taking a visual or audio recording of the meeting.”
Lord Shipley (LD)
My Lords, Amendment 42A concerns media and public access to meetings, addressing issues around the right of the press and the public to have access to the meetings of combined authorities. Existing statutory requirements enable the press, the media generally and the general public to attend, view or listen to council meetings, council committee meetings and council sub-committee meetings. These regulations are well understood in terms of their requirements and their spirit. Alongside the right to attend meetings, there are rights to receive advance notice of meetings, to see agendas in advance and to inspect relevant documents.
This amendment seeks to ensure that those rights of access cannot be diminished in the case of combined authorities. It requires reasonable access to be ensured and, in subsection (2), acknowledges the need to ensure that commercial confidentiality is protected and for officials to feel able to give essential advice to those who are charged with making decisions. Both criteria are, of course, within the existing regulations for local government.
Why, therefore, does the Bill fail to make any mention of an obligation on the mayoral authorities which it creates to meet in public? Members of the public and the media currently have a general right to attend council meetings, including those of the local authority executive or the cabinet and their committees. They also have the right to film, audio record, tweet or blog from those meetings. These rights are primarily set out in the Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012 and the Openness of Local Government Bodies Regulations 2014. Given the freedom that the Secretary of State will have to set up the new authorities by ministerial order, there is great potential for them to be watered down unless the rights of the public and the press are protected by being placed firmly in the Bill.
Given the importance of overview and scrutiny committees, will the Minister tell us the intention behind Schedule 3, which contains an enabling power allowing the Secretary of State to block disclosure of information to an overview and scrutiny committee and to determine what material it, in turn, can put into the public domain? This amendment seeks to address these concerns. I look forward to the Minister’s confirmation that there will be no diminution of the right of the press, the media generally and the public to attend meetings of combined authorities as they currently do within local government.
Lord McKenzie of Luton (Lab)
My Lords, we are fully committed to openness and transparency in the proceedings of local government and have already moved amendments to that effect. However, as the noble Lord, Lord Shipley, said, we need to be sure that nothing in or arising from the Bill could dilute or disapply existing public rights of access to meetings, records and related documents. The noble Lord has also posed a pertinent question on Schedule 3.
There may be a lack of clarity over the precise circumstances envisaged in subsection (1)(b) of Amendment 42A concerning,
“leaders of a combined authority”.
Presumably, the provision applies when they are meeting as members of that combined authority rather than otherwise. Perhaps that needs clarification. We have generally argued for dealing with matters on the face of the Bill, so we look forward to assurances from the Minister that the issues raised here are already covered. To the extent that they are not, we will work with the noble Lord, Lord Shipley, to fill any gaps on Report.
Lord Storey (LD)
My Lords, this amendment is in my name as well. Yes, it is important to have powerful leadership in metropolitan areas, and yes, it is important that we have transparency. In my own local authority in Liverpool, the elected mayor, in his infinite wisdom, has decided to do away with scrutiny, so there are no scrutiny committees at all. That should not happen in this case, so it is very important to clearly make the point that not only should there be transparency in all actions under the new arrangements but, where papers are relevant, the papers should be freely available to the general public—to the electors—and, where possible, those electors should be allowed to attend those meetings if they wish. If we do that it will give people real confidence about the new arrangements. They will feel that the arrangements are transparent and democratic and, above all, that nothing is being hidden from them behind closed doors.
Baroness Hollis of Heigham (Lab)
I, too, support the amendment tabled by the noble Lords, Lord Shipley and Lord Storey. I declare an interest. As I am sure Members of your Lordships’ House may know, I was leader of Norwich City Council, but also I was a member of the Press Council for a number of years under Louis Blom-Cooper. So I come at this from both ends.
At no stage in my time on the Press Council do I recall receiving a complaint about the regional press because it was accountable to its local community for everything from advertisements to news, from fetes to weddings, funerals, baptisms and the like. All the complaints that were sensitive or difficult were about the national press, which was essentially promiscuous in the 19th century sense of the term as it was not accountable to a readership, which fluctuated from day to day and of which it had no intimate knowledge. So the regional press served its community in a way that the national press did not, and served it faithfully.
When I was leader of Norwich council an issue started boiling up while I was in Australia. The Eastern Daily Press would not run with the story until it had contacted me in Australia to get a countervailing view. That would have been unthinkable with the national press. That is why the amendment is so important. If we do not support the amendment and encourage the regional press to scrutinise mayoral and other meetings, as it does meetings under the existing local government structure, I fear that reportage of local government, much like reportage of court proceedings, will die on the vine. Twenty years ago we could expect our court proceedings, local council meetings and some of the important committee meetings to be reported. The press would expect to be briefed on them in advance. What we get now—in national newspapers as well—is sketches rather than reports of debates.
Political coverage is shrinking in this country because it is not regarded as sufficiently amusing for people with only 30 seconds’ attention span. The regional press has held on, trying to make both Westminster and local authorities accountable and transparent to the members of their community, to whom it also feels accountable.
At the moment, the leader of a local authority will be monitored by his or her group, the opposition or the press and also by the chambers of commerce and local pressure groups and lobby groups such as the local branch of Age UK, the National Rheumatoid Arthritis Society or whatever, for example, on access to buildings. There must be stringent protection of the right of access of the press. We must not accept one person’s view of what counts as confidential or private, or what he or she would rather was not made public because it might be faintly awkward or embarrassing. Without that protection, I fear that the regional press will continue to opt out of the coverage that we absolutely need if we are to grow a healthy democracy in our localities.
Lord Brooke of Sutton Mandeville (Con)
My Lords, as the speeches so far have come from the opposition Benches, I gently remind your Lordships’ House that the first legislation to allow the general public to attend council meetings in committee was introduced by my late noble friend, Baroness Thatcher. I would not wish my noble friend the Minister to feel lonely at this moment. It is a notable piece of history to which I allude. The Minister for Housing and Local Government at the time was my late noble kinsman, Henry Brooke, who encouraged the new Member of Parliament for Finchley to become involved at an early stage in introducing legislation. It was her first legislative achievement, and he sat on the Front Bench throughout when she took the Bill through the House. I would not wish the metaphor to be misunderstood, but it was a good case of picking out a dark horse before it got into the limelight.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Williams of Trafford) (Con)
My Lords, Amendment 42A seeks to insert a new clause regarding access for the press and public to combined authority meetings. Whatever the whys or wherefores of the press’s engagement with council meetings, I am happy to confirm that legislation already exists on these issues. As my noble friend Lord Brooke has pointed out, the Local Government Act 1972 provides that all meetings of a combined authority must be open to the public except in limited, defined circumstances.
A meeting of a combined authority, as with other council meetings, may be closed to the public in only two circumstances: if the presence of the public is likely to result in the authority breaching a legal obligation about the keeping of confidential information; and if the authority decides, by the passing of a resolution of its members, that exempt information—for example, information relating to the financial affairs of a particular person—would likely be disclosed.
The Conservative-led coalition Government made new regulations in 2014 to make it absolutely clear that a combined authority is required to allow any member of the public or press to take photographs, film, audio record and report on all public meetings. This openness helps to ensure that combined authorities are genuinely accountable to the local people they serve. It also ensures genuine transparency in this digital age, where our democracy can be enhanced by the use of social media and blogging to communicate widely and, as the noble Baroness, Lady Hollis, said, to capture the market that does not want to spend more than 30 seconds reading such matters.
These requirements apply equally to any committees or sub-committees of a combined authority, including any overview and scrutiny committees. Subsection (1)(a) of the proposed amendment refers to a meeting between a mayor and the relevant combined authority. I should clarify that the mayor will be a member of the combined authority—indeed, will be the chairman—so such a meeting would simply be a meeting of the combined authority and is covered by these rules. Similarly, a meeting of the leaders of a combined authority, if I understand the noble Lord’s meaning, will be a meeting of the members of a combined authority, who are most likely—although not always—to be the leaders of the constituent councils.
The noble Lord, Lord Shipley, asked about Schedule 3. This is an enabling provision which ensures that there is flexibility to decide which information can be appropriately disclosed or must be discussed. For example, certain information may be commercially confidential or contain sensitive personal information.
I hope that, with these reassurances, the noble Lord will agree to withdraw his amendment.
Lord Shipley
My Lords, can the Minister explain what the Government plan to do if all the members of a combined authority are members of the same political party and hold informal pre-meetings prior to the meeting of the combined authority which is being held in public? Let us say that the meeting of the combined authority ends up being a short meeting and the private meeting beforehand ends up being a long one. What steps do the Government plan to take to deal with such situations should they arise?
Baroness Williams of Trafford
The noble Lord raises an important point, but it has always been thus—informal meetings between people are not obliged to be held in public. The point on transparency is that the decision-making has to be in public and the public can be there to see it. However, informal meetings have never been subject to those rules.
Lord Shipley
I thank the Minister for her reply. We may need to revisit this issue on Report but, for the time being, I beg leave to withdraw the amendment.
Baroness Janke
“( ) The Secretary of State may by order make provision for conferring on a combined authority, upon the request of that authority in relation to its area, the full retention of business rates, business rate supplements, council tax, stamp duty land tax, annual tax on enveloped dwellings, capital gains property disposal tax, and multi-year finance settlements.”
Baroness Janke (LD)
My Lords, I wish to speak to Amendments 43 and 44. I know that the Bill is important to local government. Coming as I do from the city, I urge everyone to think of the world-class cities we have in our country and how we can make them even more competitive internationally.
The raising of funding locally is important. The developments in the Greater Manchester Combined Authority and the deal that has been agreed are a good step forward. I hope the Bill is the start of a journey in building capacity in our city and county regions, in order to have local economies that flourish due to the their leadership. I have looked at some of the written material on this subject, which the London Finance Commission took evidence on. One marker it looked at is how much money central governments give to capital cities, particularly London. One report tells us that Madrid gets 37%, New York 30.9%, Berlin 20.5% and Tokyo 7.7%, but that 73% of London’s budget comes from central government, as the Mayor of London made clear. I think Boris Johnson said that in this country we are comparatively “fiscally infantilised”—his quotes are fairly unique.
That shows the gap between the self-sustaining nature of other international cities, particularly capital cities, and our own. The Minister has been the leader of a council and I am sure she has had the same experience as many of us: when we meet the mayors of our twin cities or attend international gatherings, the feeling from that contingent is one of shock at the very few powers that leaders and mayors in this country have in comparison with others. We must look at this issue. When we discussed the local government bond last week, it did not receive as welcoming a response as we had all hoped. I recognise that the Government feel that they must be cautious and satisfied with the capacity of local government to take on these greater responsibilities, but the Bill’s vision needs to include something on what the future may be and what is desirable. There is plenty of evidence. The City Growth Commission fully recognises in its report that not all cities, counties and regions are ready for full powers. Indeed, many are not as ready as the Greater Manchester Combined Authority is. Nevertheless, we must be ambitious and aspire to giving our regions and cities greater powers.
If we look at what is happening in Scotland and Wales, it is understandable that many people in England, particularly in our cities, feel that powers are being given away which are not available to them. The national economy could benefit from more financially independent cities leading their own economies. I urge the Government to give some thought to including something in the Bill—even if it is not as explicit as the amendments—to show what the scope, potential and ambition could be. I hope to hear some more encouraging remarks from the Minister.
I am perhaps not as hopeful about that after previous days, but I hope we can all see the potential of fiscal independence for some of the great cities and counties of this country, and that we will see as a result improved local accountability, and improved ownership and participation from the people living in those regions. Having finance and powers meted out from the centre is not a good recipe for local participation or for pride in one’s area. The leaders and mayors of those international cities will have ample evidence of why we need to set some of our cities and regions free. I beg to move.
Lord McKenzie of Luton
My Lords, we agree with the noble Baroness, Lady Janke, that we should give some thought to this issue, although I hope she will understand if we are unable to support the amendment as it stands. I will spell out some of the technical issues in a moment. But it does provide an opportunity to probe the Government’s intention on the devolution of fiscal resources to local authorities, including combined authorities—that is, where they are going on their journey.
My noble friend Lord Beecham will set out shortly the policy position we reached before the election on the growth of business rate retention. It accords with Amendment 43 in supporting multiyear finance settlements, for the obvious reason of enabling more effective long-term planning. However, we might consider fiscal devolution over three areas. First, we should look at the current funding arrangements: business rates, council tax, revenue support grants and specific grants. Secondly, we should look at how devolution budgets are to be made available—if functions are being transferred, what is happening to the money? Thirdly, we should look at whether any national taxes are to be devolved to local authorities and combined authorities. We seek to understand the Government’s policy on each of these matters.
National taxes are the thrust of Amendment 43, which appears to focus on property taxes, which have an unambiguous attribution to a specific area. This would appear to be perfectly possible for stamp duty land tax, which is levied on the purchase of residential and non-residential land and property, and for the annual tax on enveloped buildings, which applies to UK residential property put in a corporate wrapper. But capital gains tax appears to be more problematic because a tax liability could arise from netting off losses against gains—for example, a loss on a building in Birmingham against a gain on a building in Manchester—and making it more specific would be difficult. Similarly, the use of an annual allowance that is available generally against gains, and the taxation of corporations in relation to capital gains and how that is identified within an overall assessment, could also be problematic.
It would doubtless be possible to introduce rules to govern all of this, but with further significant complications to the tax system. On compliance, these taxes are geared to a national system and it would be necessary to disaggregate such matters. What is the rationale for attributing these taxes to a combined authority: is it the practicality of a ready additional source of revenue being made available, or because the focus of the combined authority’s activity can positively influence the tax outcome? It is presumed, of course, that the proposition is not to change the tax rates.
Nationally, stamp duty land tax raised just short of £10 billion in 2013-14 and capital gains tax just shy of £4 billion. I do not have the figure for corporation tax on capital gains. But these taxes can be volatile. Stamp duty land tax increased that year by 36%. Of course, it is not easy to predict. Is the growth in stamp duty land tax a good thing? The volume of property transactions in an area might be indicative of a thriving local economy—which could attract investment—but in so far as it is attributable to rising prices, it might simply reflect a failure to tackle supply.
We know the total spending power of local authorities in 2014-15 was in the order of £49 billion, including—though we do not have the precise figure—£10 billion-plus in revenue support grant. If the revenue support grant were, effectively, to be at least replaced by directly accruing property taxes and all business rates were to be devolved, what would be the mechanisms for dealing with the differing needs and resources of the local authorities? Presumably, business rates would continue to have tariffs, top-ups, levies and safety nets, which would help, but it is a little unclear whether the proposed full retention of business rates would be at individual authority or combined authority level. Is the noble Baroness suggesting that this could be done by pooling or by another mechanism? I think it could be done by pooling. The amendment refers to “business rate supplements”. Do these not already accrue to the relevant county or unitary district councils? Does the noble Baroness’s amendment contemplate that additional, erstwhile national revenues would substitute for devolved budgets, or eliminate the revenue support grant?
The Independent Commission on Local Government Finance set out the reasons why local government in England and the services it provides are no longer sustainable in the current form. It called for urgent devolution of powers, funding and taxes to groups of local authorities. We know from the Manchester agreement and our debates the main policy areas that central government appear to be willing to negotiate deals on for transferring functions, but we do not know whether they are willing to do anything on fiscal devolution. Is anything being contemplated, particularly with regard to existing national revenue streams such as stamp duty being devolved to local government? To what extent do the Government plan to adopt the recommendation of the noble Lord, Lord Heseltine, in brigading key national budgets and passing these as single parts to combined authorities, to do with as they see fit? In his No Stone Unturned report, the noble Lord argued the need to bring together separate funding streams which support the building blocks of growth into a single funding pot for local areas. He said that the model could be applied across England, but could not be introduced before 2015-16. We are now there. What are the plans? Is the noble Lord’s advice being rejected?
Will the Minister also tell us whether, as part of the devolution agenda, any fundamental change is contemplated to the current business rate and council tax regimes? Will the reset of the business rate retention scheme not happen until 2020? What is the latest position on the revaluation, which had already been deferred by the previous Government?
On fees and charges, it is estimated that local authorities raise some £10 billion a year. Some of these are locally determined and some are not. Is work under way to remove central government’s control over some of these? What scope would there be for a combined authority to seek increased freedom in this regard as part of a devolution deal? Addressing these fiscal issues is a test of how much central government trust local authorities and combined authorities.
Lord Brooke of Sutton Mandeville
My Lords, this is a brief intervention. One of the most attractive features underlying this legislation is the restoration of local pride up and down the country in the communities and neighbourhoods involved. I have always regretted from my time as Higher Education Minister that the relationship between universities and their surrounding communities, which had been very strong in the 19th century, gradually declined as the years went on and were not nearly as effective as they had historically been.
In the light of the amendment which has been moved, I wish to make a generic remark rather than a technical one. I can recall the circumstances in which decisions were taken at national level to reduce the amount of money retained by a local authority in terms of the resources raised within it. The local authority’s powers to have that retention were diminished. I recall that those circumstances arose because of the view of local business that it was perfectly possible for the economic situation in which it had to work to be changed overnight by a large switch in the power of an authority. I shall therefore be interested in what sense emerges from the Government, when my noble friend comes to reply, of not going backwards on that consequence of the circumstances which they replaced.
Baroness Williams of Trafford
My Lords, our intention is to devolve far-reaching powers where strong, accountable and transparent governance, delivery and capability can be demonstrated. We are open to discussing proposals from all places, including towns and counties, where there are clear lines of accountability and decision-makers can properly be held to account. Amendments 43 and 44 suggest giving mayoral combined authorities access to a wide range of important taxes and charges. We have always said that we are interested in hearing proposals from authorities, and that nothing is off the table. We have also included provisions in the Bill for a council tax precept to meet the costs of functions undertaken by the mayor. This will be subject to the normal referendum principles as part of the council tax for the area, ensuring that not only will the mayoral combined authority be properly resourced but local council taxpayers will be protected.
Moreover, the Bill will mean that, in future, mayoral combined authorities will become major precepting authorities for the purposes of the local government finance regime. This means that through the existing powers that govern the rates retention scheme, to which the noble Lord, Lord McKenzie, referred, we will already be able to give mayoral combined authorities their own share of local rates income and ensure that they benefit from local growth. We do not need powers to put in place multi-year settlements for authorities; we can already do this administratively, as part of the wider local government finance settlement. Of course, any decision to make use of the existing powers to extend the rates retention scheme or put in place multi-year settlements would be taken alongside part of the wider transfer of powers and functions to mayoral combined authorities.
To devolve the wider basket of taxes referred to in Amendment 43, however, goes further and would represent a significant change to the existing tax landscape, with potentially significant legal, economic and fiscal implications. The other taxes mentioned play an important part in reducing the deficit and restoring the nation’s finances to a more secure footing, so it would not be right to include in the Bill powers to direct these taxes to mayoral combined authorities.
Additionally, such far-reaching powers would have potential consequences not just for the combined authorities but for other authorities, large and small businesses, and taxpayers up and down the country. Given the importance and fiscal character of such matters, we would need to consider whether any proposals would receive the correct level of scrutiny if provided through secondary legislation. I am not convinced, therefore, that it would be appropriate for these matters to be the subject of powers in the Bill or considered outside the Government’s normal fiscal and budget-planning cycle. Nevertheless, we are open to proposals for the transfer of resources as well as power and would give detailed consideration to any scheme that strikes the right balance between encouraging growth and protecting taxpayers.
The noble Lord, Lord McKenzie, asked about any proposals to remove central Government influence on local fees and charges. It would depend on individual deals. The noble Lord also asked about brigading national budgets. I cannot read the writing—
Baroness Williams of Trafford
I would not dare. What part of budgets is devolved and how devolved budgets might be handled are all matters for the discussion in reaching each devolution deal. What is clear is that in all cases where powers are devolved, there will be an appropriate devolution of budgets.
In conclusion, and in respect of the other amendments in this group, I assure noble Lords that we will consider all proposals for devolution deals involving the transfer of both resources and powers and that the framework that would allow for funding from business rates retention is already in place, if needed, in addition to the existing powers for a council tax precept.
Baroness Hollis of Heigham
My Lords, I suspect I may know the answer to this. Would it be possible for a local authority in the negotiations with the Secretary of State for devolution and financial arrangements to, for example, have the right to include extra tiers of council tax bands when raising their council tax for their area?
Baroness Williams of Trafford
My Lords, I think they would have to have a discussion with the Secretary of State.
Baroness Hollis of Heigham
Given everything the Minister has said, that proposal, which has had a fair degree of support in this Chamber in the past, would be one way in which a local authority could raise funds within the existing structure in a way that most of us would think was fair and progressive.
Baroness Williams of Trafford
My Lords, it could indeed and it would be a matter for discussion between that group of local authorities and the Secretary of State.
Lord McKenzie of Luton
I know that we deal with situations where the best can happen in the best of all possible worlds, which is where we are on the Bill. However, could the noble Baroness confirm that in a whole range of functions being devolved to a combined local authority and the budgets to go with it, the prospects of those budgets being aggregated—with freedom for the combined authority to spend as it wishes, given those particular functions, and not have to follow the Bill above those amounts—would be perfectly possible, feasible and welcomed?
Baroness Williams of Trafford
My Lords, the noble Lord gives a theoretical example, which I am not in any position to stand at the Dispatch Box and confirm. I know I have reiterated this during the course of the Bill, but it really would be for a group of local authorities to prove that whatever proposal was put forward would result in growth and be fiscally neutral.
Baroness Janke
I thank the Minister for her response. I am perhaps not as discouraged as I thought I might be. However, I hope that the complexity of the tax system will not be a barrier to giving local powers and local accountability to achieving local projects. Transport is a particular issue in this country. To give a practical example, we in Bristol had to wait something like 15 years to be told that we were not going to get a tram whereas our twin city of Bordeaux not only conceived of its tram but built it and had it in operation within a fraction of that time.
I understand from the Minister’s remarks that should a combined authority wish to make proposals that might include a tourist tax or differentiated VAT or some kinds of local tax, these would all be considered. At the moment, while there is a central allocation determined by government, there is not a great deal of incentive for those who are more entrepreneurially minded in local authorities to create revenue streams to pay for important projects. That is what I have understood. Equally, the equalisation element would need to be looked at. We have very different circumstances in different parts of the country but, again, it should not be a barrier, and we need only look at our international competitors to know that this is the case.
I hope that we can pursue this a little further and that we might revisit it on Report. In that case, I beg leave to withdraw the amendment.
Lord Beecham
“( ) The Secretary of State may by order make provision for conferring powers on a combined authority to set multi-year finance settlements and retain business rates revenue in relation to its area.”
Lord Beecham (Lab)
My Lords, I find myself in the somewhat unusual position of agreeing with the Minister in her analysis of the impact of what the noble Baroness, Lady Janke, proposed in Amendment 43. As my noble friend Lord McKenzie pointed out and as the Minister implicitly confirmed, the impact of allowing the combined authorities to retain money on what is essentially a nationally based taxation would be formidable and difficult for the Wigans and Kirkleeses of this world as compared to the Westminsters and Kensington and Chelseas, and I was very glad to see her not adopting that position.
Having said that, I must say that there is a certain synergy between the amendments that we have just debated and the one that I am now moving, particularly in relation to multiyear finance agreements, which must be common sense, and to business rates growth. However, I am in another unusual position in having to confess that Amendment 44A as printed is actually in error, because it should have referred to the growth in business rates rather than the implicit retention of an entire business rate. In that way, we are agreeing again with only a part, but an important part, of the amendment that we have just debated. However, the critical factor here is that of the fairness or otherwise of the distribution of the funding. That is the subject of Amendment 44B. Of course, if we had suggested, as it appears on the Marshalled List, that the entire business rate would revert to individual councils, it would be disadvantageous. Even the 50% retention rate is inequitable, unless there are other measures to compensate those authorities in need.
The Independent Commission on Local Government Finance has illustrated this position by comparing Hillingdon, which currently collects £101 million of business rates, and Wigan—and my noble friend Lord Smith will be conscious of the fact that Wigan collects just one-third of that, at £34 million a year in business rates. If we had a more equitable system, and if it was based on need, that would result in Hillingdon receiving £42 million and Wigan £62.9 million. That was the finding of the independent commission. That is an illustration in respect of only that one area of financing, because action is desperately needed across the whole system of local government finance. Local authorities have suffered massive cuts as a result of government policy, which singled out the sector for the biggest cuts in public expenditure in the last five years, a process that is far from complete—and we may hear more next week about what is in store. In any event, even the cuts that are still inchoate and beginning to take place will lead to substantial further difficulties.
What is particularly galling is the unfairness of the way the burden has fallen on those areas with the greatest need. The 10 most deprived councils in the country, as defined by the department’s own measure, have suffered cuts 10 times greater than the 10 least deprived. Liverpool, the authority with the highest deprivation score of all—I repeat that these are on the department’s own measure—has suffered a loss just under 30 times greater than Hart District Council, the least deprived authority.
Interestingly, 14 councils were lucky enough to receive an increase in government funding over the past few years, and by sheer coincidence all but one of these have Conservative MPs, including Michael Gove, Chris Grayling, Philip Hammond and Jeremy Hunt. Some of us think that one or two of those have been lucky to have been in the Cabinet for these past few years, but certainly their constituents have been lucky to have received this benison from the Government.
If the Government’s ambitions for cities in the context of devolution are to be carried out and are not to suffer the same signal failure as their northern rail transport policy, as was revealed last week, or, in the light of last week’s belated disclosure of a three-year-old report, the fate that may be awaiting HS2, their philosophy about devolution must be accompanied by a needs-based funding formula and not rely on a continuation of the present system, which is so damaging to so much of the areas that could most benefit from the Government’s well-intentioned approach to devolution. That is why Amendment 44B calls, initially at any rate, for a report on the fairness of the distribution of funding, taking into account the cumulative cuts so far—and, indeed, those that are pending—in spending power and resources per household. I beg to move.
Baroness Hollis of Heigham
Will my noble friend read into the record, if he happens to have the information to hand, the 10 most rewarded local authorities and the 10 most deprived, in terms of grant, and their political complexion?
Lord Beecham
I am afraid that I am going to have to follow the usual ministerial procedure and say that I shall have to write to my noble friend. I do not have the information. I copied the report to my noble friend this morning and I think it runs to 163 pages. I do not have it immediately to hand, or anything big enough to contain it, but I will communicate with my noble friend.
Lord Shipley
My Lords, I am grateful to the noble Lord, Lord Beecham, for clarifying the wording of Amendment 44A: that it is about the growth of business-rates revenue. I was slightly disappointed that these two amendments were degrouped from the two amendments moved a moment ago by my noble friend Lady Janke, because they are all in the same area. They all relate to the question of whether we are dealing with decentralisation or with devolution. I have heard the Minister say that this Bill is primarily to do with decentralisation, but there is an overall context that is to do with devolution. However, I do not think that fiscal powers are about decentralisation where they can be varied from a national norm, so we are talking here about fiscal devolution.
I agree with the noble Lord, Lord Beecham, that this is set in the context partly of multiyear financial settlements, which I think all parties would benefit from, but also, crucially, of fair funding. It is therefore in part about the level of cuts that have been imposed on poor authorities, but it is also about the absolute level of funding. The issue of needs-based allocation will not go away, however much fiscal devolution we have, because even with the powers that we have set out in Amendments 43 and 44, there would clearly need to be some needs-based reassessment of the total sums involved. That is why, of course, Amendments 43 and 44 use “may” rather than “shall” in relation to the powers of the Secretary of State, as clearly there would need to be significant flexibility in those powers.
Lord Smith of Leigh (Lab)
My Lords, one of the amendments put forward by my noble friend Lord Beecham has reminded me that in Greater Manchester we had an argument with the Government about getting back our share of growth in business rates for the actions that we were taking. Through the city deal process we managed to convince Ministers that it would be a good scheme to take up, but unfortunately we then had to go to the Treasury and it took 18 months or more to get agreement on that. However, it is a model by which we can clearly demonstrate that the growth created through the work of the combined authority could be used for further investment to benefit and create further growth in the area.
I am certainly a supporter of fiscal devolution, which in a sense is the missing clause in this Bill. We need to think about what it is and what we mean to achieve. However, if we are to get the allocations of money from central government, which is a form of decentralisation, we need further freedom to agree with the Government what would be provided by the money. We can transfer funding from one field to another in a different and more effective way in some areas, provided that we do what was agreed in the deal with the Government.
I have said a number of times in this House—sometimes late at night a couple of years ago when my noble friend Lord McKenzie and I were talking to the Government about the change to business rates—that our system of local government finance in the UK is now a busted flush. There are two main taxes that we rely on. The revaluation means that business rates are no longer justifiable. There needs to be a major review and I am pleased that the Government are carrying that out. The other main form of taxation—council tax—has not been revalued since 1991, so a new house built in 2015 has to be valued as though it was built in 1991. A connection to broadband would not be a feature, because clearly in 1991 such things were not invented. There obviously has to be all-party agreement on this, because we do not want a system that is going to be changed when there is a change of government. We have to have a system, built for the 2020s, that gives local authorities the independence and freedom they need.
On fair funding, I am surprised that my noble friend Lord Beecham and the noble Lord, Lord Shipley, did not quote their former council, Newcastle City Council. It has done some wonderful work on this and produced what it referred to as a “heat map”, which shows in red the areas that have had the greatest reduction in council funding and in green those that have had the least. Guess what: most of the red areas are in the north or in urban areas, and this could be substituted for political control.
Lord Scriven (LD)
I wish to emphasise what my noble friend Lord Shipley and the noble Lord, Lord Smith, have just said. In Committee last week, I said that the real elephant in the room was the issue of fiscal devolution; otherwise the Bill is about decentralisation. I listened to the Minister and I agree with my noble friend Lord Shipley and the noble Lord, Lord Smith, that this will ultimately get lost unless there is something specific in the Bill. I hear what the Minister says about this being an enabling Bill, but there needs to be something in it that gives a framework—not a straitjacket—to understand the kind of fiscal autonomy that local authorities could have. If there is not, then we are, fundamentally, talking about a local government finance system that is not fit for the 21st century possibly being reallocated in a different way.
I accept that there is talk about TIF or business rate growth being able to be held at local level. However, it is fundamentally much more than this. As my noble friend Lady Janke said, it is about different approaches. Last week, the noble Lord, Lord Heseltine, spoke about the Mayor of Tokyo talking to potential international investors in his city. I am a former council leader who talked to international investors. As I said last week, they do not necessarily ask about the nameplate on your door. They want to talk about what tax incentives my area can give compared to elsewhere, rather than there being a national scheme. In the real world, those are the kind of issues being looked at.
So I ask the Minister to reconsider. This is so important; we are talking about a brand new deal for devolution and for local areas to become much stronger and authors of their own destiny. But we need some framework in the Bill. Otherwise, like the noble Lord, Lord Smith, I fear that when the Treasury gets hold of this, it will not treat it, as the Minister wishes, from a local government perspective.
Baroness Hollis of Heigham
My Lords, I support the comments made by my noble friend Lord Smith about the increasing frailty of the existing council tax structure to bear the responsibility we ask of it. I believe I am right in saying that, had the older rates system remained in place, the most expensive properties, compared to the median average, would be in a ratio of something like 20:1. In fact, the ratio of the top band to band D—the fulcrum point on the council tax scale—is only 3:1. That shows just how narrow the redistributive effect of council tax has become.
In the past, the Government have resisted looking at council tax revaluation, even though a full-scale revaluation went through fairly smoothly in Wales, without any great hiccups in the procedures. A few years ago, some of us did some work on this. It was clear that it would be desirable to revalue all properties—but at the very least, you could fish the top band. I was advised, by the Valuers’ Association and the Government’s valuation service that that would represent less than the valuations which happen now whenever a flat becomes a shop, a shop becomes a flat or a house is sold and is given a new valuation. So the amount of work required to allow local authorities to increase the bands above the current top band would be quite modest—I am assured of that by the district valuers who carry out this work, day in, day out, on other use changes and so on and so forth—and would allow us to stretch more fairly and produce more revenue in a way that was more reasonable.
Certainly the compression that has come from council tax bands compared to the old rate bands is probably, in my understanding, the narrowest in the OECD. In America, Australia and most of the countries in Europe, the property range of bands is far wider than we now have in the UK as a compression of council tax. As I said, we have only about three or four bands above the band D fulcrum compared to the 20:1 ratio that we used to have under the old rates system. So it is a perfectly serious proposition that this would be a fair and appropriate way to increase revenues to local authorities and to reflect local need and local ability to pay.
Lord Beecham
My Lords, perhaps my noble friend would agree with me that a major part of the problem is that the council tax embodies a significant element of the poll tax, and that that is what leads to such narrow banding.
Lord Liddle (Lab)
I agree with my noble friends on our side of the House who have spoken about these issues. Council tax is in urgent need of reform. As for anyone who defends its existing basis—it is indefensible. It needs reform, as my noble friends Lady Hollis and Lord Smith have suggested.
I applaud the Government’s commitment to devolution, as I have said before in this House. But the elephant in the room is how to devise a scheme of fiscal federalism within the United Kingdom and within England. That is a very tricky question. It is tricky politically because once we start to look at these issues we see that London and the south-east are transferring considerable amounts of money to the rest of England. The transfers within England are probably much greater than the much talked-about transfers under the Barnett formula to Scotland and Wales.
Some years ago, in my own area of Cumbria, a study was done of all government spending and the estimated tax contribution from all sources. It came to some pretty alarming conclusions. In terms of total government commitment to Cumbria, roughly twice as much money was being spent by the Government in one form or another—this includes the nuclear plant at Sellafield, not just local government—as we were paying in. This issue has to be honestly addressed.
It is also the reason why there is an absolutely compelling need for local authorities to have the powers to contribute to local economic regeneration. That is the way to start building a tax base, rather than living off this drip-feed from London and the south-east.
Some very big issues are being touched on here. It would be interesting to hear from the Minister whether there is any interest from the Government in launching a major study of these questions—royal commissions are rather out of fashion, but I suggest that this would be a suitable subject for one—or whether we will continue with the terribly unfortunate “ad-hockery” that we have. I am sure the Minister agrees with me about the unfairness of the current local government arrangements. I remember, in a meeting in Cumbria County Council when the last settlement came out, quoting that the authority that did best of all was Elmbridge in Kent.
Lord Liddle
My apologies—I meant Elmbridge in Surrey. I looked on my iPad at the description of Elmbridge, which started by saying that that part of Surrey,
“is known as the ‘Beverly Hills’ of England”.
The Minister, who is a fair person, must admit that such extraordinary unfairness is where we end up. We need a much more independent and objective look at these questions, and that is of real importance if we are to get an effective devolution of power in this country.
Baroness Williams of Trafford
My Lords, as worded, Amendment 44A would allow the Government to confer powers on a combined authority to set multiyear finance settlements and to retain business rates. In introducing this amendment, the noble Lord made clear that the intention behind it is to allow central government to put in place multiyear finance settlements, thereby allowing a combined authority greater certainty over its budget-setting process. In fact, we already have the powers we need to do this administratively as part of the wider local government finance settlement.
A combined authority is already able to set a multiyear budget; it is not necessary for central government to confer powers upon it allowing it to do so. Nor, as I have made clear in responding to Amendments 43 and 44, do the Government need new powers to allow a combined authority to retain some of its local business rates. The Bill will already set up a mayoral combined authority as a major precepting authority, and therefore we will be able to use our existing powers under the Local Government Finance Act 2012 to give the authority a share of its locally raised business rates, should we decide to do so.
Of course, any decision to make use of the existing powers to put in place multiyear settlements or to allow the retention of local business rates, or business rates’ growth, would be taken alongside any wider transfer of powers and functions to mayoral combined authorities. I further assure noble Lords that we will consider all proposals for devolution deals involving the transfer of both resources and powers.
Amendment 44B would require the Government to publish a one-off report about the impact on combined authorities of how resources had been distributed through the local government settlement, particularly with regard to levels of deprivation. I do not think the amendment would add anything to the information that we already provide. By looking only at the resources distributed through the settlement, the reports required by this amendment would separate government funding from other sources of income available to local authorities. By isolating deprivation from other drivers of spend—for example, the impact that population sparsity plays in rural areas—it would fail to present a properly rounded picture of the settlement.
As noble Lords know, we already publish annually an assessment of the impact of the settlement on authorities’ wider spending power and an equalities statement on the settlement’s effect. Moreover, the settlement is subject to wide-ranging consultation and comes before Parliament for approval. I am not persuaded that anything further is needed.
The noble Lord, Lord Smith of Leigh, talked about Manchester’s gains from economic growth. The devolution deal for Manchester illustrates what the city has gained as a result of its growth. A reformed “earn back” deal can earn up to £900 million over 30 years.
The noble Lord, Lord Beecham, talked about the relative impact of cuts in different areas. I know we could argue about this all day and all night. People have different views about cuts, but comparing regional spending in terms of spending power per household shows that in the north-east it is £2,154, in the south-east it is less, at £2,023, while in the north-west it is £2,230.
The noble Lord, Lord Smith, and the noble Baroness, Lady Hollis, talked about the revaluation of council tax. I understand the comments about this but, in practice, since 2010-11 council tax in England has fallen by 11% in real terms, and a total of £5 billion has been provided for five successive years of freezes that are worth up to £1,059 for average households. The noble Baroness mentioned the revaluation of just one band, the top band. As far as I can recall from my local government days, a simple revaluation has to be revenue-neutral. In the light of those comments, I would ask the noble Lord to withdraw his amendment.
Baroness Hollis of Heigham
I understand that a revaluation would have to be revenue-neutral, and obviously it is up to the local authority to make the total proceeds exactly the same, so that if you get more from X you can reduce the imposition on Y. However, I do not think that the noble Baroness should rejoice on behalf of local government for the freeze in council tax over the past few years. Obviously, it has helped council tax payers, but what they have gained by not having to pay council tax increases, they have lost in the social wage of the services that have been cut as a result. You need only go to cities to see exactly what that means when children with no books at home no longer have a library to which they can go because it has been cut. Their hopes of social mobility have, to that extent, been depressed. I think that was a much more contentious remark than perhaps the noble Baroness intended.
Baroness Williams of Trafford
My Lords, I do not rejoice and I did not intend to be contentious. I was simply illustrating the effect of the council tax freeze and the money the Government have given to that. In difficult times, council tax payers will have been glad of lower council tax.
Lord Beecham
My Lords, while individual council tax payers might well feel a little more comfortable, of course the impact on services for their communities has been very marked, particularly in adult care and children’s services, as we are increasingly seeing. In any event, most of the £5 billion has been top-sliced from moneys that would have gone in the local government finance settlement in any event. It is a bit much for the Government to claim credit for the freeze. It is more than a freeze for some services because it is actually inflicting a cut.
That brings us to the central question about the impact of these devolution proposals between different areas. One of the objectives of the amendment, although perhaps we will need to look again at the wording, is to ensure that in the process of devolving functions and resources to the combined authorities, both of which would be welcome, fairness in respect of other areas and between the combined authorities themselves is a cardinal objective and is something that the Government will address. It is that which we want to see in terms of the report that Amendment 44B seeks to advance. Looking at it again and listening to the Minister, perhaps the objective was not made sufficiently clear in the amendment, so it is something to which we may have to return on Report.
Unless we have a fairer funding system for local government services and the people who depend on them across the piece, including those in combined authority areas, then, in our submission, the talk about devolution will prove to be more of process than of outcome, and that would be unfortunate. Let us credit the Government, and particularly the present Secretary of State, with good intentions in this respect, but unless this is accompanied by a much more rigorous examination and the necessary change in the funding of local government, including the combined authorities, those objections will not be met. Having said that, I beg leave to withdraw the amendment.
Lord Beecham
Lord Beecham
My Lords, Members of your Lordships’ House will have observed that I am short. I intended this speech to be equally short, but I will give it a minute or two, in order to allow this debate to be kept to five minutes or thereabouts. Then we can proceed with the very important Statement which is to follow. Between us, the noble Baroness and I will no doubt get the clock to 4.30 pm.
It would be anomalous if the existing general power of competence which applies to local government in its manifestation across the country was not to be matched with a similar power for the combined authorities. The whole point of the combined authorities is to give them a wider range of functions than local government generally enjoys and for them to take on a wider role across the provision of a range of public services. Therefore, a general power of competence would facilitate the implementation of the Government’s objectives, which are shared by Members on all sides of your Lordships’ House. I hope that the Minister will concur with that view at some little length. I beg to move.
Baroness Williams of Trafford
My Lords, the Localism Act 2011 provides that local authorities have the general power of competence. This is the same power to act that an individual generally has. All principal councils and eligible town and parish councils have this power. The provision in this Bill is designed to give the Secretary of State the discretion to decide whether or not to confer this same general power of competence to a particular combined authority. This is likely to go hand in hand with an arrangement in which the combined authority is to take on wider powers and functions, thus supporting the case for a general power of competence.
Flexibility, however, must remain in conferring this general power of competence to combined authorities, as it may not be appropriate to give the full power to act that an individual has to all combined authorities. For example, for combined authorities with relatively limited specific powers, it may not be appropriate to grant them a wide general power of competence. This is so given that Section 113A of the 2009 Act already gives them a power to do anything they consider appropriate for the carrying out of the specific functions that have been conferred on them.
This amendment is a further example of moving away from the enabling character of the Bill. It is an example of another centralised requirement which an area may not want, recognising that in its circumstances this would not be appropriate. So I ask the noble Lord to withdraw the amendment.
Lord Beecham
My Lords, if the noble Baroness is right, the general power of competence would seem to be more limited than, on the face of it, it appears to be. Certainly it might inhibit a kind of development across a combined authority area that might be thought to be most appropriate. For example, in another area in which I have an interest, the justice arena, a combined authority might be in a good position to develop schemes for assisting the rehabilitation of offenders. That is not a duty of local authorities at the moment but, particularly given the area involved in a combined authority, they might well have something to offer which they should be able to carry out. Their potential partners in the Prison Service or the probation service might want to join them in such an effort. I am a little puzzled as to why the noble Baroness should be reticent about extending a power in that sort of area.
Baroness Williams of Trafford
My Lords, I do not think that it is reticence; it is about flexibility and what might be appropriate in different circumstances. I hope that the noble Lord does not take it as reticence.
Tunisia and European Council
(8 years, 10 months ago)
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The Lord Privy Seal (Baroness Stowell of Beeston) (Con)
My Lords, with the leave of the House I will now repeat a Statement made by my right honourable friend the Prime Minister in another place. The Statement is as follows:
“It is with great sadness that I have to tell the House that we now know that at least 18 British nationals have been killed, with more injured and the death toll likely to rise still further. These were innocent British holidaymakers—people who had saved up for a special time away with their friends and family—who suddenly became the victims of the most brutal terrorist attack against British people for many years. I am sure the whole House will join me in sending our deepest condolences to the families and friends of all those who have lost loved ones. I know the whole country will want to share in a moment of remembrance. So, following the act of remembrance we have just held in this House, we will have a national minute’s silence on Friday at noon, one week on from the moment of the attack. In due course, in consultation with the families, we will also announce plans for a fitting memorial to the victims of this horrific attack.
This morning, I chaired the fourth daily meeting of the Government’s emergency COBRA committee. So let me take the House through three things: first, the latest on what we believe happened in Tunisia, and in the separate attacks in Kuwait and France; secondly, the immediate steps we have been taking to help the British victims and their families; and, thirdly, how we will work with our allies to defeat this evil in our world.
The events of last Friday are horribly familiar to anyone following them in the media. A radicalised university student armed with a Kalashnikov began massacring innocent tourists on the beach at Port El Kantaoui. He continued his attack into the Imperial Marhaba hotel and on to the streets, where he was shot dead by Tunisian police. While we believe he was the sole gunman, it is thought that he may have been part of an ISIL-inspired network, and the Tunisian security forces are investigating possible accomplices who may have supported this sickening attack.
On the same day in Kuwait, a suicide bomber killed 27 and injured more than 200 in an attack on the Imam Sadiq Mosque near Kuwait City. An ISIL-affiliated group based in Saudi Arabia has claimed it was behind the attack. In Syria, ISIL executed 120 people in their homes in Kobane and, in south-eastern France, a man was murdered and two were injured in an explosion. While all these attacks were clearly driven by the same underlying perverted ideology, there is no evidence to date that they were directly co-ordinated.
Our first priority has been to help the British victims and their families. This has meant helping on site, assisting the wounded, bringing home those who lost their lives, ensuring that holidaymakers still in Tunisia who want to come home are helped to do so and gathering further evidence of what happened.
A team of consular staff was on site in Sousse within hours, and by Saturday they were complemented by additional teams of consular staff, police and Red Cross experts. We now have over 50 people on the ground helping British victims and their families. To help the wounded, we have already sent a team of military medical liaison officers to assist with medical evacuations. A C-17 has just landed in Sousse to bring home some of the seriously injured.
It is right that we do everything we can to bring home those who lost their lives as quickly as possible. We have been helping the Tunisians with what is, in some cases, a very difficult identification process. The Royal Air Force will arrange directly the repatriation of all deceased British nationals whose families wish us to do so, as soon as the identification processes are complete.
Sixty family liaison officers back here in Britain are continuing to support the relatives of those killed and injured. We are working with the tour operators to ensure that those who want to come home can do so, and more than 20 special flights have already brought hundreds home. Since Friday evening, more than 380 counterterrorism and local officers have been at British airports to meet and support travellers returning home from Tunisia and to help gather evidence of what happened.
As Assistant Commissioner Mark Rowley said yesterday, the national policing response is likely to be one of the largest counterterrorism deployments in a decade. Yesterday afternoon I visited the Foreign Office crisis centre to see first-hand the work that our teams are doing to co-ordinate our efforts at home and abroad. As I speak, my right honourable friend the Home Secretary and the Foreign Office Minister, the Member for Bournemouth East, are in Sousse in person doing everything that they can to help the British victims and their families, and talking to the Tunisian authorities about ways in which we can help strengthen their security. I have been speaking to President Essebsi over the weekend and want to put on record my thanks for the assistance of the Tunisian authorities throughout this horrific ordeal.
The Foreign Office has updated its travel advice, which continues to make clear the high threat from terrorism in the country, just as it did before Friday’s events. However, it is not moving to the position of advising against all but essential travel to this part of Tunisia, so it is not advising against visiting the popular coastal resorts. This was agreed by the COBRA emergency committee and will be kept under close review. These are difficult judgments. Nowhere is without risk from extremist Islamist terrorists, and of course we take into account the capability of the country in question and its ability to counter the threat. Here in the UK, the threat level remains at severe, meaning that a terrorist attack is highly likely, but until we have defeated this threat, we must resolve as a country to carry on living our lives alongside it. Of course, making those judgments means taking sensible precautions, and where there is a specific threat we will always take action immediately. But we will not give up our way of life or cower in the face of terrorism.
These terrorists tried to strike at places of hope—in a country with a flourishing tourist industry that is on the road to democracy and at a mosque in Kuwait that dared to bring Sunnis and Shias together. But the Tunisians and Kuwaitis will not have that hope taken away from them. They will not be cowed by terror, and we will stand with them.
Defeating this terrorist threat requires us to do three things. First, we must give our police and security services the tools that they need to root out this poison. We have already increased funding for our police and intelligence services for this year and legislated to give them stronger powers to seize passports and prevent travel. Over the next two days, our security forces and emergency services will conduct a major training exercise in London to test and refine the UK’s preparedness to deal with a serious terrorist attack. But we must also do more to make sure that the powers that we give to our security services keep pace with changes in technology. ISIL’s methods of murder may be barbaric, but its methods of recruitment, propaganda and communication use the latest technology. So we must step up our own efforts to support our agencies in tracking vital online communications, and we will be bringing forward a draft Bill to achieve this.
We must also work with our international partners to improve our counterterrorism co-operation. I spoke to President Hollande, Chancellor Merkel and Prime Minister Michel of Belgium over the weekend and we agreed to work together to help Tunisia strengthen its security. Our ambassadors met the Tunisian authorities yesterday to put that into action, including by strengthening the protective security arrangements at coastal resorts.
Secondly, we must deal with this security threat at source—whether that is ISIL in Iraq and Syria or other extremist groups around the world. British aircraft are already delivering the second-largest number of air strikes over Iraq and our airborne intelligence and surveillance assets are assisting other countries with their operations over Syria. We are working with our UN, EU and American partners to support the formation of a Government of national accord in Libya and will continue to do all we can to support national Governments in strengthening weak political institutions and dealing with the ungoverned spaces where terrorists thrive. And as I have said in this House many times before, if we need to act to neutralise an imminent threat to the UK, we will always do so.
Thirdly, we must take on the radical narrative that is poisoning young minds. The people who do these things do it in the name of a twisted and perverted ideology which hijacks the Islamic faith and holds that mass murder and terror are not only acceptable but necessary. We must confront this evil with everything we have. We must be stronger at standing up for our values. And we must be more intolerant of intolerance—taking on anyone whose views condone the extremist narrative or create the conditions for it to flourish.
On Wednesday, a new statutory duty will come into force requiring all public bodies—from schools to prisons to local councils—to take steps to identify and tackle radicalisation. In the weeks ahead we will go further. We will stand in solidarity with all those outraged by these events—not least the overwhelming majority of Muslims in this country and around the world. For this is not the war between Islam and the West which ISIL want people to believe. It is a generational struggle between a minority of extremists who want hatred to flourish, and the rest of us who want freedom to prosper. And together we will prevail.
Let me turn to the European Council. This discussed three issues which strongly affect our national interest. On the situation in Greece, I chaired a contingency meeting in Downing Street earlier today and the Chancellor will be making a statement straight after this. So let me deal with the other two—the need for a comprehensive approach to the migration crisis and the beginning of the UK renegotiation process.
On migration, the right course of action is to combine saving lives with tackling the root causes of this problem. That means breaking the business model of the smugglers by breaking the link between getting in a boat and getting a chance to arrive and settle in Europe. It means gathering intelligence to disrupt the smuggling gangs and using our aid budget to help alleviate the poverty and failure of governance that so often drives these people from their homes in the first place.
Britain has already played a leading role in all of this, keeping its promises on aid and saving over 4,000 lives in the Mediterranean. By contrast, focusing primarily on setting up a relocation scheme for migrants who have already arrived in Europe could be counterproductive, because instead of breaking the smugglers’ business model it makes their offer more attractive. Others in the EU have decided to go ahead with these relocation schemes, but because of our opt-out from justice and home affairs matters, we will not be joining them. We will, however, enhance our plans to resettle the most vulnerable refugees from outside the EU, most notably from Syrian refugee camps, in line with the announcement I made in Bratislava earlier this month.
Finally, on the UK’s relationship with the European Union, we have a clear plan of reform, renegotiation and referendum. And at this Council I set out the case for substantive reform in four areas: sovereignty, fairness, immigration and competitiveness.
First on sovereignty, Britain will not support being part of an ever-closer union or being dragged into a state called Europe. That may be for others, but it will never be for Britain, and it is time to recognise that specifically. We want national parliaments to be able to work together to have more power, not less.
Secondly, on fairness, as the eurozone integrates further, the EU has got to be flexible enough to make sure the interests of both those inside and outside the eurozone are fairly balanced. Put simply, the single currency is not for all, but the single market and the European Union as a whole must work for all. Thirdly, on immigration, we need to tackle the welfare incentives that attract so many people from across the EU to seek work in Britain. And finally, alongside all these, we need to make the EU a source of growth, jobs, innovation and success rather than stagnation. That means signing trade deals and completing the single market, such as in digital, where the Council made progress towards a roaming agreement that could cut the cost of mobile phone bills for businesses and tourists alike.
At this meeting, my priority was to kick off the technical work on all of these issues and the specific reforms that we want in each area. The Council agreed that such a process will get under way and we will return to the issue at our meeting in December. These talks will take tenacity and patience. Not all the issues will be easily resolved. But, just as in the last Parliament we showed that change could happen when we cut the EU budget for the first time in its history, so in this Parliament we will fix the problems which have frustrated the British people for so long. We will put the common market back at the heart of our membership, get off the treadmill to ever-closer union, address the issue of migration to Britain from the rest of the EU and protect Britain’s place in the single market for the long term. It will not be the status quo. It will be a membership rooted in our national interest, and a European Union that is better for Britain and better for Europe, too. I commend this Statement to the House”.
My Lords, that concludes the Statement.
Baroness Smith of Basildon (Lab)
My Lords, I thank the noble Baroness for repeating the Prime Minister’s Statement. As the news came through on Friday lunchtime, it became almost too difficult to comprehend both the magnitude and the nature of the events as they unfolded in Sousse. Families and friends on holiday, relaxing and enjoying glorious weather and local hospitality, were thrown into murder and mayhem. I do not think any of us will ever forget the heartbreaking sight of sun loungers being used to stretcher the dead and the injured. With 18 British citizens confirmed dead and the death toll of British and other nationalities likely to rise, and with others seriously injured, the horror and fear of that day will never be erased from the memories of those who have survived. As we think of the pain and distress of families trying to find and identify loved ones we can only try to understand what they must be going through.
I concur with and support the comments of thanks to all those—the FCO staff, our police and other agencies and the locals in Sousse—who are trying their best to give both the practical and the emotional support that is needed and will be needed for many for months and years to come. The Home Secretary and the Minister with responsibility for the Middle East are in Tunisia today and they will understand the scale of the problem.
I am sure that, like me, the noble Baroness was deeply affected by the interviews with holidaymakers who, while clearly traumatised and visibly upset, said that they wanted to stay on, in recognition of the support that they had from the locals, who had helped them despite their own fears and distress. I understand that the Government are not issuing advice against travelling to Tunisia, but is any advice being provided to those who are booked to go on holiday there over the coming weeks?
Obviously many Tunisians are already worried about their futures, both in terms of security and economically. I know it is early days and I welcome the fact that discussions have been held with Prime Minister Hollande and Chancellor Merkel but have there been any further discussions with the Tunisian Government? I am thinking not just about security issues but also about economic issues, which can have a huge impact on the local economy and the national economy and will raise other issues around security.
At the European Council, security and defence were rightly high on the agenda. It is a stark reminder, as we reflect on the 10th anniversary of 7/7, that this week alone there have been deadly terrorist attacks not only in Tunisia, but also in Kuwait and France. Meanwhile, the death toll in Syria and Iraq continues to rise. The Prime Minister has rightly recognised that this violence stems from an extremist ideology which hijacks and perverts the religion of Islam, and that this must be tackled at home as well as internationally. We must challenge such extremism, whatever its origins, and champion the values of peace, freedom of speech, tolerance and equality.
The noble Baroness may be aware from debates in your Lordships’ House on the then Counter-Terrorism and Security Bill that not only must our security forces and police have the resources, the numbers and the appropriate tools to be effective but action must be community-based, and all communities have to engage with government and other public bodies in a climate of trust. She will be aware that so many within the Muslim community are challenging ideological extremism and championing the values that lead to a more tolerant and peaceful society. In their considerations of the way forward, are the Government also giving further thought to how these individuals and communities can be supported in their work?
The noble Baroness will know that your Lordships’ House has been very concerned about migration, as discussed at the European Council, both in tackling the organised criminality that fuels it and the instability in north Africa and the Middle East that leads frightened and vulnerable people to risk their lives and those of their families. One of the conclusions of the European Council meeting is:
“Further to the Commission’s European Agenda on Migration, work should be taken forward on all dimensions of a comprehensive and systemic approach”.
Is she in a position today to explain what that means in practice and what action will be taken? The same document refers to,
“the reinforcement of the management of the Union’s external borders”.
What contribution did the UK make to that discussion, given the cuts that we have seen in our UK Border Force?
Finally, on Britain’s negotiations with Europe, can the noble Baroness inform your Lordships’ House whether there will be any treaty changes before the referendum takes place? I understand the Prime Minister’s political difficulties and the sensitivities around this but it is a really important issue. How long was he given to make his case at the summit? Perhaps she can help me: we are not clear at this stage what he is negotiating for. There is even confusion among those he is negotiating with about what he is negotiating for. British citizens, who are going to be asked to vote in a referendum, are also unclear what he is negotiating for. The Prime Minister said in his Statement that this was the first stage, “to kick off the technical work” between now and December. What exactly does that mean and what steps will be taken to keep the public informed?
It is a fact of geography that we are an island nation but all these issues impact on the lives of British citizens. Whether it is terrorism in Tunisia, refugees in the Mediterranean or the economy in Greece, these problems connect us all, and if we are to genuinely address them, we must do it together.
Lord Wallace of Tankerness (LD)
My Lords, I, too, thank the Leader of the House for repeating the Statement made by the Prime Minister. I certainly join her and the Leader of the Opposition in expressing on behalf of these Benches our condolences to those families who have lost loved ones through the senseless and brutal terrorist attack in Tunisia. Our heartfelt thoughts are with those who were injured in the attack and are seeking as best they can to recover from those injuries.
Like the Leader of the House and the Leader of the Opposition, I think it is important to pay tribute to the heroic members of staff who went to the assistance of those who had been injured, and the holidaymakers who helped. As was acknowledged by the Prime Minister, there has been a considerable immediate response by Foreign and Commonwealth Office staff, consular officials, the police and the Red Cross. These are all very welcome.
The Leader of the Opposition also reflected on those who have expressed the view that they wish to stay on holiday in Tunisia. I certainly heard one of them on the “Today” programme this morning. I cannot help but reflect that it is the resilience of ordinary people to terrorism that will ultimately undermine the hate of terrorist organisations.
The Government have talked about a “full spectrum” of measures to support Tunisia and to address the consequences of the appalling events of last Friday. In his Statement, the Prime Minister referred to working with President Hollande of France, Chancellor Merkel of Germany and Prime Minister Michel of Belgium to help Tunisia strengthen security. That is a particularly welcome example of proper co-operation within Europe to help Tunisia. As well as shedding some light on what kind of help is in mind, perhaps the Leader of the House could also acknowledge that in addition to security measures, wider economic support will clearly have to be given to nurture what is a fledgling democracy. There are historic ties between our two countries. If democracy is to take root and flourish, it is very important that we not only give economic help—given the inevitable damage there will be to the tourist trade—but help where we can to support the institutional arrangements in Tunisia. Will the Leader of the House also update the House on what influence the Government are bringing to bear on those countries in the Middle East with which we have good working relations in order to undermine sources of funding to ISIL?
I heard the Prime Minister reported in the press today talking about the values of democracy, justice, freedom and tolerance. It will be these values that will prevail. I certainly wish to endorse that but there is an age-old balance to be struck between security and these values and freedoms that we cherish. Can I therefore have a reassurance from the Leader of the House that, in addressing the necessary measures, it will also be important not to undermine those values which we think are so important in winning the battle against the intolerance of extremism?
To return to the EU Council meeting, we have heard about the dynamics of the meeting. The noble Baroness, Lady Smith of Basildon, asked just how long the Prime Minister had to make his case. At the end of an eight-page communiqué issued after the meeting, there are two—or, rather, one and a half lines—that say:
“The UK Prime Minister set out his plans for an (in/out) referendum in the UK. The European Council agreed to revert to the matter in December”.
It has been reported that this was done during what in other circumstances might be described as a pit stop. Some colour on how the Prime Minister presented his case would be very welcome.
The Prime Minister’s Statement talks about both reform and renegotiation. If there is to be renegotiation of the treaty and there is treaty change, it will almost inevitably require referendums in France, Ireland and Denmark. Can the Leader of the House perhaps clarify whether the Prime Minister is expecting treaty change? Will the referendum which we are having here be contingent on those treaty changes having been approved in the referendums of those EU countries which require them under their own constitutions? Or is it just the case that the Prime Minister is not very clear at this stage whether he wants reform or renegotiation and is hedging his bets?
With regard to migrants, do the Government accept that many of those crossing the Mediterranean are fleeing war and persecution in places such as Syria and Eritrea and are forced to undertake dangerous journeys due to a lack of safe and legal routes to find protection? A key part of the response to the crisis must be to offer refugees safe routes into the EU so that they no longer have to make such dangerous journeys or have to use the appalling means of people smugglers. Given that there are now 20 million refugees worldwide, I am sure that the noble Baroness will accept that to resettle just 20,000 must only be a starting point. She talked about the Prime Minister making further commitments in Bratislava recently. By one estimate, we have so far resettled 187 Syrians. There are estimates of nearly 4 million Syrian refugees, most living in Lebanon, Jordan and Turkey. Can she indicate, in the light of what the Prime Minister committed to in Bratislava, what numbers we expect to see as an increase?
Finally, I acknowledge that the United Kingdom did have and has exercised a legal right not to take part in this resettlement—the opt-out. Perhaps the Leader of the House will explain to your Lordships the moral case for that course of action.
Baroness Stowell of Beeston
My Lords, I am grateful to the noble Baroness, Lady Smith of Basildon, and the noble and learned Lord, Lord Wallace of Tankerness, for their comments about the despicable act of cruelty that occurred in Tunisia last Friday. I certainly support the tributes that they have paid not just to the officials and all those involved in supporting the people and families affected but also to the Tunisians themselves. Anyone listening to my right honourable friend the Home Secretary doing her press conference in Sousse earlier today would have heard how she paid a very big tribute to everybody there and to the local people of Sousse.
The noble Baroness, Lady Smith, mentioned those who wish to stay in Tunisia and those who wish to continue to go on holiday there. She asked about the travel advice offered by the Foreign Office. That was updated to reflect the heightened risk of terrorist attacks post the events on Friday but, as I said in the Statement that I repeated, we are not advising against travel to that area. She also asked what further support we are providing to Tunisia for it to continue to be an attractive place for people to go on holiday to. We are doing a range of things: in an immediate sense, we are sending over relevant experts to make sure that the resorts have the security that they need; we are also looking at what is possible to support the Tunisian police to take an intelligence-led approach to policing in this area. As far as financial assistance to Tunisia is concerned, since 2011 we have already made quite a considerable contribution. We have done that through the Arab Partnership initiative, and we certainly want to look at that again in the light of events. We continue to work with all partners to ensure that we tackle terrorism at source.
The noble Baroness, Lady Smith, mentioned the effect of the events on the Muslim community here in the United Kingdom. The noble and learned Lord, Lord Wallace, also asked about values of democracy and what we are doing to promote our own values. I first pay real tribute to the Muslim community and its work to tackle extremism. We are working, and want to continue working, with the Muslim community to support it, and together to ensure that we are even more effective than we have been so far in addressing extremism.
The noble Baroness, Lady Smith, then asked some questions about the European Council and pointed specifically to the debate on the European Union’s external borders. As she knows, and as the House knows, we are not part of the Schengen agreement but we play a proper part in protecting the European Union’s borders. We contribute in quite a significant way to ensuring that the security around our borders is tight. One of the areas where we provide a lot of specific expertise is on asylum. She also asked about treaty change and the Prime Minister’s contribution during the European Council on his move to renegotiate and reform Britain’s membership of the European Union. The noble and learned Lord, Lord Wallace, asked about that too. I will say a couple of points in response.
First, it was an historic moment at the European Council on Thursday night. We have started the process to which the Prime Minister committed of Britain having a renegotiation with Europe, for reform in Europe and for us to seek a better deal for the United Kingdom. Prior to the European Council, he met and spoke to all the other European leaders. As was made clear, Thursday marked the start of this process, which will continue. He will ensure that throughout the next few months Parliament is kept informed of progress. The initial talks will be what we call technical talks at an official level. It is worth noting, for example, that my right honourable friend the Europe Minister, David Lidington, is giving evidence tomorrow to the House of Lords European Union Committee. I am sure that he will be asked about this at that time. Therefore, we will continue to keep people informed as we make progress on the start of something that the British people really want, and we will ensure that, finally, they do get their say in membership of the European Union.
As far as the questions put about Mediterranean migration and the steps on that are concerned, I say first that our contribution is very comprehensive. HMS “Bulwark” has contributed to saving 4,000 lives, as I mentioned in the Statement; 900 of those were just over the weekend. The Government have a very different view from the Labour Opposition. We are committed to a programme of resettlement of people from outside Europe—so people who are at risk in countries such as Syria and Libya. We play a big part in resettling people from those countries to the United Kingdom. However, we do not believe that it is right to follow a programme of resettlement of people who have already made the crossing over the Mediterranean to Europe. As the Prime Minister made clear in his Statement, we believe that would make the prospect all the more attractive to the gangs who create misery by promoting this as a prospect, which is not one that we believe is the right way forward. We want to support these countries with aid, and political support where that is appropriate, to make sure that they themselves—the countries that these people are seeking to leave—offer the kind of future and prosperity that all the people who live there rightly deserve. That is what we are doing and where we will continue to focus our efforts.
Lord West of Spithead (Lab)
My Lords, the Prime Minister made it clear that he believes that ISIL and Daesh are actually a threat to the existence of our nation at the moment. I have to say I do not see it in that way, but he has said that. Clearly that means—rather like the last time we had such a threat, which was the Second World War and the Cold War—one has to look at spending priorities in a totally different way, and things such as foreign aid, education, the National Health Service and welfare have to take a hit because we need to spend money on defence and security. However, my question is more specific. When we started our air campaign in Iraq, we said that we would not do attacks into Syria unless something specific—an atrocity or something—happened. Those of us in the military pointed out it made no military sense not to do attacks into Syria. Is this now being looked at again so that we have some more cohesive aspect to what should be a much bigger overall strategic plan, which a number of us have talked about?
Baroness Stowell of Beeston
I think what the Prime Minister said was that ISIL presents an existential threat to the United Kingdom. In response to the point that the noble Lord makes about military action and intervention and expanding on what we are already doing in the area, as he knows, the House of Commons was given an opportunity to consider whether we should get involved militarily in Syria and decided against that action. We believe that what we are doing right now is an appropriate and a very valid and important contribution to the fight against ISIL. Ultimately, we believe—and the international community feels—that to properly combat the threat of terrorism that emanates from ISIL there needs to be better governance in these countries. That is going to take a long time, and we need to support the people in the relevant countries to form the kind of representation of all the people that will lead to stability in those areas.
The Lord Bishop of St Albans
My Lords, we, too, on these Benches send our sympathies to those who have been bereaved and those who are injured. It is deeply concerning that Tunisia, a relatively peaceful haven in a part of the world in which there are many tensions, has now had this attack. Does the Minister agree that it calls for a renewed emphasis on working to strengthen community relations here in this country? The danger is that the events from Tunisia, Kuwait, Kobani and France could inflame ethnic and other violence and inspire copycat attacks here in this country.
It has been interesting over the weekend to hear of some of the fairly rapid responses that were made by community leaders. In my own diocese in Luton, we had a Britain First demonstration on Saturday. We had already planned to deploy a number of people on the streets, and that gave huge impetus to redouble our efforts. Fortunately, it went off relatively peacefully, but it had all the potential simply to bring those tensions that are overseas on to our own streets. There is really quite a pressing need to see what we can do. In some areas, community leaders including church leaders were immediately making contact with their counterparts in the Muslim community; certainly, that was going on in some of the interfaith areas in my own diocese. I know of at least one area—for example, the diocese of the right reverend Prelate the Bishop of Leicester—where a vigil was organised.
The Lord Bishop of St Albans
Sorry, I shall ask a question. Does the Minister agree that we need to redouble our efforts to work on these relationships?
Baroness Stowell of Beeston
The right reverend Prelate touches on an important point. Certainly, with regard to the Muslim community, there has been a lot of effort over the past few years to step up and increase integration. I have a couple of recent examples of things that we have done to support them and build relations in communities. One is the Big Iftar—and I had the great pleasure of going to one of those last year when I was a DCLG Minister. There is also the Sadaqa Day, a social action day of community, which is a bit like the ones that we support with the Jewish faith. Those are to try to make sure that those communities can play their part in the wider community as they want to do so.
As for extremism more generally, one reason why we are developing the extremism strategy that we are developing and intend to bring forward the legislation that we will is because we want to tackle all forms of extremism, not just the specific extremism that we have focused on in the Statement today. That is what we will ensure that we do.
Lord Howell of Guildford (Con)
My Lords, I hope that I shall be forgiven for focusing my question just on the European Union negotiations in this massive Statement that has covered so many issues, not least because so much has been said and words are almost inadequate in the face of the Tunisian horror—and, anyway, I agree totally with the Prime Minister that this is not just a western issue but a global issue requiring a global response.
I turn to the EU negotiations, which came at the end of the Statement. I admire very much the tenacity and energy of my right honourable friend the Prime Minister for getting the negotiations on the table. He has constantly said that the key issue is not so much British demands as EU reform; he has said that the EU is an “organisation in peril”, and that we need,
“'the flexibility of networks, not the rigidity of blocs”.
In the light of that essential insight, which is quite right, when are our negotiators going to begin to work with their allies across Europe on the fundamental redesign of the very troubled European Union today? Are not we leaving it a bit late?
Baroness Stowell of Beeston
I am grateful to my noble friend for his remarks about the Prime Minister’s approach and his tenacity on this issue. He asks when the talks are going to start. They have already started. Thursday signalled the start of the technical talks, and the efforts of the very senior government representatives who will lead on this are now under way. Prior to that the Prime Minister made a round of visits and had discussions with all other European leaders. Over the past couple of years, since he made it clear that this was something that he, as Prime Minister of this country, wanted to do, he has, in my view, been able to stimulate some enthusiasm and an agreement from other European leaders that reform of the European Union is in their interests as much as it is in the interests of all people in the United Kingdom.
The Deputy Chairman of Committees (Lord Taylor of Holbeach) (Con)
My Lords, in order to satisfy the interest in this subject I propose that we extend the time for questions on the Statement for another 10 minutes.
Lord Jay of Ewelme
My Lords, I am very grateful for the Statement and I agree with every word that the Leader of the House said on Tunisia. As I know only too well, terrorist attacks of this sort are immensely difficult and traumatic for those who are caught up in them and for their families and friends. I congratulate the Government on the quick response of the Foreign Office and others to the attacks in Tunisia. I very much support what the Prime Minister and the Leader have said about greater funding for the police and the security services because I fear that we are inevitably going to see further attacks of this sort around the world. Will the noble Baroness confirm that there will also be sufficient funding for the Foreign Office, and particularly its consular services, because they, too, are going to be required to provide the services that people who are attacked and affected both deserve and need?
Baroness Stowell of Beeston
I know that the noble Lord knows only too well, as a former Permanent Under-Secretary at the Foreign and Commonwealth Office, just what is involved in the reaction of the Foreign Office to such incidents, so I welcome his congratulation on the way the Government have handled this. As for funding, as he acknowledges, we do and we have ensured that not only has funding for the security services been maintained, it has increased in recent times. As for funding for consular services in the Foreign Office, our approach is always to make sure that there is adequate funding for any of our operational services to meet their needs.
Lord Gardiner of Kimble (Con)
My Lords, we are trying to do this in turns, as we do at Question Time, and it is therefore the turn of the Liberal Democrats.
Baroness Ludford
My Lords, will the Leader of the House give us an assurance that we will hear more consistent messaging from the Prime Minister about the purposes of engagement with our EU partners? We have had mixed messages up to now. I was glad to hear the Statement refer to reform as well as renegotiation, but of course those require rather different styles. If we are taking about the reform of the whole EU, which will, of course, get a good degree of support across the EU, as opposed to renegotiation of Britain’s relationship with the EU, which was the language in the Conservative manifesto, is the Prime Minister going to say consistently that his aim is multilateral reform of the EU? If so, he may get more than a few minutes, during what my noble friend called a pit stop, at a future European Council, to be heard on this issue.
Baroness Stowell of Beeston
I am glad to know that the noble Baroness has studied our manifesto. As far as her question is concerned, the Prime Minister will take an approach that covers both those things. As I said, this is about reform, renegotiation and a referendum, when the British people will have the opportunity to decide. The Prime Minister has been very careful to talk to all his counterparts in the European Union and he will continue to do so. As I said, I think that there is now real enthusiasm from others that this should be an opportunity that benefits the European Union as a whole.
Lord Davies of Stamford
Is it not constitutionally improper and pretentious for the Prime Minister to use the word “never” in the context of this country subscribing to the concept of ever closer union of peoples in Europe? The Prime Minister has a mandate for one Parliament, not for ever. No Parliament can bind its successor and the Prime Minister ought to know that.
On the matter of refugees coming from Africa, if the Government wish, understandably and rightly, to break the link between being rescued at sea and gaining residency rights in the European Union, why is the Royal Navy not instructed to rescue these poor people but then to take them back to wherever they came from—Libya, in most cases? Have we undertaken negotiations with those de facto in control of the various ports in Libya so that we might be able to adopt such a policy?
Baroness Stowell of Beeston
I wish the noble Lord all the very best with his approach to ever closer integration in Europe if the Labour Party gets the chance to govern on that agenda. As for his question about Mediterranean migration, at the moment we are ensuring that when people are rescued they are taken to the first available place in order to establish whether they are economic migrants or asylum seekers. At the moment it is not possible to return people to Libya in the way that the noble Lord described, but I will reflect further on what he said.
Lord Blencathra (Con)
My Lords, did my noble friend see the article in yesterday’s Sunday Times about Foreign Office expenditure on some weird and wonderful overseas aid projects? Will she now urge the Foreign Office to divert that rather wasteful expenditure to Tunisia, which is in the front line fighting extremism? The Islamic extremists know that they have to destroy Tunisia because Tunisia has opted for democracy and for keeping Islamic fundamentalism firmly in its box and out of government. Tunisia needs all the help it can get because, if it is destroyed, no other country is safe.
Baroness Stowell of Beeston
My noble friend is right that Tunisia is a great example of a country which is trying to provide the kind of future, prosperity and hope to its citizens that we want others in the area to see as a possible way forward. For that reason, it is important that we support it in its endeavours, and that is most definitely what we intend to do.
Lord Marlesford (Con)
My Lords, I believe that the Prime Minister is right, as he said this morning on Radio 4, to compare the threat from Islamist terrorism with that from communism during the Cold War. Then, one of the most useful defence mechanisms that we had was enhanced positive vetting of all those in sensitive posts. First, will my noble friend assure us that the Government will make full use of positive vetting for all those who are responsible for the protection of our borders? Secondly, will the Government review the practice of using non-British local people to process visa applications in countries such as Nigeria?
Baroness Stowell of Beeston
I am not familiar with the detail of the processes that are in place these days for vetting staff. However, I am confident that there is appropriate vetting of any individual who is employed by this Government, wherever they are based, to ensure that they have the appropriate clearance for the task they are given. As to my noble friend’s point about non-British nationals being locally engaged in embassies to carry out entry clearance for visas and that sort of thing, again, I would imagine that there is no reason to doubt the processes involved in recruiting local personnel.
Baroness Symons of Vernham Dean (Lab)
My Lords, in answering an earlier question on the Statement, which she repeated, the Leader of the House said that the issues would take time. One of the really difficult things is the feeling that we may not have an awful lot of time to deal with some of them. There are now 4 million displaced people in Syria, which is causing huge disruption and real difficulty in Jordan and Lebanon. We know that this is not happening just in Tunisia; we are seeing it split apart countries such as Syria, Iraq and Libya. What progress is being made in the work undertaken by Sir John Jenkins to look at the sources of funding and weaponry for ISIL? That very important report was announced some time ago, and it would be enormously helpful to have an idea of when we might expect publication.
Baroness Stowell of Beeston
The noble Baroness has a lot of expert knowledge of this area. I will write to her in response to her question about the report by Sir John Jenkins.
Clearly immediate action needs to be taken, and it is being taken. There is military intervention in Syria, albeit that America is taking the lead there with our Arab partners. We are providing some security and intelligence effort. We are contributing very directly in Iraq and are the second largest contributor to air strikes. Ultimately, the answer to stability in that part of the world lies in good governance. We must support these countries to get to a point where they have Governments in place who can properly represent all the peoples of their individual nations so that together they can combat this terrible, perverted ideology. That will take some time.
Lord Pearson of Rannoch (UKIP)
My Lords, on defeating Islamism, the Statement rightly says that,
“we must take on the radical narrative that is poisoning young minds”.
Is not one way to do that for us all to be allowed to talk openly about Islam, among ourselves and with our Muslim friends? If we try to do this nowadays, we are immediately told that it is we who are stirring up religious hatred. Surely the hatred is all in the breasts of the Islamists? It is all very well intoning that Islam is a religion of peace, but the jihadists, for instance the murderers of Drummer Rigby, believe that they are justified by the Koran and the life of Muhammad, which they quote freely. Will the Government encourage a national conversation about the nature of true Islam?
Baroness Stowell of Beeston
It is important for me to say that this is not about defeating Islamism; it is about defeating extremism and an ideology that is perverting a religion called Islam. All, I am sure, that any of us in your Lordships’ House wants is for the shared values in Britain, which are all about freedom and democracy, to be the loudest message that everyone hears. We want to ensure that we say to any person who shows sympathy with extremism that that will not be tolerated. Wherever it comes from, extremism should never be part of anybody’s conversation in this country. The Prime Minister is making clear in his contribution to the debate at this time that he wants all those in the Muslim community to have the confidence to know that they are right in condemning acts of extremism, that when they condemn acts of extremism they are standing alongside the rest of this country and that together we are going to defeat this extremism. Only together will we succeed.
Baroness Falkner of Margravine (LD)
My Lords, the Minister speaks about the Muslim countries in the Middle East trying to achieve good governance and stability. Would she accept that the war in Syria, which by next year will be entering its sixth year, must be resolved? The European Council Statement talks about a strategic reflection to conclude by June 2016. By then, ISIL will have been in power for two years in a given territory and the Syrian war will have been going on for six years. We do not have the time or the leisure to watch all this unfold over an extremely long period. What progress are they making towards trying to bring about Geneva III, a peace process, even if that results in a partial peace in Syria? We will turn the tide back through incremental gains in peace and stability on the ground and not through a good-governance revolution in places such as Saudi Arabia and Bahrain, which are going in the opposite direction.
Baroness Stowell of Beeston
What I am trying to say is that, as the Prime Minister made clear in his Statement, this is not a situation in which just one approach will see a successful result. There has to be a combination of approaches, which includes some military intervention. We are not involved in the military intervention in Syria—the noble Baroness knows of course that the decision was taken not to pursue that course of action—but we are supporting it with intelligence. I do not have the kinds of answers that she wants from me today, but I can assure her that the Government completely agree with her desire for urgent action. We want to see progress. That is what we are working towards, and we are trying to do so at every level and with every partner that we can to bring about progress in the Middle East.
Lord Taylor of Holbeach
We should listen to the question from the Cross Benches.
Lord Kerr of Kinlochard
Can I take the Minister back to her answer to the last point made by the noble and learned Lord, Lord Wallace of Tankerness, about cross-Mediterranean migration and death? She referred to the pull factor that discourages us from agreeing to receive any of these poor people if they make it. I cannot see the logic of that. I can see that there could be a pull factor when the news gets back home that somebody has made it across the water, but we do not think that is a deterrent to rescuing them, and quite right too. I do not see why it should be an additional pull factor if the postmark on the news is French, British or Danish. If they have made it across, surely if there is any pull factor it is there, so I do not see why we absolve ourselves from any moral responsibility to help. Could the Minister look at page 4 of the conclusions and help me with the footnote, which appears to say, as far as I can see, that our partners in Protocols 21 and 22 to the treaties—the Irish and the Danes, who like us have no obligation to take anybody—have decided that they will not rule out taking people, whereas we specifically chose to rule out doing so? Is she quite sure that that was wise, given that we are engaging in a negotiation that in the end will require unanimity, and that Prime Minister Renzi has a very real problem?
Baroness Stowell of Beeston
I object to the noble Lord’s description of us not making a moral contribution to this crisis, because we are. As I said, we are playing our part in the rescue of those who are at risk at sea and are making a very large contribution by way of aid to the countries where people are affected by war or by other things that cause them to seek to move to Europe. We are playing a strong part. As I said, we have a point-of-principle disagreement on the resettlement of people who have made that crossing, but we are doing quite a lot in the resettlement of people from countries such as Syria before they actually make the crossing.
Lord Maginnis of Drumglass
My Lords, has there been a precedent for raising a domestic issue of the European Council in common with a Statement on an international terrorist tragedy, such as in Tunisia? Is that not strange? I can understand why government would want to cloak the impact of what has happened in Tunisia, but as somebody who has lived cheek by jowl with international terrorism for almost three decades, I suggest that we would not have mixed up a domestic issue with the Omagh bomb, the Ballygawley bus bomb or the Enniskillen Armistice Day bomb. Why on earth have we chosen now to take this tragedy—and I feel the injustice of that tragedy—in the way we have rather than talk about the positive, concrete steps that we might take to bolster a Government in Tunisia who are not in favour of the sort of terrorism that we see elsewhere in the Middle East?
Baroness Stowell of Beeston
The Prime Minister was due to give a Statement to the House of Commons today about the European Council, as he customarily does following his attendance at a European Council meeting—that being something that he is obliged to do. He decided, quite rightly in my view, that he should also make a Statement about the terrible events in Tunisia. This will not be the final occasion when the Government make a Statement to Parliament about our response to the most recent terrorist attacks. One reason why it was felt appropriate to combine the two is that clearly we are at the initial phase of responding to the events of last Friday. The most important and urgent thing that we are trying to do is to support the families affected by this despicable act. That is what the Prime Minister has sought to do in describing how the Government have responded. As I say, as things unfold, I am quite sure that others from the Government—my other ministerial colleagues—will make Statements as they see appropriate.
Greece
Lord Ashton of Hyde (Con)
My Lords, with the leave of the House, I will repeat a Statement made a few minute ago by my right honourable friend the Chancellor of the Exchequer in another place:
“Mr Speaker, let me report to the House on the latest developments in the financial crisis in Greece, how they might affect British citizens and how we protect our economic security at this uncertain time.
The developments over the weekend have been well reported. Greece’s financial assistance programme is due to expire tomorrow. After tense negotiations last week between the Greek Government and their eurozone partners, it looked likely that a deal to extend that programme would be agreed. On Friday, however, the Greek PM suddenly announced that there will be a referendum on 5 July on the terms of that programme extension and that he will be recommending that the Greek people vote no.
On Saturday the eurozone Finance Ministers confirmed that, as a result of this unexpected move, negotiations were at an end and the programme would expire. Yesterday the European Central Bank said that without a programme it could not extend the emergency liquidity assistance that is the life support of the Greek banking system. Last night, clearly under pressure, the Greek Government announced that banks would not open today and capital controls would be introduced.
There is considerable uncertainty about what happens next. I have spoken over the last 48 hours to fellow Finance Ministers, the chair of the eurogroup and the head of the IMF. This lunchtime, as we just heard, the PM chaired a meeting attended by the Governor of the Bank of England, myself, the Foreign Secretary and others to co-ordinate our response. Britain’s attitude to the developing Greek crisis is clear: we hope for the best but we prepare for the worst.
Let me address some immediate issues that will concern people. First, our view on the overall state of the relationship between Greece and its fellow eurozone members is that, whether or not Greece should ever have joined the euro, it is now part of that single currency and an exit will be traumatic. It was the Greek Government’s decision to hold a referendum that was the immediate trigger for the events over the weekend and the bank closures today.
We should plan on the assumption that this referendum will effectively be a choice for the Greek people about whether their country now leaves the euro. This is a matter for the Greek people to decide, and we respect their democratic right to decide their country’s future. We also respect the right of the eurozone to set conditions of membership. That remorseless logic of integration is one of the reasons we did not join the euro and we do not want to in the future.
Secondly, there is the impact of the current events on the stability of the financial system, in the UK and across Europe. Related to that is the position of the Greek banks here in the UK. This Greek crisis has been with us in one form or another for five years. It has been one of the biggest external economic risks to the British economy, and the situation today shows that these risks remain. I do not think that anyone should underestimate the impact that a Greek exit from the euro would have on the European economy, and the knock-on effects on us. That is why I have consistently agreed that the best way to protect ourselves from these risks is to get our own house in order.
Of course, markets anticipate some of these risks. The private sector exposures to Greek banks and the Greek economy are far lower than they were, say, three years ago, so the financial market reaction today has been relatively contained. Stock prices on European exchanges have fallen by between 2% and 5% and Greek bond yields have increased by around 400 basis points to over 14%, but bond spreads in other eurozone economies have stayed broadly steady.
The eurozone authorities have made clear that they,
“stand ready to do whatever is necessary to ensure financial stability of the euro area”,
and we welcome that commitment to the currency. Equally, the British Government and the Bank of England stand ready to ensure our financial stability in the UK. The four largest Greek banks—Alpha Bank, Euro Bank, National Bank of Greece and Piraeus—all have branches here. Their UK balance sheets are small; between them, their deposits total less than £225 million. The resolution and supervision of these branches is the responsibility of the Greek and EU authorities, while the protection of depositors is solely the responsibility of the Greek authorities. All four branches are open today. There is one Greek bank with a subsidiary in the UK, Alpha Bank. This is a separate, standalone entity from its parent bank. It is small, with assets of slightly over £500 million. It is regulated by the Bank of England, and customers can be assured that their deposits are covered by the UK’s Financial Services Compensation Scheme.
Thirdly, there are 40,000 British residents in Greece, including 6,000 receiving payments from the Department for Work and Pensions and around 300 receiving public sector pension payments. The Greek Government have announced a bank holiday in Greece, lasting at least until after the conclusion of the referendum on 5 July, and restrictions on withdrawals from ATMs. Withdrawals will be limited to €60 per day per account for Greek accounts. The Greek bank accounts of those British residents are subject to these restrictions. Their UK bank accounts are not affected.
International payments into Greece are exempt from the restrictions that the Greek authorities have placed on the banking system. That means that UK government payments, including state pension and public service pension payments, should be permitted, and I can confirm that those payments will continue to be made in the usual way. However, the situation remains fast-moving and uncertain; we will keep it under review and I recognise that people may be concerned.
I have asked the Department for Work and Pensions and public service pension administrators to attempt to contact people who draw a British state or public sector pension from a Greek bank account. Those people will be helped to switch these payments to a non-Greek bank account if they wish.
Fourthly, there are on average 150,000 British tourists per week in Greece in the month of July. For the time being, the Greek Government have announced that, as usual, tourists will be able to withdraw up to €600 on cards that have been issued outside Greece. However, the foreign ministry could impose limits in future, and the availability of ATMs that are stocked with cash may get increasingly patchy. I remind people that credit and debit cards are of course accepted only at the discretion of the business that you are paying.
As a result of these limited and potentially unreliable banking services, I confirm that, as I speak, the Foreign Office is updating its travel advice. We recommend that travellers should take sufficient euros in cash to cover the duration of their stay, emergencies, unforeseen circumstances and any unexpected delays. Obviously travellers should be careful and take sensible precautions against theft. The full advice is available from gov.uk, and travellers should check this regularly.
Lastly, we are taking steps to help firms doing business with Greece. There are restrictions on the settlement of payments being transferred out of the Greek banking system. The department for business is today publishing guidance for businesses that may be affected. In addition, I can announce that HMRC’s Time to Pay service will be available to help to give breathing space to businesses that are experiencing cash-flow difficulties as a result of events in Greece.
So let me be clear: British pensioners are being paid as normal, British businesses trading with Greece will be supported and British holidaymakers will receive the advice and help that they need. In a rapidly changing situation, I want people to know that Britain is prepared.
To conclude, it is vital now that the Government and people of Greece act to resolve the current uncertainty, and ensure economic and financial stability across Europe. Five years ago we came to office in the first flush of the Greek crisis. At the time, Britain too was dangerously exposed and on the brink. Since then, with the British people, we have worked hard to repair our economy and ensure that we can deal with risks like this from abroad. If ever we needed a reminder of why we need to continue working through our plan to deliver economic security at home, we have it today. I will take further steps to secure our country’s future in the Budget next week”.
Lord Davies of Oldham (Lab)
My Lords, I thank the Minister for repeating the Statement made by the Chancellor in the other place. I think that we can dispense with those last few remarks comparing the British economy with the Greek position and suggesting that it is government action in the past four years that has prevented our position from being the same. We all know the particular and extremely difficult circumstances of Greek society and its economy. These are very serious times for Greece and for the eurozone, of which of course it is a member, and there are risks for Europe and indeed for our country if urgent resolution cannot be found.
The main immediate fact is of course that the Greek banking system is now closed. I shall focus my response, first, on the impact on British citizens and, secondly, on the implications for our economy and financial system. Understandably, exporters, pension funds and the many British visitors to Greece need to know that the UK Government have a thorough contingency plan. I must say that in the Statement today there is a fair amount of wishful thinking rather than clear evidence of a plan.
I turn first to the impact on British citizens. As the Minister has indicated, some 150,000 British citizens would have been expected to go to Greece in July, although of course that number may now reduce. However, it will still be a very large number because people have made their plans. How will people travelling to Greece this summer be able to obtain full information and updates about the best way to plan and proceed with their arrangements? An obvious piece of advice the Government can give is this: “Go there absolutely loaded with euros and make sure that you look after them carefully”. That is wise advice, I am sure, but it is not much solace to the British traveller. What we want to know is what discussions have British officials had with the Greek authorities and banks to ensure that UK citizens are able to withdraw sufficient funds. What is the Minister’s assessment of the number of British citizens with resources deposited in Greek banks who will be anxious about what this means in terms of their ability to access their funds? For many, the British embassy in Athens and the consular staff will be the first port of call. Can the Minister give us an assurance that the embassy is sufficiently staffed and has the resources to cope with what inevitably will be a flood of anxious calls and representations?
I turn now to the impact on our economy and financial system. What discussions have the Treasury and the Bank of England had with financial institutions both here and across the European Union about the implications for our financial system, and what structures are in place to monitor closely any emerging risks? It is clear that if there are wider ramifications for the eurozone economies in the months ahead, there will be greater risks for UK business, trade and, of course, our economy. What assessment have the Government made of the number of British firms and the volume of exports that are potentially at risk? Billions have been invested from eurozone economies in bailouts and considerable hardship has been felt by the Greek people, who are facing economic distress. Does the Minister agree that it is important that the institutions should continue to seek opportunities for a negotiated settlement with the Greek authorities during the week ahead? Time is of the essence. Does he also agree that it is important for the Greek Government to accept their part in charting a course towards a long-term resolution?
This is surely a time for all parties to pursue a responsible approach for Greece and for the wider European economy, for much is at stake.
Baroness Kramer (LD)
My Lords, watching the events in Greece is like watching a car crash in slow motion, and we on these Benches hope very much that steps will be taken over the coming days and weeks to avert what is undoubtedly a lose-lose outcome for essentially everyone involved. I have a few questions for the Minister.
Everyone in the House will be concerned for British citizens who are travelling in Greece. For tourists, the advice is to carry cash. I understand that that seems to be the most obvious solution, but I do not think that anyone would recommend it for themselves or their family because it exposes one to extraordinary risk. What conversations are taking place with our consular officials in Greece to see if they can provide some better advice, and if this continues beyond a few days, on looking to work with financial organisations? American Express and Thomas Cook are organisations that come to mind in terms of going back to some of the older methods of payment like travellers’ cheques, which were used before the days of credit cards.
Can the Minister give an assurance that the UK banks have passed stress tests which look not just at the immediate fall-out of the impact on the Greek banks, but on banks in other parts of the eurozone which might be the victims of knock-on effects by predatory financial traders, and indeed of the normal actions of the market looking for other weak spots? Can he also assure me that conversations have been held with the bank regulators? At times of volatility, and this crisis could lead to one, there is an obvious opportunity for misbehaviour in the financial system. We have another burgeoning crisis in the US swap market and one would hate to see those bad behaviours use the opportunity to take advantage of the volatility that may result from this crisis.
Does the Minister agree with the Financial Times that this,
“is a soluble problem merely cloaked in an aura of impossibility”?
Although the British Government have pointed out that they are not directly involved because they are not members of the eurozone, surely this is the time for the Government to make strenuous efforts and urge all parties back to the table. Does he not also agree that this crisis in Greece offers up some broader lessons, one of which is that EU Ministers and Governments will not put up with endless game playing? As a consequence, as he looks at the EU’s own negotiations on reform, will he ask the Government to make sure that they do not focus on synthetic issues—quite frankly, like whether there are phrases about ever-closer union—but on real issues such as the standing of non-eurozone countries and whether they are on a par with others? Perhaps he will speak to members of his own Cabinet who think that playing with a no vote in a referendum is a way to strengthen Britain’s negotiating hand. That is the kind of childish behaviour that we have just seen get Greece into extraordinary difficulties. This is a time when everyone needs to act like a grown-up.
Lord Ashton of Hyde
My Lords, I thank the noble Lord and the noble Baroness for their comments. I shall start with the initial remarks of the noble Lord, Lord Davies. I shall just refer back to what the Chancellor said, because I do not see any part of the Statement where he compared this country to Greece. He said:
“If ever we needed a reminder of why we need to continue working through our plan to deliver economic security at home”.
Economic security at home is extremely important to deal not only with the obvious problems in Greece, which are not the same as we have here, but the other, unexpected problems that occur in the worldwide economy.
The noble Lord and the noble Baroness asked about British citizens. Of course, that is one of the most important issues as far as we are concerned. Greece is a big tourist destination, with 150,000 tourists normally going there in July. The Foreign Office updated its information both last night and again, I think, within the last hour. All British citizens should look at the information from the Foreign Office on the GOV.UK website because the situation is developing fast and that is the best way to get up-to-date information. The Foreign Office has been dealing with the Greek authorities and I can answer the noble Lord opposite directly: it has undertaken contingency plans to make sure that if the situation gets worse, adequate support will be provided for UK citizens in Greece and it will ensure that adequate resources are available.
I was asked what structures are in place in this country to monitor the situation. The Bank of England has primary responsibility for stability and is looking at this on a daily basis. The number of firms that deal with Greece is relatively minimal. The financial sector has reduced dramatically over recent months, with the latest figures for March showing that exposure levels were approaching a quarter of what they were in December last year. By way of comparison, they comprise less than 2% of the UK’s financial exposure to France. Direct trade and investment links are also minimal, with only 0.6% of total UK goods and services exports going to Greece—worth around £2.8 billion in 2013—while only $1.1 billion of Greek foreign direct investment stock comes from the UK. In fact, of all the periphery euro area economies, Greece receives the smallest amount of UK outward foreign direct investment.
I agree with the noble Lord opposite that a negotiated settlement is preferable. I also agree that the Government here will do whatever they can to help in that. They have been in touch with European institutions, but, obviously, as we are not part of the eurozone, we have less influence in this matter. But I agree with him that a negotiated settlement would be best. I have to bear in mind what the president of the IMF said: it is time to have some adults in the room when they get to negotiations.
The noble Baroness, Lady Kramer, asked about cash, which obviously is a risk. I think that it is sensible to take more cash than you would normally take. One could also take more than one card, if one has them. Of course, the problem is that those cards are no good if the banking system is not working and the ATMs have run out of cash—and I think that they will run out of cash fairly soon. She mentioned travellers’ cheques. Again, they are only any good if the banking system is open and working. Hotels, I think, fairly rapidly run out of cash.
The noble Baroness asked about the stress tests and the banks in this country. I cannot answer directly whether they involved a specific reference to a situation like Greece, but all our banks have passed their stress tests. These take into account instability in the economy, which is one of the tests—and the banks passed. There is much less contagion risk in the periphery than there was a few years ago. Countries such as Spain and Italy have reduced their exposure to Greece as well—it is not just this country. As for the discussions with the bank regulator, the Bank of England—the regulator in this country—has talked to other European institutions.
The noble Baroness said that this was a soluble problem. I think it is soluble with good will on both sides, but it will be very difficult. The performance of some of the players has made that more difficult, to be frank. On reform generally and the effect that this will have on our negotiations with the EU, I do not agree that ever closer union is a synthetic issue. When you have a eurozone, ever closer union is an absolutely important part of that. That is a real issue we have to address, and the Prime Minister is determined to do so.
Lord Lawson of Blaby (Con)
My Lords, is it not clear that the Greek disaster is simply the most acute evidence of the fact that the European monetary union was, from the start, a fundamentally flawed enterprise, as a number of us predicted and explained very clearly at the time? Is not the best thing that we can do now to persuade our friends in the eurozone to enable Greece to exit from the eurozone in the most orderly way possible? Inevitably, it cannot be totally orderly; it will be difficult. But to facilitate the most orderly exit of Greece from the monetary union is the best service we could provide.
Lord Ashton of Hyde
My Lords, I am not sure that it is fundamentally flawed. The key is that the participants in the eurozone have the right economic fundamentals that allow them to go into it and play their part. As for exit, that is up to the Greeks. It is they who are having a referendum. It is not for us to tell them which way to vote. I absolutely agree with my noble friend that if they decide to exit by dint of the referendum, which is their democratic right, we should do all that we can to make it orderly.
Lord McFall of Alcluith (Lab)
My Lords, it is clear that a Greek exit would provide an existential threat to the whole European monetary and economic framework, with knock-on effects geopolitically and also for the United Kingdom. As Angela Merkel said, if we lose the ability to compromise, we will lose Europe. Even at this late stage, is it not incumbent on the UK Government to ensure that their voice is heard and that a compromise is agreed with a degree of debt write-down and concomitant structural changes in Greece itself? That is still a possibility and every effort has to be made to ensure that before the weekend.
Lord Ashton of Hyde
I agree that we should do what we can, but it is fundamentally a eurozone problem. There is a limited amount we can do. In terms of the bailout, we would not be on the hook for that. I agree that we should do what we can. Of course, the former Leader of this House is hard at work in Europe, even as we speak.
Lord Higgins (Con)
My Lords, in the present confused situation, only one thing is clear. It is inconceivable that Greece will become competitive and achieve economic recovery at the present exchange rate. Therefore it will be condemned to endless austerity, abortive negotiations and financial crisis until such time as it leaves the euro. My noble friend’s Statement refers to an exit by Greece as being traumatic. The important, thing, therefore, is that we should do everything we possibly can to make it happen in an orderly way, rather than in a traumatic way, where other European countries are not taking action because they believe that it is fundamental that Greece remains in. It is not going to remain in; sooner or later, it is coming out. Therefore it is very important that we should work together with other European countries to achieve a sensible exit.
In particular it needs to be made clear that, if there is an exit of Greece from the eurozone, it does not mean that Greece exits from the European Union. From a political point of view, it is very important indeed that it should not do so. At the moment, however, I fear that we are underestimating our interest in this matter. We are of course already contributing in part to the bailout through our contribution to the IMF, and it is obviously extremely important as far as our export markets to Europe and so on are concerned. So we need to work with the other members in the European Union to seek to achieve a resolution to this crisis that is long term. That can only be if Greece exits the euro.
Lord Ashton of Hyde
My noble friend is obviously right. I would not swap economics with him. I accept that there are difficulties if your exchange rate is constrained by the euro and your interest rate policy is determined by the euro authorities. Ultimately, that is why it would be traumatic, as my right honourable friend said, if they leave—and it will be traumatic for individual Greeks, for whom we should feel a great deal of sympathy.
As far as the IMF is concerned, it is true that if Greece does not pay back its loan, it will go into arrears. There are contingency funds within the IMF which may cope with that. Ultimately, however, if that was the case, we would have about a 15% share of that. I agree with my noble friend that if we get to the stage of Greece leaving the euro, we should do all we can to help. I note that on Twitter today, President Juncker has said that, in his view, if Greece leaves the eurozone it will mean that it will be leaving the European Union.
Lord Pearson of Rannoch (UKIP)
My Lords, does the noble Lord agree that it is strange that the Greek people, and indeed the Portuguese and the Spanish, blame their problems on austerity, without seeming to realise that that is caused entirely by the ill-fated project of European integration and its euro, which they think they want to keep? Do the Government agree that, as other noble Lords have suggested, the Greek people’s best way out of the cruel euro trap is to leave it, devalue and gradually rebuild their economy? Would it not be nice if the Greeks were to succeed in this task and were eventually followed by the Portuguese, the Spanish and perhaps even the French? That might start to break up the whole euro project and, indeed, the project of European integration itself, which is doing so much damage to Europe.
Lord Ashton of Hyde
The noble Lord may be surprised to know that the Government do not agree with that analysis. I know that he has certain views. Austerity per se is not the cause only of the Greeks’ predicament. It has been a long time coming, and other European countries have dealt with it in a possibly more effective way. Austerity alone is not the answer, but nor is leaving the euro. We need to help the Greeks negotiate a position where they can face the future with a bit more optimism, and I am sure that the noble Lord will join me in that.
Baroness Falkner of Margravine (LD)
The noble Lord has accepted that the United Kingdom is exposed through the IMF to a Greek default or Greece being in arrears. He has not given us a figure, but the Times this morning said that Greek indebtedness to the IMF was to the tune of about €21 billion. Will he tell the House what specifically the United Kingdom exposure would be in that regard?
Lord Ashton of Hyde
I do not have the exact total number, but I am told that it is about 15% to the IMF.
Lord Davies of Stamford (Lab)
Would it not be a good idea for the Government, when they refer to ever closer union, to quote the phrase correctly? It is the ever closer union of peoples. It has never been a legal or an institutional matter. On Greece, I am sure that the Government have given some thought to what follows, or what might follow, from the referendum on Sunday. Presumably, if the vote is no, Greece will continue down the tube of bankruptcy, and no doubt leave the euro, have high inflation and so forth. If the vote is yes, will the package, which was so petulantly rejected by Mr Tsipras the other day, be revived and be on offer to a new Greek Government? Will our Government use their influence with our eurozone partners and the IMF to urge them to adopt that cause?
Lord Ashton of Hyde
My Lords, I do not think that the package is a matter for this Government. We would certainly take into account what would happen after the referendum, which of course is a Greek choice, but it is for the eurozone to decide what package is given to its members.
As for the ever closer union of peoples, the point is that when you have one currency, you need to have closer political union to make that one currency work. If you do not have that, you end up having some of the problems that we are seeing.
Lord Forsyth of Drumlean (Con)
My Lords, given that the German Finance Minister only a month ago suggested that a referendum on the package might be appropriate, is it really acceptable that the package should be withdrawn the moment the Greek Government announce that they are going to have a referendum on whether the people should accept it? What exactly are the Greek people voting on if the package has been snatched away? When the Minister refers to the loan to the IMF being in arrears, will he explain the difference between being in arrears and being in default?
Lord Ashton of Hyde
As regards the arrears, I was merely repeating the official nomenclature of the IMF. I would not comment on the precise meaning of the IMF vocabulary, but it is true that it refers to being in arrears. If that was the case, Greece would join Zimabwe, Somalia and the Sudan. On the referendum, the negotiations are coming to an end because, despite what the German Finance Minister said, if you are to have a sensible negotiation, you need to have willingness on both sides to compromise. Walking out instead of taking the decisions that are needed, and turning around without any warning and instituting a referendum, is not the way to get proper negotiations and to achieve success.
Lord Lea of Crondall (Lab)
My Lords, is not one of the difficulties of the analysis that people assume that something follows on from having a referendum, which of course must be nonsense? It is not a logically connected piece of analysis. There can be all sorts of scenarios from where we are now, but Angela Merkel has said that the referendum question is simply, “Do you want the euro? If so, vote yes. If you want the drachma, vote no”. Can it be as simple as that? Are there not a number of scenarios that could follow, and should we not be thinking through a number of them, otherwise the schizophrenia in this debate about whether a referendum is a bright idea has not been followed up by thinking through the policy scenarios?
Montenegro is just up the road from Greece. It is a member of the United Nations and a singing and dancing country. It uses the euro without permission from Frankfurt. It is not obvious to me exactly what the connection is between the way the referendum is posed and the scenarios that follow.
Lord Ashton of Hyde
I can see the noble Lord’s problem, but I do not think that it is a problem for the UK Government. The referendum was instituted by Greece and it is up to them what the question should be, what they are trying to address and why they are trying to have one. I completely agree with the noble Lord that there are many scenarios resulting from that. The Treasury, the Government, the Bank of England and the Foreign Office are looking at this and working out contingency plans on a daily basis.
Lord Tugendhat (Con)
My Lords, the Minister said that the British Government would be preparing for the worst. I think it is quite widely thought that the worst that might come quite quickly is a humanitarian crisis within Greece. Once no cash is circulating, particularly in an economy that has such a substantial cash sector as in Greece, the difficulties for people in getting food and basic services will become very immediate. Are the British Government going to play a role, should that be required, in any EU humanitarian effort to mitigate suffering in Greece?
Lord Ashton of Hyde
My Lords, I agree with my noble friend that in preparing for the worst—I alluded earlier to the sufferings of the Greek people—a humanitarian crisis would be very serious and possible. I am afraid that I am not in a position to commit today on how we would help in that situation. I would like to, but I just do not have the knowledge to do so, I am afraid.
Lord Berkeley (Lab)
My Lords, the Minister said that the Foreign Office was updating its advice to travellers to Greece hourly, daily or something, which clearly is welcome. For humanitarian reasons and for the sake of people’s holidays, clearly we do not want to discourage people from going to Greece, but surely the only safe advice at a time when the banks are shutting and credit cards may not work is for people to take cash, probably in euros but any hard currency would do. Is that not the best advice to give people, rather than saying, “Well, you might be able to go to a bank or you might not?”, or anything else?
Lord Ashton of Hyde
My Lords, I have not checked the latest advice. I have been informed that it was updated last night and will be re-updated today. I think that is exactly what the advice said.
Lord Stoddart of Swindon (Ind Lab)
My Lords, are we not just kidding ourselves about the real situation? Does the noble Lord not agree that the eurozone is fundamentally flawed and has been so right from the beginning? The grown-ups among us recognised that when we opposed going into what was to be a flawed system. Is it not true that without the fiscal and social power, together with the monetary policy, the eurozone simply cannot work? The idea that it could work, particularly with the membership of Greece, was always absurd.
Lord Ashton of Hyde
My Lords, the Government do not believe that the eurozone is fundamentally flawed as long as its members have the right economic position when they go in and go in at the right exchange rate. The euro institutions’ power is adequate as long as the members go in at the right time and with the right criteria. I accept that there are different views on this, but the countries in the eurozone are varied. Greece may well leave—I do not know; it is up to the Greek people—but just because one country on the periphery leaves does not necessarily mean that the eurozone is fundamentally flawed.
Lord Empey (UUP)
Does the Minister agree that politics brought the Greek people into the eurozone and that politics will be deployed to keep them in it as the week goes on? Will that not mean that the misery that they suffer continues? As the noble Lord, Lord Davies of Stamford, said, what happens if the Greek people vote yes when their Government recommended no? What policy can we expect to be implemented following such a decision?
Lord Ashton of Hyde
I completely agree that politics is very important in all these things, along with the economic arguments. Politics demands that all people in positions of power take decisions that are not just in the short-term interests of their political persuasion but in the long-term interests of the Greek people.
Lord Marlesford (Con)
My Lords, it looks inevitable and is probably desirable for the euro’s sake that Greece leaves the euro area. Does the Minister agree that it is very important that Greece stays in the EU, which is a more important organisation of longer standing than the euro and should be much more durable? Does he agree that Greece should not invent some Mickey Mouse currency such as a new drachma, which would not fulfil the functions of money—store of value, unit of account and medium of exchange—but should instead continue to use the euro? As the noble Lord, Lord Lea, said, a country does not necessarily have to be in the euro area to use the currency. It has been done with the dollar in South America. Tourists, who are so important to Greece, could use travellers’ cheques. Hotels and so on do not have to cash them; they can accept them and keep them. As long as they have been issued by a reputable outside bank, they are as good as cash for them.
Lord Ashton of Hyde
My Lords, I am not an economist, but I accept that it is theoretically possible to use other countries’ currencies. The problem is that a country does not have control over its currency if it does that. It is not up to me or to the UK Government to decide which currency Greece should use in the event that it leaves the euro. That will be up to the Greek Government.
Lord Lamont of Lerwick (Con)
My Lords, has the Government’s policy on the euro changed dramatically—
Baroness Evans of Bowes Park (Con)
My Lords, I am afraid that the time is up for this Statement.
Cities and Local Government Devolution Bill [HL]
Lord Berkeley
“Sustainable development
After section 117 of the Local Democracy, Economic Development and Construction Act 2009 (orders) insert—“117A Sustainable development
(1) In determining whether or how to exercise the power conferred by section 113D, a combined authority shall have regard to the effect which the proposed exercise of the power would have on—
(a) the health of persons in its area; and(b) the achievement of sustainable development in the United Kingdom.(2) Where the authority exercises the power conferred by subsection (1), it shall do so in the way which it considers best calculated—
(a) to promote improvements in the health of persons in its area, and(b) to contribute towards the achievement of sustainable development in the United Kingdom,except to the extent that the authority considers that any action that would need to be taken by virtue of paragraphs (a) or (b) above is not reasonably practicable in all the circumstances of the case.(3) In subsection (2)(a), the reference to promoting improvements in health includes a reference to mitigating any detriment to health which would otherwise be occasioned by the exercise of the power.
(4) In deciding whether or how to exercise that power, the authority shall have regard to any guidance issued under section 118.””
Lord Berkeley (Lab)
Amendments 44DA, 44DB and 44DC are probing. They mirror similar texts in the Greater London Authority Act 1999. Why do the Government not propose to include these important safeguards for devolution outside London that the 1999 Act provides for within London? That is particularly important in relation to the concentration of power that is proposed for mayors. It is also relevant to the exercise by combined authorities of the general powers of competence.
Amendment 44DA requires the combined authority to have regard to the effect on the health of persons in its area and to the achievement of sustainable development. I would have thought that the Government were keen to see those things promoted and would be in favour of the provision in proposed new subsection (3), which states that,
“the reference to promoting improvements in health includes a reference to mitigating any detriment to health which would otherwise be occasioned by the exercise of the power”.
Amendment 44DB relates to consultation. All Governments say that they do not like lists of people who have to be consulted, but the list in my amendment seems reasonable. Amendment 44DC refers to transport strategies. The London mayor has produced many strategies—most of them are good, some less good—and people in the London area have been consulted on them. I was in Liverpool last week hearing people’s views on the northern way, or northern powerhouse or any of the other names for the new area for development across the Pennines—from the Humber to the Tyne and Tees to Liverpool and most places in between. It is good, and surprising, that the authorities have got together and appear to be coming up with a joint strategy for the whole region. Only a few years ago, as the Minister will know from her experience there, such a strategy was a bit of a pipe dream, but it is happening now. It will need funding and it will need more detail, but it is happening.
The key is to achieve consensus without any one mayor thinking that he or she is in charge. A couple of years ago I was told that the people of Liverpool had to run everything because they were better. Perhaps Manchester is supposed to be better now, but in fact everyone is working together.
Amendment 44DA is a probing amendment to find out why the Government have not felt it necessary to replicate the text from the Greater London Authority Act in this Bill. Is it seen as an unnecessary constraint on the mayor’s powers? We need some constraints, especially on health and sustainable development. The measure has not been entirely successful in London because, before the Olympics two years ago, the mayor managed to hide the statistics for air pollution by covering up the monitors. It was an easy way of doing it and he seemed to have got away with it. We were certainly said to have better air quality than Beijing, which would not have been the case if the monitors had not been covered up.
I shall be interested to hear what the Minister has to say. She may say that the amendment is not necessary, but if it is good for London, why is it not good for the rest of the UK in the circumstances that the Bill covers?
Lord Teverson (LD)
I support the amendment. A question has come from a number of Benches and the Minister about the problem of trying to recreate London devolution in the north and elsewhere in the country. I understand that and I concede that there might be differences in the way it is implemented which are more relevant to those areas. However, I suspect it is dangerous to talk about the north because those cities to the left of the Pennines might not see it in the same way as those on the eastern side. The fundamental thing is not necessarily to make it the same—as the noble Lord, Lord Berkeley, said, this is a probing amendment—but why should metropolitan areas outside London have a second-division method of governance in comparison to what has been trialled and used in London, to a degree successfully, although not completely?
The areas of particular importance in this are sustainable development—which ties up completely with the outline planning rules introduced by the previous Government—and transport. When we discussed the Infrastructure Act last year we asked for a transport strategy—particularly around cycling and pedestrians— which I hope the Government and the Secretary of State are developing. It is important that this becomes part of the work of combined authorities.
This may not be the perfect amendment but it is necessary to include this kind of framework in the Bill for northern cities and combined authorities. Even though a direct comparison with and a copying of London legislation and regulations may not be completely appropriate, it is important to find something that fits the situation of combined authorities in the north and elsewhere that enables them to be successful. In that sense, I hope the Government will come forward with a different formula that meets those objectives.
Lord Deben (Con)
My Lords, I know that opposition to motherhood and apple pie is always disliked in this House, but the impression put forward by these amendments is very worrying. Do we have any indication that the governance of London has been affected by this, because any sensible mayor of any denomination would do the useful things that are listed here? However, some of them mean very little. For example, what can we take from subsection (2) of proposed new Section 117B, which states that any body or person a combined authority considers consulting must include any council within its area and,
“bodies of each of the descriptions specified in subsection (3)”?
Those bodies in subsection (3) include:
“(a) voluntary bodies some or all of whose activities benefit the whole or part of its area;
(b) bodies which represent the interests of different racial, ethnic or religious groups in its area;
(c) bodies which represent the interests of persons carrying on business in its area”.
Are there any bodies of any kind whatever not covered by that? It makes no sense. It is a list of things. Will a decision by the mayor be illegal which did not follow a discussion with a particular body providing for the interests of a small number of people in a particular ethnic group for whom it was not appropriate? This is a list of things which are good, valuable and helpful but totally not useful in the activities which we envisage the mayor carrying through.
It would be perfectly reasonable to say that the mayor should have serious concern about sustainable development; that he should have appropriate consultation; that it would be a good idea to ensure that transport strategies were,
“consistent with national policies and with such international obligations as the Secretary of State may notify to the mayor for the purposes of this section”.
However, I have my doubts about whether it would make any difference. If there are things to be said, they should be said when they are necessary. There should not be merely a list of things about which we can all feel warm because we have voted in favour of reminding people that it is a good idea to consult.
Lord McKenzie of Luton (Lab)
My Lords, the amendments of my noble friend Lord Berkeley reasonably probe the Government and focus on issues which should underpin a combined authority’s operations and strategies. There are issues around the health of people in the area and around sustainable development, about which my noble friend always speaks with passion. I know the Minister’s answer will be, “You can ask for all these things; you may well get these things in a deal; but you do not have to have them in the Bill”
The consultation requirements in these amendments are a little more specific than one would like, even if one were in support of putting them in the Bill. The issue here is to encourage all the deals that take place under these devolution proposals to have, as their underpinning, issues around sustainable development and the health of people in the area. I am sure the Minister will tell us there is no reason why those issues should not feature in any deal that might be entered into. If that is not the case, there is a stronger case for putting something more specific in the Bill.
As to the strategic view on transport, if there is an argument for putting measures in the Bill it might be to hold the Government to account so that we do not proceed on an assumption of a northern powerhouse, with a big debate around connectivity, and hear a few days later that the funding is not there to deliver on it. That does not help trust between government and local authorities in creating an environment where devolution can work and where issues around sustainable development and the health of people in an area are at the forefront of the strategic operations of a combined authority.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Williams of Trafford) (Con)
My Lords, these amendments seek to introduce into the Bill new clauses that would place on combined authorities prescriptions and requirements about how they exercise certain powers which may be conferred upon them.
Amendments 44DA and 44DB place requirements on how a combined authority which has been given the full general power of competence through the provisions of Clause 9 of the Bill is to exercise these powers. These requirements are about having regard to certain matters and having to undertake consultation with various specified authorities and other bodies. The intention of new Section 113D, which Clause 9 inserts into the Local Democracy, Economic Development and Construction Act 2009, is to allow the same power of general competence that is available to local authorities to be conferred on combined authorities. The purpose of such a general power is to give the authority concerned the same scope and freedom of action as is available to any individual, such as you or me, subject to any specific legislative restraints applying to that authority.
To seek to prescribe to combined authorities how they should exercise this power would seem to be contrary to the essence of the general power of competence. It would place combined authorities in a more restrictive regime than that which applies to local authorities generally. There are no grounds for doing this in those situations where, as part of an agreed deal, it is considered right to give a combined authority the full general power of competence.
I recognise that these amendments appear to mirror some of the provisions that apply to the Greater London Authority. In the London context, the authority has the power to do anything which it considers will further any one or more of its principal purposes. In exercising this power the authority is required to have regard, for example, to its effect on the achievement of sustainable development in the UK and on the health of persons in Greater London. However, these specific powers which are given to the Greater London Authority are of a very different nature to the general power of competence, which, as I said, is the power for an authority to do anything which an individual can do, unless it is specifically prohibited. These are particular powers about promoting economic development and wealth creation in Greater London, promoting social development in Greater London and promoting the improvement of the environment in Greater London. It may be in a particular deal that similar powers are conferred on a combined authority, using the powers in the Bill under Clause 6.
Amendment 44DC provides that in preparing or revising any transport strategy a combined authority shall have regard to the health of persons in its area, the achievement of sustainable development in the UK and certain matters relating to national policies, international obligations and the available resources for that strategy. This amendment mirrors provisions which apply to the London mayor in respect of his general duties in relation to his strategies. However, such provisions are not appropriate to be included in an enabling Bill, which does not refer to any particular powers or duties a combined authority and its mayor may have. If, as part of a particular deal, a combined authority mayor is given a power similar to the Mayor of London’s in relation to certain strategies, then it may be right that, in the case of that combined authority, matters such as sustainable development and the health of the people in the area could be relevant considerations to be taken into account by the mayor when drawing up those strategies. The orders creating such an arrangement would be able to reflect this.
Whatever the importance of particular issues, and clearly the health of people in an area is of the utmost importance, it is not for this Bill to include either references to specific powers, or provisions which can relate only to specific powers. This is an enabling Bill and in our previous debates I have made very clear that the Bill is not a vehicle for setting out lists or descriptions of powers which may or may not form part of an agreed deal with particular areas. Accordingly, I hope the noble Lord will agree to withdraw his amendment.
Lord Berkeley
I am very grateful to the noble Baroness for her comprehensive explanation, which might be summed up with “good try”. As I said, it is a probing amendment. It has been an interesting debate, and I accept the comments of the noble Lord, Lord Deben, about the detail. The amendment was basically copied from a GLA Act, which seemed a good place to start, but he has made some very good points.
The noble Lord, Lord Teverson, reminded the Committee that we are still waiting for the Government’s strategy on cycling and walking, which came in earlier this year, and that will be good. My noble friend Lord McKenzie hit the nail on the head by saying that all this is fine but unless it is accompanied by funding—and, one could even add, an ability to raise funds locally—how important will it actually be? I will read the Minister’s comments with great interest. I may come back on this again, or I may not. I beg leave to withdraw the amendment.
Lord Warner
“NHS responsibilities
(1) The Secretary of State may transfer to a combined authority any NHS responsibilities provided for in the Health and Social Care Act 2012 if he considers—
(a) that it is in the best interests of the authority’s population in terms of health outcomes; and(b) that it will help fulfil his duty in section 2 of the 2012 Act (the Secretary of State’s duty as to improvement in quality of services) to improve the quality of health services.(2) In making a transfer of responsibilities to a combined authority under subsection (1), the Secretary of State shall request that a memorandum of understanding between NHS England and the combined authority be agreed.
(3) The memorandum of understanding shall—
(a) be consistent with the duties and powers of the combined authority under the 2012 Act, and(b) last for a minimum of 5 years, unless the combined authority fails to discharge its responsibilities under the memorandum, including its mandate from the Secretary of State.(4) Any memorandum under subsection (2) shall have regard to the Secretary of State’s duty under section 5 of the 2012 Act (the Secretary of State’s duty as to promoting autonomy) by—
(a) promoting autonomy and avoiding placing unnecessary burdens on the combined authority, and(b) specifying the key health outcomes to be achieved by the combined authority.(5) The requirements in the memorandum shall be set out in regulations by the Secretary of State.
(6) A combined authority assuming NHS responsibilities under the provisions of this section shall publish an annual report on how it has discharged its responsibilities on the basis set out in the memorandum of understanding.”
Lord Warner (Lab)
My Lords, we return to the issue that we discussed last Wednesday, namely the ability of combined authorities to assume NHS responsibilities under this Bill. Several things emerged in our last discussion. The first was that the Government currently have no intention of making any clear provisions in the Bill for combined authorities to assume NHS responsibilities. Instead, they wish to proceed on the basis that a combined authority could negotiate a deal with NHS England that would be enshrined in a memorandum of understanding covering a number of years. However, the Secretary of State would retain all his powers in the Health and Social Care Act 2012 to overrule actions by the combined authority in accordance with the memorandum of understanding, if he disagreed with those actions. No matter how much agreement there was between local bodies such as clinical commissioning groups, health and well-being boards and a combined authority, it would still be the Secretary of State’s view that prevailed. The Minister made it clear when I taxed her on the issue of local bodies replacing acute hospital beds with more preventive and community-based services that that was the position. I have reread Hansard to make sure I did not misunderstand her and I did not.
Lord Hunt of Kings Heath (Lab)
My Lords, I warmly welcome my noble friend’s amendment. I read with interest the debate in Committee last Wednesday about this very important issue, which goes right to the heart of the relationship between the combined authority and the National Health Service, and the integrity of the NHS as a national service providing uniformity of services across the nation.
Of course, our debate is mostly about Greater Manchester. I very much support the thrust of what is happening in Greater Manchester. I want to see the same in greater Birmingham. But we have to get to the bottom of the essential relationship between local authorities, the combined authority and the NHS. This is not an academic exercise. It would be all too easy for a Chancellor faced with enormous financial pressures, as he is, to transfer responsibility to local government or combined authorities and then deny responsibility, putting the blame firmly on local government and using local government legitimacy to defend the rationing of services to an extent that the NHS has never seen.
Of course, one can go back to the foundations of the NHS, to the arguments in the post-war Attlee Government between Morrison and Bevan. Morrison had been leader of the London County Council, which before 1948 had been the largest hospital authority in the world, and wanted local government to run the NHS, but Bevan was concerned that it would be a very patchy service. Bevan won the argument and we had a national NHS. So the arguments we are having today will be very familiar throughout the history of the NHS. The key question is: how do we get the advantage of local government leadership and democratic legitimacy while ensuring that we have what we would recognise as a national NHS? That is why this is such an important debate and why the Bill lacks clarity.
The Minister was very helpful on Wednesday and spelled out a number of principles. She said first that healthcare services,
“must remain firmly part of the NHS … and the position of NHS services in the area in relation to the NHS constitution and mandate cannot change”.
She said that,
“all national standards for health services … must … be complied with”.
I take that to mean that the NICE technology appraisals will be fully complied with as well. She said:
“The Greater Manchester deal does indeed put health as a function of the combined authority and not of the mayor”,
but that it will not prejudice arrangements elsewhere, which is a very important factor—for me, certainly—in relation to greater Birmingham, although very few of us in greater Birmingham actually want a mayor and very much object to the blackmail that is being put upon us by the Government forcing us to have a mayor in order to accept the greater responsibilities that would be given. We had a referendum in Birmingham not so long ago when we voted very clearly not to have an elected mayor. It is highly objectionable for the Government now to come along and say, “We don’t really care what the public thought, we insist that you have a mayor”. Significantly, the Minister went on to say that,
“in the field of health and social care, all decisions about Greater Manchester will be taken with Greater Manchester”,
with,
“clinical commissioning groups … providers, patients, carers and partners to shape the future of Greater Manchester together”,
and that the Bill will give local authorities within the combined authority,
“the powers to participate in … strong, collaborative partnerships”.—[Official Report, 24/6/15; col. 1672.]
I would just say that they already have statutory freedom to enter into those partnerships.
Lord Shipley (LD)
My Lords, when I read the announcement about the decision for Greater Manchester and the fact that £6 billion of NHS funding would be devolved to that area, I asked myself two questions: how do they know it is £6 billion and who will make what decision as a consequence of this announcement? After listening to the last 20 minutes or so, I have come to the conclusion that I am none the wiser.
I pay tribute to the noble Lords, Lord Warner and Lord Hunt, for having so succinctly explained what the problems are and could be. I understand that there would inevitably be variations area by area and there needs to be some flexibility in the hands of Ministers to meet what is deemed to be right for a particular local area, but one cannot permit a situation to continue in which there is simply nothing in the Bill in relation to the powers of a combined authority. I think I noted the words of the noble Lord, Lord Warner, correctly when he said that we must make it clear how NHS responsibilities can be transferred to a combined authority and remain consistent with the 2012 Act. That seems to be one of the key points that we have to be clear about. Otherwise, a whole set of problems could arise as a consequence of that lack of clarity in the Bill. I sincerely hope that between now and Report the Minister considers the questions posed today so that we can have a set of amendments that the House might be able to agree upon.
Lord Bradley (Lab)
My Lords, very briefly, I support this probing amendment which has been so eloquently moved and spoken to by my noble friends Lord Warner and Lord Hunt. I said in our debate last week that I suspected that we would need a second debate for clarification of NHS responsibilities and their relationship with the combined authority. I know that the Minister will be anxious to come to the Dispatch Box to give us much clarification this evening, because that relationship needs to ensure that there is no confusion at local level between the combined authority and the NHS.
In our debate last week, I raised 10 questions with the Minister, which I am not going to repeat. I am sure that she will be writing to me with detailed responses, but I want briefly to refer to two of the questions which my noble friends raised again tonight. First, I said that we do not want to leave NHS organisations and their boards, which implement policies by the combined authorities, open to legal challenge that they are acting outside or in conflict with legislation. I am sure that the Minister will want to clarify that point again.
Secondly, I raised the issue of whether the Greater Manchester strategic health board and its relationship with the combined authority needed any statutory powers and whether there was any requirement to amend the Health and Social Care Act 2012. Again, the issue in that general relationship has been raised tonight and I am sure that the Minister will want to clarify that point further. This probing amendment is surely to ensure that the devolution which we all support for Greater Manchester in health and social care can be effected efficiently. We will reflect further on the questions raised tonight in the light of the Minister’s response as we move towards Report.
Baroness Williams of Trafford
My Lords, I thank all noble Lords who have made remarks this evening. A number of questions have been raised. Perhaps I might address the amendment generally and then come to specific questions that noble Lords asked.
Amendment 44DD makes specific provisions about the transfer of health and social care NHS responsibilities, as noble Lords have said, including a requirement for an annual report by a combined authority which has assumed NHS responsibilities. It is important to reiterate this evening what I have said in earlier debates. The Government are committed to the view that health and social care services in any area, whatever devolution arrangements are entered into, must remain firmly part of the National Health Service and social care system—the noble Lord, Lord Hunt, alluded to this—that all existing accountabilities and national standards for health services, social care and public health services will still apply, and that the position of NHS services in relation to the NHS constitution and mandate cannot change.
As we have discussed throughout our debates on the Bill, the context in which the Bill’s powers will be exercised is that of implementing bespoke devolution deals, agreed with individual areas and reflecting each area’s proposals and ambitions for devolution. The Bill is an enabling Bill and I do not believe that it is necessary to include specific requirements about how particular powers will be devolved. However, I hope that tonight I can provide more clarification on specific questions that noble Lords asked.
Within the legislative framework that the Bill is creating, the safeguards are to be provided by not making specific provision in the Bill, such as provision about any memorandums of understanding and their relationship with the National Health Service Act 2006, as amended by the Health and Social Care Act 2012. Safeguards are in fact provided by the requirement that the implementation of any particular devolution deal must be debated and approved by both Houses of Parliament.
Lord Hunt of Kings Heath
My Lords, if I may intervene on that, of course I understand that an affirmative order allows Parliament to have a debate, but so what? Nothing else happens. I think that the number of affirmative orders that have been rejected is seven. It is certainly a handful, so in reality we are giving executive power to Ministers to make absolutely any decision they like. The fact is that parliamentary scrutiny is virtually nonexistent. Of course, if we were able to amend or delay statutory instruments, as the royal commission on Lords reform argued some years ago under the noble Lord, Lord Wakeham, that would be different—but we are not, so I am afraid that saying that an affirmative order is a protection simply is not true.
Baroness Williams of Trafford
My Lords, we have talked about the Secretary of State’s ability to intervene, which in itself is also a check and a balance. The orders will be debated through both Houses of Parliament. I will make some progress on this, and if the noble Lord wants to intervene further, he is very welcome to.
For the debates it will be important that full details of the deal concerned, how it was arrived at and the outcomes expected of it will be fully available to Parliament. As I said in the earlier short debate, I am ready to consider whether the standard Explanatory Memorandums are sufficient to ensure that Parliament has all the information it needs in this unprecedented process of devolution. As to a requirement for a combined authority to publish an annual report on its deal in relation to health, there will be a process, as I said in one of our debates last week, for evaluating the progress on each deal agreed with each area. For example, the Greater Manchester deal has an extensive programme of evaluation, with evaluations being public documents available to all with an interest in the area and the progress being made. I do not believe that it is appropriate to make a requirement about the reporting or evaluation of some particular aspect of a deal—an aspect which may not be in all the deals that are agreed.
I turn to some specific points that noble Lords have made. The noble Lord, Lord Warner, talked about the Secretary of State for Health overturning decisions if he did not like them. It is a bit more than that. I think he could intervene if he thought that decisions would be detrimental to people’s health or well-being. That was the point I was hoping to convey, but perhaps I did not do it articulately enough.
Lord Warner
I am being totally confused by the Minister. If she is saying that the detail of a deal is enshrined in regulations, the Secretary of State has signed off that deal. That implies that if there are any controversial issues around in, say, Greater Manchester, they will be dealt with in the orders that come before both Houses of Parliament and which he will have signed off. If he has signed off those orders and they have covered the transfer of resources, for example, from hospitals to preventative services, why should he need to intervene on such a transfer from a hospital to these other services? The Secretary of State seems to want to have it every which way: you agree the deal, you put it in an order and you still reserve the right to veto things on a subsequent level. That is what the Minister seems to be saying.
Baroness Williams of Trafford
My Lords, it is what I am saying but I am also saying that the detail of the deal, which noble Lords have requested full sight of, will go through both Houses of Parliament. It is important that the Secretary of State, of whichever department, can intervene in any matter which he feels is to the detriment of the public. That is what I am saying but maybe we mean different things by “intervene”.
Lord Warner
My Lords, this really goes to the heart of this matter. The Secretary of State under my amendment would have to assure himself that having a deal in the first place was for the benefit of the population of the combined authority. He is actually guided in that—also by the 2012 Act—so he cannot agree a deal that is likely to adversely affect that population. He would be in breach of his own duties and responsibilities. If he has then agreed a deal that is not abrogating NICE responsibilities or access standards or anything else, but is merely shifting the balance of resource provision and service provision between one set of services currently and another set of services that better meet that population’s need—which is indeed what the Five Year Forward View says should be done—and he signed that all off in an order, why does he need a power to intervene again during the duration of that order because he thinks something is wrong? He has agreed what they are going to do.
Baroness Williams of Trafford
Perhaps I have not articulated this—in fact, I wonder if the noble Lord and I are talking at cross-purposes. I am not talking about the Secretary of State intervening in the process of the deal and of the order going through both Houses; I am talking about subsequently, if matters went awry in a particular area. However, that would be the obligation of the Secretary of State whether it was for local government or health or whatever area we will be talking about. Perhaps we can leave that there and return to it in due course.
The noble Lord, Lord Warner, also made the point that it will always be the Secretary of State’s view that prevails. The noble Lord suggests that however great the local consensus might be, the Secretary of State has the power to override this. This argument lacks the essential element, which is how the Secretary of State will exercise his powers. These powers will be exercised reasonably, having regard to all relevant considerations, including local views and the NHS’s own plans in the forward view. In terms of service reconfiguration, the Government have pledged that all service changes should be led by clinicians and patients and not be driven from the top down. The Government have outlined strengthened criteria that decisions on NHS service changes are expected to meet. The criteria are: support from GP commissioners; clarity about clinical evidence bases underpinning proposals; arrangements for public and patient engagement, including local authorities being further strengthened; and the need to develop and support patient choice.
The MoU between the NHS England and Greater Manchester makes it clear that plans for devolution will align and support the objectives set out in the Five Year Forward View. The forward view sets out the NHS’s own plan for the next five years, supporting local areas to take forward plans for transformation, including an increased focus on prevention and integration of services. On the aspect of the 2012 Act that noble Lords have asked about, we have been very clear that existing NHS standards and accountabilities will be upheld. The NHS Act 2006 as amended by the 2012 Act sets out clear duties held by the Secretary of State in relation to the health service. For example, the 2006 Act puts a duty on the Secretary of State to,
“have regard to improvement in quality and reducing inequalities”,
and the duty is exercised in a way that supports local areas. He and other noble Lords asked about the compatibility between the 2012 Act and what has been proposed here. I can confirm that they are compatible with each other.
The noble Lord, Lord Hunt, asked who actually takes the decisions in Greater Manchester. The memorandum of understanding between NHS England and Greater Manchester provides that decisions are to be taken by the partnership between the local authorities and the health bodies—in other words, the Greater Manchester joint commissioning board as a board would operate. This reflects the principle that decisions are devolved to the most local level that is most effective and beneficial for patients and communities.
Lord Hunt of Kings Heath
Who do I sue then? Who is accountable in this great mushy edifice that has been created? Who is the accountable officer? That is what we are trying to get to—who can you point the finger at and say, “You are responsible ultimately for what happens in Greater Manchester’s health system”? That does not seem to be coming through at all in this.
Baroness Williams of Trafford
My Lords, there is a partnership board. Who you would actually sue on that board I do not know. It might be the chairman. I imagine that the ultimate accountable person, who you would actually sue, is the board itself because it is jointly responsible for the decision-making. It is a partnership board.
Lord Scriven (LD)
In a previous life I have been both a senior NHS manager and a leader of a council. This is as clear as mud. If, for example, the partnership board decided it wanted to reconfigure local healthcare and a hospital was to be closed, who would be held responsible ultimately by the public for that decision? Would the Secretary of State ultimately be able to stop that decision? Coming back to what the noble Lord, Lord Hunt, said, where would specialised commissioning fit in? It would not be a national standard, but would what the Minister calls the health partnership be able to move away from decisions made by NHS England on specialised commissioning? If it did, who would be able to overturn that decision? Who would be able to ask for a review of that decision, and to whom?
Baroness Williams of Trafford
My Lords, I can confirm that the accountable body is the partnership board.
Lord Warner
We are going nowhere, my Lords. Let us have another go. Let us follow up the issue of the closure of 50 beds in a Manchester hospital because the money is going to be used for preventive services and more services in the community. The partnership board has agreed that, and the consultants in the hospital affected take umbrage at that. They wind the public up—this is a well-tried and tested form of action in the NHS—get some money from a pro-bono lawyer and, under the provision of the noble Lord, Lord Hunt, they sue somebody. The Secretary of State has signed off the partnership board’s deal. Are they going to sue the partnership board? Are they going to sue the chairman of the trust affected for letting his 50 beds go? Are they going to sue the Health Secretary? Or are they going to sue the chairman of NHS England for agreeing this deal? I think we need to know who. This is not an implausible case I am giving; it is everyday bread-and-butter stuff in our British NHS.
Baroness Williams of Trafford
My Lords, as I understand it, it is the partnership board. I cannot add any more to this. As I understand it, the accountable body is the partnership board.
Lord Scriven
Is the partnership board a statutory body or a corporate board in law, or is it just a partnership?
Baroness Williams of Trafford
I would imagine it is a statutory body. May I confirm that, because I am not entirely certain? I will confirm that either during this debate or after the dinner break on subsequent amendments.
Lord Beecham (Lab)
I would like to help, if I might, because the noble Baroness is obviously in difficulty. This question is a health issue and not her department. When we are talking about suing, we are talking not about suing for damages; we are talking about judicial review. I therefore suggest that somebody gives the Minister some advice, not necessarily now but certainly before we get to Report, on where and against whom action for judicial review might be issued in relation to decisions taken around the health service by whomever is responsible under these deals. That is the best way to clarify the position. I do not expect the Minister even with the assistance of the Box to be able to answer that now, but it should be answerable before we get to Report.
Baroness Williams of Trafford
I thank the noble Lord very much indeed for that intervention.
Finally, the noble Lord, Lord Hunt, asked me to define “public authority”. It is any authority in the public sector, including all public bodies and NHS bodies, Ministers of the Crown and government departments. New subsection (4) in Clause 6 provides that, in the case of the Bill, it,
“does not include a county council or district council”.
With that, I ask the noble Lord to withdraw his amendment.
Lord Warner
My temptation is to say, “You must be joking”. This has been a very interesting and illustrative debate. I do not think that many people, not just on the Labour Benches but on this side of the House, have found illuminating some of the answers to the questions that we asked. I want to make a helpful suggestion to the Minister. I strongly suggest that she facilitates a meeting between some of us with herself and Health Ministers—and possibly even NHS England—to explore this issue as quickly as possible. We are in danger of creating total confusion, not just among ourselves but among people in the outside world and in the NHS, who will read these debates and be thoroughly confused as to what is going to happen to them in the coming years. I suggest that we have a meeting and, on that basis, I beg leave to withdraw my amendment.
Sierra Leone
(8 years, 10 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Hayman
To ask Her Majesty’s Government what is their assessment of the current situation in Sierra Leone, and what are their plans to assist the country to recover from the effects of the Ebola outbreak.
Baroness Hayman (CB)
My Lords, I am grateful for the opportunity to introduce this Question for Short Debate and to the numerous organisations and individuals who have provided briefing material. In the time allotted, I fear that I cannot do justice to the breadth of issues they have raised, so I am particularly glad to see the number and expertise of other noble Lords who will be contributing tonight. I also remind the House of my interests in health and overseas development, as set out in the register.
The Ebola outbreak in west Africa has disappeared from headlines in the United Kingdom, but the devastating effects of that outbreak are still being felt every day by the people of Sierra Leone. For a start, unlike in Liberia, Ebola cases have not disappeared. For the last few weeks, the number of cases has been bouncing along the bottom, as epidemiologists predicted, with up to 15 new cases a week being reported in June, and with a worrying number of those cases coming from unknown transmission chains. Some 1,100 people in Sierra Leone are still under quarantine restrictions, and we are now beginning to tally up the costs, not just of the epidemic itself—not only the 3,900 deaths from Ebola that we know of, and many more that we do not—but in other areas of health, where thousands more are estimated to have lost their lives because of the collapse of the already impoverished health services that existed before Ebola, and the collapse of community trust in those services.
It has been estimated that use of government health services has declined from 80% to 50% of the population since the first Ebola case was identified more than a year ago. Most experts agree that, in that year, more people will have died from the absence of treatment for malaria than from Ebola. The effects on maternal and perinatal mortality are equally if not more devastating. Services for pregnant women have virtually ground to a halt because of the particular risks for healthcare workers in treating women giving birth. There has been a terrible toll of stillbirths. The Maternal and Newborn Health Unit of Liverpool School of Tropical Medicine and VSO are even now working to bring forward a programme to build again maternity services that in the past were so inadequate that the maternal mortality ratio in Sierra Leone was the worst in the world.
There are also problems in terms of services for HIV and tuberculosis; cholera is always a risk in Sierra Leone; and there have been reports of measles outbreaks as a result of plummeting immunisation rates when patients simply stayed away from clinics. I welcome the mass drug administration programmes for malaria, and the vaccination campaigns for polio and measles that have taken place recently, but the situation remains precarious. Building sustainable universal health coverage in Sierra Leone will be an enormous long-term challenge for a country that had only 100 doctors and 1,100 health workers before the outbreak. Nearly one-third of those health workers contracted Ebola and 224 died during the epidemic.
Beyond health, the effects of the outbreak were far reaching. Schools were closed for nearly a year, and many pupils will not only have lost that part of their education but will never return to school. As so often, girl children have suffered most, with reports of increased sexual exploitation, early marriage and teenage pregnancy. Those girls will have great difficulty in ever establishing independent and free lives for themselves. Agriculture was also impacted and, while showing signs of recovery, needs further technical and other assistance if it is to contribute to economic growth and address the needs of the 35% of children in Sierra Leone who are chronically malnourished.
The effects on the wider economy were devastating—and I am sure that the noble Lord, Lord Giddens, will speak about this. The World Bank estimated that Sierra Leone will have lost $920 million from its projected GDP in 2015, and has revised its estimates of growth from 8.9% to minus 2% this year. Rebuilding that economy will be an enormous challenge, as will getting into place an appropriate tax structure, particularly in relation to the extractive industries, to provide a robust tax base for government spending on health and social services.
I should like to highlight one decision of the UK Government which contributed to the economic problems—halting direct flights to and from the country. I believe, along with the Public Accounts Committee in its report last Session, that the Government were wrong to halt those flights, not least because indirect access to the UK actually makes it more, not less, difficult to track and screen travellers. I strongly support the recommendation of the Public Accounts Committee that direct flights to Sierra Leone should be restored as soon as possible. In its response in March to the Select Committee, the Government said that they would keep the situation under review. I hope that the Minister will tonight give us some cause for optimism that licences to fly direct to Freetown will be restored in the very near future.
I visited Sierra Leone in February this year and saw for myself the commitment of UK volunteers, particularly in the health area, through UK-Med and other agencies, to helping Sierra Leonean colleagues and those from all over the world in the fight against Ebola. I know that many are keen to continue to support the health service in that country so that it can provide resilience against further outbreaks and basic health rights for the population. However, there are a number of issues about how that commitment could be maximised and how the Department of Health and the NHS could better support medical volunteers. They include looking at the impact on training programmes when people leave their jobs for a time, pension contributions, and the possibility of pre-release agreements with employing trusts.
Across the world, in the global response to epidemics such as this, every country, as well as the world community, needs to put in place resilient and immediate measures that can be brought forward in the case of need, and not have the sort of delays we saw with Ebola. The Royal College of Paediatrics and Child Health has, along with other colleges, put forward suggestions in this area, as has Dr Oliver Johnson, who led the outstanding work of King’s Health Partners at the Connaught Hospital in Freetown and beyond. I hope that the Minister can tell us that discussions are ongoing between her department and the Department of Health to progress these issues.
Just as the Ebola crisis went much wider than health, so did the UK’s contribution, with crucial programmes delivered by many NGOs, supported by the British public’s generous response to the Disasters Emergency Committee’s first ever health appeal. I particularly highlight the work of young Sierra Leoneans in the wide-ranging community-based social mobilisation programmes which were central to halting transmission through unsafe burial practices and to persuading people to notify the authorities of cases, providing food for families in quarantine, caring for some of the 8,000 children who lost their parents to Ebola and supporting Ebola survivors who suffer both from stigma and from long-term health effects of the disease. No one visiting could fail to be impressed by the work of our High Commission, led by Peter West, the staff of DfID, many of whom put their own lives and families on hold for months at a time, and, of course, the British military presence, which was so crucial to setting up the national emergency response centre and district centres throughout the country.
I also visited the Sierra Leone Parliament when I was in the country, and heard of the challenges in strengthening scrutiny of government and democratic accountability in the complex society, with many parallel power structures, that is Sierra Leone. I know that the CPA UK branch and the Westminster Foundation for Democracy are looking at how they, as partners, can, together with the FCO and DfID, aid this process and support, in particular, women Members of Parliament who feel very estranged from the levers of power in their country.
President Koroma showed real and effective political leadership throughout the crisis, but institutions in the country were put to the test—as, indeed, were international institutions such as the WHO—during Ebola, and no one can deny that there were real problems of both leadership and governance. At the EU meeting in Brussels this year, the leaders of the affected countries recognised the need to improve public administration and financial compliance and requested international support for long-term recovery and development plans for the region.
Just as the challenges for Sierra Leone are multifaceted and its national recovery plan will entail long-term commitment, so are the opportunities for the UK; from our science contributing to the search for vaccines, diagnostics and medicines to health service strengthening; from governance and financial advice to promoting the rights of women and children. Some great collaborative work was carried out during the Ebola outbreak. I hope that the Minister can assure us tonight that Her Majesty’s Government intend to bring all the strands together and put in place a long-term, funded and comprehensive plan of support for Sierra Leone, working alongside its Government and people.
Lord Patel (CB)
My Lords, I thank the noble Baroness, Lady Hayman, for securing this debate. She has already said much of what I might have said, so I will deviate from what I was going to say and pick up some of her points and hope to enlarge on them.
One lesson we must learn from the Ebola crisis is that whatever we did in the past to support poor countries to build their health systems and their societies has not worked, otherwise this would not have happened. I repeat the noble Lady’s commendation of the volunteers who went from this country and others, at great risk to their own health, when the death rate from this infection was 90%. They took that risk and they need to be commended on it. Mostly, they were young people.
The noble Lady also mentioned the WHO response, which was initially poor. It did not have enough experts on the ground to do the necessary surveillance. It was slow in declaring an international emergency. It may have been preoccupied with the damage that the crisis might do to the economies of these countries, rather than declaring an emergency, which would have protected citizens. Yes, the death toll could have been higher if it had not been for the international response, including the United Kingdom’s, which was immediate. None the less, the WHO failed in that, so the first thing we need to ask the Minister is, what are the Government now doing to work with the WHO and the expertise that we have in the United Kingdom and countries such as the USA to help the WHO build in future a more resilient system of surveillance?
The noble Lady’s next remarks were about the health system. The health system in that country, which was fragile to start with, has now collapsed. She referred to maternity services. The maternal mortality rate in Sierra Leone is 1,100 per 100,000. Last year 1,200 women died during childbirth. Neonatal mortality is 49 per 1,000. Under-5 infant deaths are running at 160 per 1,000. The maternal mortality rate has gone up by 20% due to the complete collapse of emergency obstetric services. She mentioned the Centre for Maternal and Newborn Health at Liverpool School of Tropical Medicine which is helping to build assistance and which needs to be supported. So does the Royal College of Paediatrics and Child Health, which is trying to build services and train doctors, who are now very few—200 health workers have died, some of them doctors, and others have left the country. We need to support these organisations.
Health systems are linked to the economy of the country. Sierra Leone spends $25 million on health and $32 million on education. It gives away 10 times the health budget in tax incentives to overseas companies, some of them British. These are dollars that it could use for building health and education systems, but it does not have it. Is it not perverse that while people die in these poor countries, companies from richer countries seek tax incentives? Should not part of our help in assisting Sierra Leone now to recover include some advice and assistance in the ability to use its own domestic resources, including help with tax policies, so that the country can have better financial resources to support its health system?
The noble Baroness referred to the fact that more deaths are now occurring because of the collapse in the health system due to tuberculosis, malaria and HIV/AIDS. Referrals to doctors and the health system have completely failed. Fewer than 20% of pregnant women now seek help during pregnancy or attend antenatal classes. If this is not stopped, maternal mortality will keep rising, as will stillbirths and neonatal deaths. I ask the Minister about our response to the WHO, our help in building health systems and our help in building the economy of Sierra Leone.
Lord Giddens (Lab)
My Lords, as the noble Baroness, Lady Hayman, has indicated, the fact that the Ebola outbreak in west Africa has gone from being everywhere in the news to nowhere is an example of the capricious nature of the media. This debate is, therefore, very timely, because we have to keep public attention focused on the issues, and I congratulate the noble Baroness for having initiated it so ably.
Unless aid and assistance continue to flow to Sierra Leone and other affected countries, far more people could die from the knock-on effects of the epidemic than have perished from the disease itself. The level of disruption to infrastructure, including but not limited to the health system, has been quite staggering. This is in spite of the wonderful work of overseas volunteers, to which other noble Lords paid tribute, including from this country.
A sustained economic recovery will be crucial but will be very, very hard to achieve. Of the three countries affected by the epidemic, Sierra Leone has suffered by far the most on an economic level. In 2013, having recovered from years of internal strife, Sierra Leone ranked second in the world in terms of GDP growth. It was an extraordinary moment. The country started from a low base of course; nevertheless, to achieve a ranking of second in the world in terms of economic growth after all those years of disruption was a quite remarkable phenomenon.
Since then, the country’s economy has more or less collapsed. According to the World Bank, this year Sierra Leone faces an acute recession, with a negative growth rate of no less than 23.5%, which I can assure noble Lords is catastrophic in terms of its size and implications. Let us compare that with, for example, Liberia, which is projected to have a positive growth rate of 3%. In the case of Sierra Leone, foreign capital has mostly fled the country, as have some of its richest citizens.
I have three sets of questions that I would like the Minister to comment on, recognising that she will not necessarily be able to answer all of them. First, in April this year the World Bank promised no less than $1.62 billion for Ebola response and recovery. What is the status of this money? Is it merely a promise? Does the noble Baroness know how much of that sum is there? On the surface, it is a substantial amount but I was not able to discover its exact status. What is the timescale by which it will be invested? It is clear that upfront investment is needed and that a great deal is needed very rapidly. What proportion of that money is likely to go to Sierra Leone? I could not find that in the World Bank literature either. If the UK is making a direct contribution to that sum, how much is it contributing, and how would the questions that I have just asked in relation to the World Bank apply to the UK’s contribution?
Secondly, the presidents of the three countries affected by the outbreak have requested that international donors cancel their debts. Has any progress been made on this? It is quite crucial because the level of aid was substantial. If this could be done, it would provide enormous economic leverage for Sierra Leone. If the UK Government have a position on this issue, it would be good to know it.
Thirdly, a recent UNDP report rightly emphasises that women need to be at the centre of all efforts to achieve recovery. Women made up a large majority of the labour force prior to the outbreak of the epidemic, and, as in many other countries but especially in Sierra Leone, were doing two jobs: looking after the family and working pretty much full time, especially in small-scale micro-entrepreneurial enterprises. The female labour force was absolutely crucial to the statistics that I gave earlier, which showed that the country was entering a period of quite significant economic take-off before the epidemic broke out. The latest figures show that more than 40% of women in the labour force at the time of the epidemic have withdrawn. Many have gone back to their families, devoting themselves to care rather than to the economy. Most of the women who have left the labour force were in agriculture, which is still the backbone of the economy in Sierra Leone. What strategies does the Minister know of that are in play to target investment efforts specifically at women in the labour force?
If you put these three things together, the international community seems on the surface to be coming up with substantial resources, but, as we know from many other situations, these tend to evaporate in the face of actuality. Therefore, is there anything that the Minister can say about the reality of these sums of money, especially the World Bank investment programme, which is designated as a sort of Marshall plan for the country? If that had some substance, it could be very important for Sierra Leone’s future and recovery.
Baroness Masham of Ilton (CB)
My Lords, I thank my noble friend Lady Hayman for having secured this debate on the catastrophic epidemic and its results in Sierra Leone, one of the countries in west Africa affected by the Ebola virus. With cases of this very infectious condition still appearing, it is clear that the epidemic is far from over. The efforts to end it must not be relaxed.
The medical personnel who have been helping in Sierra Leone rightly have the admiration of many people. It was good news that the nurses who developed Ebola and came back to be treated in the special unit at the Royal Free Hospital recovered, but I take this opportunity to ask how, with all the training that they had had, they became infected. It is important that that is known so that others learn from it. Prevention of infection when working first hand with infected people is vital.
A total of 869 confirmed cases of health worker infections have been reported from Guinea, Liberia and Sierra Leone since the start of the outbreak, with 507 reported deaths. It is said that the initial response by WHO regional staff was slow and poorly targeted, and it has since been heavily criticised as one of the contributory factors in the early expansion stage of the epidemic. It is notable that the WHO Global Outbreak Alert and Response Network, which had such a pivotal role during the SARS outbreak, was mobilised at a late stage after other groups, including Médecins Sans Frontières, had been in action for weeks or months. Even at that point, the WHO concentrated on advisory support rather than mobilising logistics, and clinical and diagnostic support. Several UK agencies, including Public Health England and the Defence Science and Technology Laboratory, were among the European groups to get specialist manpower on the ground at an early stage.
I cannot stress enough how important microbiology and pathology are in combating infection. I think that sometimes the value of their contribution to tackling epidemics is not highlighted enough. At the latest G7 summit, responding to lessons from the Ebola crisis, G7 leaders pledged to help strengthen the world’s ability to prevent, detect and respond to disease outbreaks. I quote from the Society for General Microbiology:
“Emerging zoonitic diseases … pose an increasing global health and economic security threat. Recent outbreaks include Ebola, H1N1 swine flu and severe acute respiratory syndrome … An interdisciplinary ‘One Health’ approach involving human and animal science, health and policy is vital for mitigating this threat”.
There is a huge need for public health improvements. Acute infectious diseases remain the leading causes of mortality, and children under the age of five are disproportionately affected. Since the Ebola outbreak, the impact of malaria has almost certainly increased owing to reduced and/or delayed access to treatment, leading to increased case fatality rates. There is only one paediatrician in the whole of Sierra Leone. Maternal morbidity rates are very high. Over 70% of the population live in poverty and, therefore, the majority of the population’s basic need for food and water is not satisfied. Half the population in Moyamba drink from unsafe water sources. There are few areas with adequate sanitary facilities. One-third of children are stunted; malnutrition is common and under-recognised. During the Ebola outbreak, when the need has been great, the supply of supplementary food has stopped. Thus, unmet nutritional needs of the population have increased.
The current Ebola outbreak is reducing and efforts will continue towards its elimination from the country, but the population will remain at risk of future outbreaks. There is a desperate need for ongoing education. Changes in behaviour such as hand-washing and safe burial practices reduce this risk but the population risk profile has not dramatically altered. There is still a high consumption of bushmeat in Moyamba and other rural areas of the country. I congratulate BBC Media Action on its programme “Kick Ebola out of Sierra Leone”, which it is producing in partnership with Cotton Tree News, broadcast on 40 radio stations across the 14 districts. In recent months, the programme has evolved to focus on concerns about complacency.
I hope the Government will give money to this very poor country. There are successful, rich countries which are getting our support: why not give it to these countries in west Africa?
Lord Crisp (CB)
My Lords, like others I congratulate my noble friend Lady Hayman on this very important and timely debate. I also, like others, congratulate the many people from the UK who are playing, and have played, a significant part in tackling these dreadful events. I also note that this is a devastated country. The health issues go far beyond the direct effects of Ebola and there are the economic impacts which we have heard described so fluently. These impacts have been on business, tourism and trade in a country which already had a fragile infrastructure.
When I talk to friends working in Sierra Leone, they tell me that the first thing that the UK and other donors need to do is maintain continuity of support. They pick out three particular areas. The first is sustaining help for local communities to achieve better hygiene and infection control, otherwise there are—as we know—going to be continuing new outbreaks. The second thing they advocate is using some of the money which is now available to continue supporting the salaries of health workers in Sierra Leone and to redistribute some of those health workers to rural areas. The third area is surveillance. We still do not have a very clear picture of what is happening throughout the country and a major effort is still needed there. The final point which has been made—on which I have asked a Written Question and received a reply from the Minister—is about research on rapid diagnosis and other technologies which are starting to be available and the importance of deploying them. A lot of it is just about continuing what we are doing now.
My second point is about learning lessons. I congratulate everyone but I hope that the British Government and others will be listening to the frustrations and learning frankly from many people about problems that have occurred—not just the well-publicised problems with the WHO, but the problems of co-ordination and communication between different agencies and how we can do that better. I also hear some disquieting things about competition between donors and agencies for credit or resources. Those are very worrying aspects of what has happened.
In addition to the existing support, there is a real need for integrated action from the many British agencies that want to help. My noble friend Lady Masham has already mentioned BBC Media Action. Various other people have written to us to say what they can do to help with support. Perhaps the biggest need is for more health workers, a point which the noble Baroness made in introducing the debate. I note the offer from the Royal College of Paediatrics and Child Health to bring together the royal colleges on training more health workers. I will come back to that important point, because this is about Africa, not just about what we Brits can do. It is worth noting that Ebola was stopped in its tracks in Uganda, Nigeria and even in the DRC without external intervention. People had just enough skills and abilities to do that. Africans have contributed an enormous amount to this and there is some fear about directive intervention from outside as a result of these problems. There is a danger that we will—with the best will in the world and the best intentions—be imposing our solutions from outside rather than from within.
There is a considerable African response; there is great community knowledge. We should be able to draw on African leadership and not perpetuate the dependence which is too often associated with aid. It is interesting to note that the World Bank, and others, have picked up on the important point of developing and training community health workers: local people who understand local customs and are better able to institute and support changes in customs that may be dangerous and to introduce new habits and norms to promote health, well-being and hygiene. I hope the Government, and others looking at this, will think about education and training in terms of three levels. The first is the need for community health workers who are local people—very often village women—who are trained to identify and support things at a local level. Then there is the need for classic, African, mid-level nurses and other workers who are doing things that doctors do in our country. There is also the need, proposed by the Royal College of Paediatrics and Child Health, for the specialists: more paediatricians and clinicians of various sorts. There needs to be an integrated education and training plan but, importantly, this also needs to involve the development of institutions. The noble Lord, Lord Giddens, referred to a Marshall plan. There is a need here for the sort of approach that recognises that it is not a matter of training a few health workers, or providing a few drugs and facilities: it is institution-building and supporting the development of the economy.
Finally, I hope the UK will play a major role here. We have so many people who are willing and able to help, coming from all sectors of our community. It would be interesting to hear from the Minister about how this will be handled but I suggest that there is a great deal to be gained from bringing together some of these people, who may be outside the normal DoH and Department for International Development systems, and challenging them on how they can help, always bearing in mind my point about African leadership. This is about Sierra Leone, but it could also be about showing what can be achieved by a determined global effort in a country that needs global solidarity.
Lord St John of Bletso (CB)
My Lords, it is always a pleasure to follow my noble friend Lord Crisp, with his deep knowledge and passion for healthcare improvement in Africa. I join him in thanking my noble friend Lady Hayman for introducing this topical debate on a subject that, sadly, has had very little media coverage of late.
Although much of the recent World Heath Organisation report on the Ebola situation in Sierra Leone makes encouraging reading, major challenges still lie ahead to eradicating the disease, particularly preventing cross-border traffic between Sierra Leone and Guinea. More needs to be done to contain the threat in the northern provinces of Port Loko and Kambia. The Sierra Leone Government, with their limited police force and army, are severely restricted in fully monitoring checkpoints.
There is no doubt that the long-term effects of the Ebola outbreak will linger for many years to come, posing challenges not just for healthcare workers but for communities right across the country that are left with many hundreds of thousands of orphans. The charity Street Child UK is to be commended for its incredibly impressive and great work supporting those orphans. For the immediate future, one of the greatest challenges facing the country will be youth unemployment. Although there have been a number of initiatives to create jobs and kick-start growth in the country, this is an uphill battle. With extensive mobile coverage right across the country, I believe that a lot more can and should be done to provide affordable broadband, particularly in Freetown.
With commodity prices having collapsed over the last few years, the mining sector in Sierra Leone is currently not sustainable, with a chronic lack of adequate infrastructure and access to power. However, as the noble Lord, Lord Giddens, mentioned, the agricultural sector has a chance for hope in the future. The agricultural sector, where most of the population works, unfortunately has very disheartening statistics showing that coffee, cocoa and all types of tropical fruit are rotting on the trees, with lots of fields remaining fallow, as local farmers do not have adequate equipment either to harvest or to take the produce to market.
My noble friend rightly mentioned the problem of malnutrition. I recommend that assistance be given to finance a form of co-operative among the farmers, not just by helping them to finance their equipment but by training them to potentially build more food processing factories for the local market. I believe that there is huge scope for more beneficiation within the country. If one goes into Freetown, one will see that the supermarkets, many of which are run by Lebanese traders, offer tropical fruit cartons and bottles, but almost all of these are imported.
Sierra Leone desperately needs more clean water, not just for Freetown but in the villages and provinces. In the dry season, the main water sources are rivers, streams and abandoned mine workings. Most of these sources are contaminated, which is a major source of high mortality for the very young, the very frail and the elderly. Solar-powered water pumps in the villages could be a major boost for the provision of clean water.
On a brighter note, Sierra Leone is blessed with some of the most beautiful beaches in the world, comparable to those in the Caribbean and the Seychelles. I believe that, in the future, once the outbreak has been tackled, there is huge potential for the tourism industry.
In conclusion, our Government, in conjunction with our European partners, have played a pivotal role in tackling the epidemic and, just as importantly, in putting measures in place to reduce the chances of another Ebola outbreak. We have been instrumental in rebuilding the political and socioeconomic infrastructure after the civil conflict that ended in 2001. In March this year, west African leaders called for a “Marshall plan” to help with regional reconstruction after Ebola, saying that the region is “coming out of a war”, with its economy and public services decimated. One of the key lessons from this devastating EVD disaster is the need for the Government of Sierra Leone, as well as the international community, to take proactive measures to prevent another disaster.
Lord Collins of Highbury (Lab)
My Lords, I, too, thank the noble Baroness, Lady Hayman, for initiating this important debate.
The Government’s response to Ebola has been positive, providing more than £200 million for treatment, facilities, expediting NHS staff who have heroically volunteered, helping to finance trials, and developing new treatments and vaccines for Ebola. The role of the volunteers has been significant, and I, too, very much welcome the Government’s decision to provide a new medal that will recognise their bravery and hard work.
Sierra Leone is one of the poorest countries in the world and had one of the most fragile health systems. Over decades, it has had insufficient investment in infrastructure, the healthcare workforce, the health information system, and medical supplies and equipment. Therefore, has the department, in considering the lessons of the outbreak, reversed or rethought any planned funding cuts to Sierra Leone?
Universal health coverage can make countries more resilient to health concerns such as Ebola before they become widespread emergencies. I therefore welcome the clear commitment given by Ministers in the House in recent debates to support universal health coverage, free at the point of access, in the language of the health goals in the forthcoming negotiations over the SDGs.
Last week, I attended a meeting with Professor Chris Whitty, chief scientific adviser to DfID. A key part of the discussion was the impact of Ebola on other diseases, highlighted by the noble Baroness, Lady Hayman. It is clear that the gains made against malaria, for example, are at risk as health systems are pushed to breaking point and people avoid using them because they fear contracting Ebola. As we have also heard, many children have missed out on routine vaccination services, and since 2014 measles outbreaks have been reported in the country, mostly among children under five. I, too, welcome the commencement of mass vaccination programmes, including those for measles and polio for children under five, which are going into all districts and should benefit more than 1.3 million children. However, what steps have been taken to ensure that we are offering other health services alongside the strategies for containing and eliminating the Ebola virus in Sierra Leone?
According to Save the Children, nearly half the population of Sierra Leone is under the age of 18, and the impact of the Ebola crisis on their lives now and on their future opportunities has been far-reaching: no school, loss of family members and friends to the virus, and changing roles and responsibilities in the home and community. What steps has the department taken to support the Government of Sierra Leone in developing a comprehensive strategy aimed at getting the country back on track to meet development targets?
As we have heard in the debate, building the economy is another critical factor. The impacts of the Ebola crisis are likely to linger well into the future, and economic recovery will hinge on understanding which sectors and groups need the most support to get back on their feet, as highlighted by my noble friend Lord Giddens. Private sector investment is critical, and it is good to see the CDC leading the way on this. However, when supporting the private sector, prioritising those industries that provide much-needed infrastructure to the health system, such as communications and energy providers, is important.
One other clear lesson highlighted by the noble Baroness, Lady Hayman, has been the vital role of community engagement, which all too often has been regarded as a soft and relatively non-technical add-on to medical interventions; the noble Lord, Lord Crisp, also highlighted this. The Social Mobilisation Action Consortium brought together BBC Media Action, Centers for Disease Control, FOCUS 1000, GOAL and Restless Development, all funded by DfID. Through working with young volunteers, community and religious leaders and partner radio stations covering every district in the country, it has achieved tangible behaviour change around safe burials, early treatment and the social acceptance of Ebola survivors. I urge the Minister to take the opportunity of this community engagement infrastructure and the large-scale behaviour change achieved in this crisis to address other issues such as child marriage, teenage pregnancy and female genital mutilation.
If we are to stop this threat, we must continue to support the Government of Sierra Leone to develop their capacity, address corruption and ensure that they have the technical and administrative support to work effectively.
The Parliamentary Under-Secretary of State, Department for International Development (Baroness Verma) (Con)
My Lords, I join noble Lords in congratulating and thanking the noble Baroness, Lady Hayman, for securing this debate, and I commend her on her long-standing commitment to international development and health. All noble Lords’ contributions today have highlighted the passion and commitment that we in the UK place on the challenges and plight faced by those who face such tragic circumstances. I thank the noble Lord, Lord Collins, for his supportive opening words on the Government’s response, and welcome his noting of our wish to honour those courageous people who put themselves at the forefront of supporting the recovery from such a crisis.
As we continue to work with the Government, the people of Sierra Leone and the region to defeat Ebola, it is right that we come together at this time to discuss the situation on the ground and how the UK is supporting recovery. We recognise the loss of life, and I agree with the noble Baroness, Lady Hayman, the noble Lord, Lord Patel, and other noble Lords that the bravery of and personal risk taken by front-line workers in tackling this disease show the need for continuity as we continue.
As noble Lords will be aware, the UK has played a major role in successfully responding to the devastating Ebola virus in Sierra Leone. Ebola case numbers have reduced from a peak of more than 500 in the final week of November 2014 to an average of fewer than 10 new cases a week. That is still 10 cases too many, but the numbers have come down dramatically over the past two months. The UK has shown incredible leadership, mobilised the international community and efforts to tackle Ebola in Sierra Leone and helped to halt the spread of the virus within the region and beyond.
A number of questions have been asked today. Given the time, if I do not manage to get through all the responses I will undertake to write to noble Lords on the questions that have been posed. The challenging circumstances presented by this outbreak of Ebola demonstrated the UK Government’s ability to work together, drawing in—as noble Lords have highlighted today—capacity and expertise from across DfID, the MoD, the FCO and the Department of Health, delivering impact greater than the sum of its parts. These efforts have not only saved countless lives in west Africa but helped to prevent a health crisis that could have been far deadlier than it was and presented a greater health risk to the UK and the world.
Liberia was the first country to overcome the disease, with the WHO declaring it Ebola-free on 9 May this year. While the epidemic is still not over in Sierra Leone and Guinea, we are well on the way to zero and are acutely focused on finishing the job. President Koroma of Sierra Leone has ordered a renewed drive to accelerate the pace and to get to zero in chiefdoms where the disease is proving to be the most intractable due to community resistance and often very poor living conditions. Surge activities are involving paramount chiefs, traditional healers, women, religious leaders, youths and particularly social mobilisation. We will make every effort over the coming weeks to get to and sustain zero as soon as possible.
Beyond these areas, the vast majority of the country has seen no new cases for weeks, if not months, and recovery planning is getting under way. The Government of Sierra Leone have developed a transition and early recovery plan for six to nine months to get health and education services up and running again and to kick-start economic growth. It focuses on building back better and increasing the role of the private sector in economic development, a point made by a number of noble Lords. I will come to some of those comments if I have time.
I am pleased to say that we have allocated £54 million for early recovery that will focus on these areas, including a focus on women and girls, as was so rightly pointed out by the noble Lord, Lord Giddens, and the noble Baroness, Lady Hayman. We are using the upcoming UN Secretary General’s International Ebola Recovery conference on 9 and 10 July to encourage partners who played an important role in tackling the epidemic to help the country to get back on its feet and commit to fund the gaps in the plan. As recovery gets under way, we will work with the Government of Sierra Leone on their longer-term development objectives and shape DfID’s programming in line with those.
I also draw noble Lords’ attention to the important work we are doing to learn from this crisis and improve global health security. During the Ebola crisis, DfID funded research with the Wellcome Trust, the Medical Research Council and others to develop new vaccines, therapeutics and diagnostics on a scale not seen in previous health crises. This helps to build longer-term resilience against diseases with epidemic potential and supports better identification and understanding of future epidemic and disease threats.
Improved global health security will also benefit from safe, effective and affordable health technologies and strong health systems. In Guinea, Liberia and Sierra Leone we saw the impact of weak, ineffective health systems and the failure of these countries to meet their obligations under international health regulations. Building effective national health systems is key, and DfID along with other government departments will draw on the Ebola experience to strengthen our work on global health security, which is a prime-ministerial priority. I hope that that gives the noble Lord, Lord Patel, an assurance of our commitment to a longer-term solution.
We have heard some outstanding comments on the challenges that the Ebola crisis has posed for west Africa and globally. We can be proud of how UK citizens from the Armed Forces, the health service and charities, and government officials, have supported the people of Sierra Leone to combat the crisis and now begin along the road to recovery.
Before I conclude, I have time to go through some of the questions that have been posed, the first of which was a general group of questions alluded to by almost all noble Lords. The noble Lord, Lord Patel, and the noble Baroness, Lady Hayman, asked about our planning for early recovery and what our support would be. The priority for the UK Government has always been to get to zero cases as soon as possible and to prevent outbreaks in any new countries. The crisis has brought healthcare, education and economic activity to a halt in the affected countries, so we need to try to rebuild them. That is where our priority will remain: on recovery and transition plans, with the £54 million that we have committed. We will mobilise a team of people from McKinsey to work with DfID staff and UK military planners to help the President of Sierra Leone to develop the plan. We will support the building back of better services and help the Government to make the reforms needed for strong and sustainable development.
The UK is the largest bilateral donor to Sierra Leone, and as the Prime Minister set out at the G20 meeting we are committed to supporting long-term recovery across the region. We do not want to make short interventions, and we are supportive of the President’s long-term plan. This is a real moment for change, because we will be able to help to define how international assistance can make the best contribution to tackling poverty and accelerating development over the coming years.
The noble Baroness asked about direct flights. The response from the Government must first and foremost be the safety of the British people. The decision not to commit to direct flights was part of the Government’s overall strategy to mitigate the risk of Ebola entering the UK. The change in the Government’s position is only possible once we are content that there is no risk to the British public and that the risk has been sufficiently reduced.
A number of noble Lords asked about the reform of the WHO and what we are doing. We have been driving WHO reforms since 2010 following the Ebola crisis. We have reassessed ongoing reforms and accelerated progress to improve its effectiveness alongside ongoing improvements in human-resources processes, including the adoption in January of this year of the new staff mobility policy and a much more robust performance management policy. We will continue to highlight with organisations such as the WHO, where we need to, the need to make sure that they are delivering and responding quickly and effectively to countries so they do not have to wait for assistance.
On 7 June this year, the Prime Minister announced that the UK will establish a new group of six to 10 expert staff, mainly infection control specialists and infection control doctors, who will be on permanent standby, ready to help countries respond rapidly to disease outbreaks. We will ensure that the UK’s rapid reaction unit and the deployment of reservists through DfID-funded UK-Med will complement WHO’s global emergency workforce to ensure a co-ordinated response on the ground.
I have run out of time and I have a pile of responses yet to deliver, so I undertake to write to all noble Lords. This is a journey that we need to make together to build a better future for countries such as Sierra Leone.
Cities and Local Government Devolution Bill [HL]
Lord Teverson
“Function of making representations on transport issues
(1) The Secretary of State may by order provide that it shall be a function of a combined authority to make representations about transport issues affecting the area of that authority.
(2) If a combined authority has the function described in subsection (1), that authority shall be consulted on relevant transport issues.
(3) In this section “transport” means—
(a) rail,(b) roads falling within the competence of the Secretary of State,(c) airports, and(d) ports.(4) In this section “transport issues” includes—
(a) proposals for new transport infrastructure within the area of the authority, and(b) changes to proposals or decisions previously announced by the Secretary of State on transport infrastructure within the area of the authority.”
Lord Teverson (LD)
My Lords, this amendment was put forward by my noble friends Lord Shipley, Lord Scriven and Lady Pinnock. As we know, one of the key tasks of combined authorities—and one of the key areas where we expect there to be strong synergies, better co-ordination and economic stimulus—is transport and changing transport arrangements. We have seen how in London transport is absolutely essential, and an important part of the mayor’s role; in fact, many people would say it is perhaps the only effective part of the mayor’s role in London. Although we are not comparing London with the other metropolitan areas, it is still a very important area—we have seen that from the recent debate in terms of the northern powerhouse and all the transport arrangements around the Greater Manchester authority, and the others proposed in the north, and indeed joining up those combined authorities that are likely to happen in the north of England.
The purpose of this amendment is simple. Given that this is such a core element of any proposal for combined authorities and the relationship between the Government and those authorities, there should be a very clear form of communication, consultation and exchange of information between those authorities and the Secretary of State. As and when those combined authorities come about, there is then an obligation, once it has been entered into, for the Government and the Secretary of State to communicate transport issues—whether that be rail, roads, airports or ports—with the combined authority, and for a consultation to take place. Clearly, this is important and part of what will happen.
This has been shown to be very important because, since we had the debate on the northern powerhouse and the transport elements and connectivity of that, already we have had a major change. The following week we heard that a core part of the northern powerhouse strategy—the electrification and improvement of the line on the TransPennine Express between Manchester and Leeds—is postponed. We hope that it is only postponed but it appears that we will all have to catch our breath and wait during the whole of the summer until Network Rail, in conjunction with the department, decides the fate of something that was seen to be absolutely core to the northern powerhouse and the new potential combined authorities.
There is no better illustration than this of why such a change in the Bill is required, in order that there will be real communication, advance warning and consultation between those authorities, the Secretary of State and the department, let alone all the public who are affected. That announcement, which was made so soon after we had the debate, and was apparently a surprise and a new announcement, came very soon after all the big promises and the energy that the Chancellor and others put into the concept of the northern powerhouse. This amendment is nothing more than a sticking plaster but we hope that it would work better for the future and ensure that such an incident does not happen again. I beg to move.
Lord Beecham (Lab)
My Lords, there is a good deal of sense in this amendment. Of course, there are areas—my own is one of them—in which transport issues were effectively run, so far as the Metro system is concerned, for many years by the local authorities before the combined authority came into being. The combined authority currently oversees the function. In relation to roads in particular, I said at an earlier stage of the Bill that, in my part of the world at any rate, the experience of local authorities with Highways England—as I now understand it to be, as opposed to the Highways Agency—is far from satisfactory. What would be the relationship there? Would it be a direct relationship with the combined authorities—Highways England is not really organised on a basis comparable to local government—or would it be via the Secretary of State? It is a matter that needs clarifying. The general thrust in this is one which we would support.
Lord Scriven (LD)
My Lords, I am pleased to put my name to this amendment and I thank my noble friend Lord Teverson for outlining the reason why it is necessary. On the face of it, it would not seem necessary to have such an amendment, apart from the announcement made last week with regard to major transport infrastructure and electrification of all the rails in the north of England. Let us assume that we have this new system of decentralisation or devolution, and a number of combined authorities and mayors are making significant investments in their areas with regard to the environment and the economy, having been promised that major infrastructure will be invested in to make their rail system faster and the major cities of the north connected, and to help economic activity and to speed up the way in which commuters and other people can travel.
Let us further assume that, with no consultation or prior warning, the Government pull that major investment, or pause it or kick it into the long grass—whatever phrase is used. For several years, combined authorities and mayors might have been making strategic investments about the location of economic zones or other infrastructure that fits on to the railways in which the Government said that they would invest. That is why the provision needs to be in the Bill. The Minister said that such things would of course be discussed and a requirement did not need to be written into the Bill, but we now have a real case in which dozens of leaders in the north of England have not been consulted about a major change in government infrastructure funding.
We have gone from the northern powerhouse to the northern power cut in the blink of an eye. We are talking about devolution and decentralisation in which significant responsibilities and money for transport will be handed down to local areas, and strategic decisions will be made not in a vacuum but in relation to national government infrastructure. Local areas will be not only consulted but seen as equal partners so that their investments and plans are taken into consideration when the Government invest; and so that the Government keep local areas informed truthfully, openly and honestly about decisions on infrastructure, whether roads, rail, ports or aviation. This is not a made-up scenario; it is a real scenario that happened last week. It is important that it is written into the Bill that areas that have devolved powers should be consulted or warned about government transport infrastructure decisions, and that the area’s ideas are fed into the national plan.
I am happy to support the amendment and I ask the Minister to accept it. Last week shows exactly why the amendment needs to be in the Bill. We need to enable not just the Government but combined authorities, which will be making significant decisions about their local transport systems, to make strategic decisions.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Williams of Trafford) (Con)
My Lords, I will respond first to the point made by the noble Lord, Lord Scriven. I will talk later about the Northern Hub and my perspective on it, having worked on it some years ago.
The amendment is not necessary because existing legislation already enables the Secretary of State to confer by order transport functions on a combined authority. In such circumstances, a combined authority with strategic responsibilities is able to make representations about decisions that are likely to impact on its area and how it exercises those transport functions should it decide to do so. On the point about combined authorities being consulted, I can confirm that, wherever appropriate, the Government would expect to consult all local authorities, not just combined authorities, on new infrastructure in their area, whether that be transport or otherwise.
However, the Government must have discretion to take decisions about the future and prioritisation of national assets across the country, some of which—for instance rails and roads, to which the noble Lord, Lord Beecham, referred—run through many local authority areas. Of course we would expect to engage with local areas on the impact of such changes. One of the advantages a combined authority brings is that it enables the Government to focus their engagement on issues such as transport with a single body that can represent its constituent authorities on strategic responsibilities across a wider area.
Lord Teverson
No one more than me welcomed the ambitious £38 billion investment, which has been shown to be overambitious. Part of that investment programme was introduced during the coalition Government and, no doubt, there were creaks in it even at that time.
The Minister has tried to assure me that this is not necessary but was the Midland main line and the TransPennine Express announcement as much news to the local authorities as it was to us? The momentum and rhetoric of the Government since the election, particularly out of the Treasury, has been about pushing this programme forward. This makes it even more incredible that suddenly it has hit the buffers, to use the cliché, literally within a week of this amazing government rhetoric. Did the local authorities get any inkling of this before the public and the House?
Baroness Williams of Trafford
I cannot confirm that those local authorities had any inkling—there is no one from Manchester or Leeds here this evening—but, as I tried to say earlier, the Northern Hub, as a project, is well under way. This aspect of it has been paused—not stopped—and I fully expect it to continue.
Lord Scriven
The purpose of the amendment is not to say that it has not altered. Let me give a practical example. If a local authority, LEP or combined authority agreed with a multinational investor a decision about the placing of a factory or economic unit and then out of the blue, without any consultation or pre-warning, this major transport electrification on which the investment is predicated was postponed, what would that look like to the international investor? How do the combined authority and the mayor respond? The whole purpose of this Bill is for the mayor to have some form of accountability and authority to deliver on the powers that are handed down or in partnership with national bodies.
The amendment does not ask for them to override. It says that if something like this happens, it is in the Bill that the Government, as a matter of courtesy and of strategic planning with that combined authority and mayor, will pre-warn and discuss some strategic changes that may be made so that they can reassure people who are either investing there, or there already, rather than being left startled and unable to answer the significant questions that investors will be asking.
Baroness Williams of Trafford
I take the noble Lord’s point that if an international investor was reliant upon the fact that the Government had made an announcement about something and then a mayor or combined authority proceeded in that way, it would be very difficult. I have just been passed a note about the Transport Secretary, who gave evidence to the Transport Select Committee in March. He was at that point raising concerns about the cost and the programme delays on the TransPennine link and First Great Western. Transport Ministers answer questions on rail issues all the time. Uncertainty is a natural part of a huge programme; I think that all noble Lords would accept that. The timetable is subject to continuous review as plans develop and the Transport Minister has set out his plan for addressing, not scrapping, the situation. I hope that that comforts the noble Lord.
Lord Teverson
My Lords, I thank the Minister for her reply. There is a real problem here and it is something that needs to be fixed. I do not in any way question her or her department’s will that this project happens or that they will communicate with the combined authorities, but the track record shows there is a need here. I will think about that further. In the mean time, I beg leave to withdraw the amendment.
Lord Shipley
“( ) Where regulations under subsection (1) apply to local authorities in areas not part of a combined authority, the Secretary of State may allow for the local authority to enter into collaborative working arrangements with a mayor or other appropriate governance structure operating in a city or metropolitan area.”
Lord Shipley (LD)
My Lords, I will speak to Amendment 44F very briefly. We had a helpful debate last week about the nature of a combined authority which had close to it less populated and rural areas that nevertheless were part of the urban area in terms of service provision. What we have here is a form of words which I hope the Minister may find helpful, in that it enables maximum flexibility but protects the rights of rural areas. It is a statement of principle about the opportunity for local authorities, which are not part of a combined authority but may be close to it, to enter into collaborative working arrangements with a mayor or other appropriate governance structure which operates in a city or metropolitan area. I hope the Minister finds it a helpful amendment because it is a statement of principle and would enable rural areas to feel more integrated, rather than taken over by urban areas. I hope she is able to think about this amendment and that we can pursue the matter further on Report.
Lord Liddle (Lab)
My Lords, Amendments 44H, 44J, 44K and 44L are in my name. They are probing amendments, and in speaking to them I am very proud to declare an interest as a member of Cumbria County Council. I speak to these amendments with the full support of the Labour leader of Cumbria County Council, Stewart Young. I very much hope that the outcome might be some kind of constructive cross-party—I emphasise that—dialogue between the county council, the generality of local government in Cumbria and DCLG Ministers about how best to streamline what are really cumbersome arrangements for local government in our county in the wider public interest.
We desperately need a simplification of the present structures to provide better value for money at a time when things are very tight and will possibly get a lot worse; to make local government more effective at doing its job with limited resources; to improve democratic accountability and closeness to the people for the entirety of the services that we deliver; and, most importantly in the context of the Bill, to enable the people of Cumbria and the new authorities in Cumbria to seize the opportunities for devolution of power from an overcentralised Whitehall that the Bill is all about.
The amendments are to Clause 10. We are quite far along in our deliberations but it is the clause that justifies the inclusion of “and Local Government” in the title of the Bill because it widens the scope of what we are talking about from what I think in reality initially started out as a big cities government Bill into something that can transform local government in many of our smaller city and county areas. I remind my Labour colleagues that I think this is in line with the party policy at the last election, where we stressed the importance of devolution to county regions as well as city regions.
Clause 10 does not seek to impose a single model on local authorities, and that is very welcome. That flexibility is right but the aim of the amendments in my name is to remove what we in Cumbria believe will be an insuperable obstacle to the necessary transformation of structures; that is, the requirement in Clause 10(3) that regulations can be made,
“only with the consent of the local authorities to whom the regulations apply”.
This requirement for local government unanimity—in my view and, I venture to say, in the view of many people in Cumbria—gives far too much weight and leverage to what I would describe as the forces of small “c” conservatism. I hasten to add that the position I am putting forward is supported by many large “C” Conservatives in the county. This is not a party issue; this is a view that unites people across the parties in my county council.
My amendments try to offer a number of options for what could take the place of Clause 10(3) to facilitate the creation of new single-tier councils in what are at present two-tier local government areas. I emphasise that in Cumbria that would not necessarily be a single, unitary council but it would be a streamlined model of authorities. In our view, substantial consensus in the community would be necessary to support such a measure but not unanimity, which experience has shown over 25 years—it has been 25 years since this was first discussed—is impossible to achieve. I am putting these amendments forward as options. Some are mutually contradictory. We are interested to hear what the Government think and whether they are prepared to move on this question.
Baroness Royall of Blaisdon (Lab)
My Lords, it is a pleasure to follow my noble friend. I agree with much of what he was saying, especially in relation to county regions. I apologise for not having participated in the debate beforehand, but much of it has of course been about metropolitan areas and the growth spur needed for them. I fear that in county areas we will be left behind even more, so I hope that the Government will soon come out with some ideas about what they will be doing about county regions, because those are fundamental to the well-being of our country as a whole.
The Explanatory Memorandum clearly states that the Bill is to,
“support delivery of the Government’s manifesto commitment to ‘devolve powers and budgets to boost local growth in England’, in particular … ‘economic development’”.
That is absolutely fine and we could agree with it all over the Chamber. However, the potential of devolution is far more than economic. It should be about much more than our economic well-being. It should be about the devolution of power not just to local politicians but to communities and citizens. It should be about the devolution of functions and powers to the lowest possible level, and about empowering citizens. It is an opportunity to reconnect people with politics and to help restore trust in our system of governance. Like all noble Lords, I am concerned about the rise of populism in this country—indeed, throughout the European Union—and my amendment seeks to address people’s feelings of distance and alienation, albeit in a very small way. This is about a new politics, a new way of doing politics, which I believe is necessary for the democratic well-being of our country.
I draw noble Lords’ attention to an excellent publication by Claudia Chwalisz of the Policy Network and the Barrow Cadbury Trust entitled The Populist Signal: Why Politics and Democracy Need to Change. Drawing on new survey data in the UK as well as interviews and case studies, the publication shows that people are concerned with the process of politics, not merely its performance, and that they have genuine desire for greater political participation in the decision-making process. It cites examples of interactive forums such as citizens’ assemblies, which allow political institutions to involve citizens in making decisions that affect them. These are not a threat to formal systems of government but much-needed additions to enrich democracy. People might not trust politics, politicians and policies, but they do want to be engaged in decision-making about the services that most affect them.
Young people in particular want a different way of doing things in place of the hierarchical, top-down ways of traditional politics and governance. It seems to me that the Bill could provide an opportunity to encourage local government to devolve powers to local communities and citizens. When people feel, as they do, that the current system does not work for them, populism comes to the fore. The devolution of power to the people is a means of countering the simplistic attractions of the populists, who are feeding off anger and a politics of grievance. This means that politicians at local as well as national level must loosen their grip on power, not just between different levels of government but directly to communities and to individuals as well. It means empowering people and giving them a voice. By this I do not mean consulting local people and then taking no notice of their views; I mean involving them in making important political decisions and enabling them to shape their local services.
There are already some excellent examples of where this sort of policy has been successful. I am sure that many noble Lords can cite examples. I know that my honourable friend Steve Reed, when leader of the council in Lambeth, shared power with, for example, tenants on local estates and with young people in respect of youth provision in their locality. I know that Councillor Sharon Taylor, the excellent leader of Stevenage Council, is doing likewise.
I recognise that it will take some time to familiarise people, including elected politicians, with the idea that “ordinary citizens” can and should be involved in making important political decisions and being properly empowered. Voting, in terms of engagement, is not working, and we have to find new ways of engaging people. It is all very well for us to consider the devolution of power and budgets, but it is the citizens of our country whose views must be taken into consideration. Their voices must be heeded. In doing so, the Government and local government would help to bridge the widening gap between people and politicians, as well as improving their citizens and their lives. The amendment before us now would go some way to addressing these problems, and I hope that the Government will take it into account.
Lord Scriven
I will very quickly say that I fully support everything that the noble Baroness, Lady Royall, said. When I was leader of Sheffield City Council, we did things such as devolution down to citizens and communities, participatory budgeting, restorative justice—all the things that gave people not just power but actually a stake in the community—and they became authors of a better communities and better well-being where they are. I fully support that, because at times we talk about devolution but we talk about it to a body rather than actually empowering our citizens and our communities to be part of that.
Following on from that, I would just like to comment on some of the things that the noble Lord, Lord Liddle, said. He talked about not wanting to impose, but then spoke for quite a long time about one county—his own—coming around to a unitary authority, and what that might mean. He said that he did not want the Secretary of State to dictate, but that is exactly what Amendment 44L would do. The Minister has heard me for the last few days talking about things that I want in the Bill. This time I shall probably support her saying that she does not want this in the Bill. Amendment 44L would completely change everything about an empowering and enabling Bill. It says that,
“where there is no agreement by all the local authorities to whom the regulations are to apply on the arrangements under subsection (1), the Secretary of State may make provision for unitary governance arrangements based on recommendations of a body appointed by the Secretary of State”.
That basically means dictation if there is no agreement in that area. That is what the amendment actually says.
Lord Liddle
Could I just make clear what I thought I had made clear in my speech? I was not saying that the only model that was possible was a unitary authority for the whole of Cumbria.
Lord Scriven
I understand what the noble Lord says, but the Bill says that when there is disagreement you would be pushing for unitary authorities or an authority—one or more—in an area where that might not be needed. That is what Amendment 44L would dictate would happen if there was no agreement. It could be one unitary or two or three unitary authorities within the area. The principle of having an amendment that forces unitary authorities on areas that do not want them is not in the spirit of how I see devolution.
Lord McKenzie of Luton (Lab)
My Lords, we have Amendments 44G and 45A in this group, to which I shall speak first. Amendment 44G is an attempt to address in part the concerns expressed by the Delegated Powers and Regulatory Reform Committee at paragraph 17 of its first report this Session. Again drawing attention to the wide powers in Clause 10, the committee states:
“We are not convinced that requiring the consent of the local authorities affected is by itself a sufficient control over the very wide powers conferred by clause 10. In our view the delegation is inappropriate without the exercise of the powers being made subject to similar constraints and protections as those which apply to the establishment of a combined authority under Part 6 of the 2009 Act”.
The amendment that we are talking about requires that when exercising the power under Clause 10 the Secretary of State must,
“reflect the identities and interests of local communities and to secure effective and convenient local government”.
It is difficult to see why the Government should object to any of that. Since then, and only today, just before the Committee met, we had the opportunity to see the Government’s reply to the committee’s deliberations, in which the Minister says that these regulations are not of themselves establishing new structures or governance arrangements but modifying where all the councils concerned consent to processes for merging authorities, creating unitary authorities and reducing the number of councillors to fast-track these processes. This is not a sufficient distinction to say that we should eschew the recognition that these processes should reflect the identities and interests of local government.
Amendment 45A is also addressed by the DPRR report and would remove the subsection that removes the denial of the hybrid procedure. We know that this is not unusual in legislation. Indeed, in the case of Ebbsfleet, for a limited period, with our reluctant agreement, it was instigated, but there is normally, surely, an alternative mandatory consultation process that is laid down as a substitute. That is what happened in the case of Ebbsfleet. Where is the process in that situation? On what basis is the hybrid instrument process, if applicable, to be denied if there is no alternative procedure on offer?
Amendment 44F, in the name of the noble Lord, Lord Shipley, seems entirely reasonable to us, and the Minister may say whether it is necessary to provide specifically for this in legislation. Are not associate membership arrangements already in operation in certain circumstances?
Amendment 46A, in the name of the noble Lord, Lord Shipley, in part mirrors an early amendment that we tabled. We have no great objection to the establishment of an independent commission to review and advise on the progress of devolution, but we need to be mindful of not creating another tier of bureaucracy and a process that might drive uniformity on these matters. My noble friend Lady Royall is right to focus on how devolution is working for communities and individuals. Putting decision-making and policy formation closer to communities and individuals and getting their engagement is one of the fundamental reasons for embarking on this process, or should be. Of course, it will be an evolving process and nowhere near complete in six months, although we need to give it impetus from the beginning.
As for the issues raised by my noble friend Lord Liddle, I fully understand the desire to have a single-tier or unitary authority. I know that in our own local case in Luton it has transformed the opportunity to deliver and join up services in the town. The difficulty that we face, whether it is a county council seeking unitary status or the reverse, is that just one council holding out and not agreeing negates the opportunity of Clause 10, but I say to my noble friend that it operates in two directions. If our noble friend Lady Hollis were here she would say in no uncertain terms that having the need for unanimity has destroyed the opportunity for Norwich to get unitary status.
I think I may have a way through this, and perhaps the Minister might comment. I am not sure that the provisions are still in operation, but about six years ago there were successful attempts to get unitary status for Exeter and Norwich. The enlightened Government of the day supported it, but unfortunately it was judicially reviewed, and when the coalition Government—the coalition of Liberal Democrats and Conservatives—came in they overturned the decision. There is a serious point here: there are big towns and significant cities, such as Cambridge, Norwich and Exeter, that believe that any decent economic analysis shows that they can deliver more effectively for their communities if they are part of a unitary authority. In a sense, my noble friend’s amendment to deny the need for unanimity would have its problem in one direction or the other.
I entirely accept the point that we would not want to leave it up to the Secretary of State in any unfettered way, but should we not be thinking perhaps of establishing some criteria such as those that were certainly applicable at that time, as I recall: an assessment of whether the cities involved could benefit from unitary status and whether it added value to their communities? Certainly, that was the initial assessment in the case of Norwich and Exeter. Perhaps revisiting some such criteria, if those procedures are not still around, might be worth while. I accept entirely that devolution to county regions is party policy, and heaven forfend that I should not support party policy. We can see the benefit of unitary status for counties, but it is a two-way street and it can have an impact in the other direction.
My noble friend referred to “tiny district councils” being largely powerless, but they are seemingly not so powerless when they can stop a unitary authority. However, we are not talking about tiny district councils; we are talking about significant district councils that are being denied the opportunity of unitary status and all that that could bring, just as it could to a unitary county council in Cumbria.
Lord Woolmer of Leeds (Lab)
My Lords, I will address this issue in relation to combined authorities and take up the points raised by my noble friend Lady Royall. In relation to combined authorities, in reality a lot of the deals are being done in discussions between leaders of authorities, the department and the Treasury. There is a danger of a democratic deficit: that is, the deals that are being done are not necessarily devolution with the wholesale endorsement and support of the wider population. They are being done behind closed doors, with detailed and close negotiations, and afterwards people are being invited to accept that—indeed, not only to accept that but to accept an elected mayor, which in some cases fairly recently they have rejected.
So there is a problem: in order to make haste with the underlying drive of this legislation, there is a strong temptation to consult and persuade people after the event rather than beforehand. That is probably inevitable. However, I say to my colleagues, certainly in my part of the world, that ensuring that people accept this, agree with it and are enthusiastic about it will be an enormous job. They will be faced by what is pretty well a take it or leave it situation. They will not have played a great part in this. Of course, their elected representatives will have done—that is, indirect democracy—but that does not necessarily mean that people at large will have done. I said earlier that I am very enthusiastic about a combined authority for the whole of Yorkshire, which has 5 million people. However, it is enormously difficult to involve 5 million people beforehand and to find out whether they agree. Indeed, there will always be people who strongly disagree.
Therefore, there is a problem here that not merely the leaders of authorities but government Ministers have to deal with. To say to people, “We’ve done a deal behind closed doors and this is what the devolution package looks like”, is hardly taking people with us. I say to my colleagues around Yorkshire—we have the former leader of Sheffield here—that there will be a big job to do in making the move from doing a deal with the Government to forming a large combined authority and it being something that people are enthusiastic about. I hope that in the fullness of time this will have the enthusiastic endorsement of the wider electorate and that they will be given an opportunity to express their opinion at the ballot box. There is no suggestion that there should be a referendum on a large combined authority or on a mayor, so there will be, in my terms, a democratic deficit. People will have to work hard to ensure that there is gradual and significant support for the driving aim of this legislation in the large metropolitan areas.
Baroness Williams of Trafford
My Lords, I thank noble Lords who have all made interesting points this evening. On Amendment 44F, I can confirm that there is nothing at all which would prevent a local authority from working in partnership or collaborating with other authorities in its area, or across other areas. Indeed, the Government encourage collaborative working as an integral part of providing better services for local people and providing value for money for local taxpayers. However, we do not see that it is necessary for the Secretary of State to provide for any such collaborative working by order. It is for local authorities to enter into partnerships where they consider that it would be mutually beneficial and provide value for money for the taxpayer, and it is not necessary for such arrangements to be established in statute.
Amendment 44G seeks to insert a new paragraph into Clause 10(1), requiring the Secretary of State to have regard to the need to reflect the identities and interests of local communities and to secure effective and convenient local government. In response to the debate we have just had on this, and the number of interesting points that have been raised, I hope that it may be helpful to noble Lords if I set out briefly how we envisage that the Government may use the powers being taken under Clause 10 in support of any proposals that are submitted to us in the context of devolution deals.
The regulations in Clause 10 are not themselves about creating new governance structures, for example creating new unitary councils or merging councils. Rather, the regulations are about modifying the processes in particular cases. An example would be enabling, in the case of a particular deal, the processes for establishing new governance arrangements to be fast-tracked if all the councils involved consent. The processes for establishing unitary councils and merging councils are currently set out in Part 1 of the Local Government and Public Involvement in Health Act 2007. It may be that a bespoke devolution deal is agreed with an area which involves changing the governance arrangements in the area in a way that results in a move to more unitary structures, perhaps also involving some merging of authorities.
All the councils involved have agreed these changes. Furthermore, all these changes will have been developed as part of the discussions, negotiations, and engagement by councils with their areas, which have led to the development and finalisation of the deal. With the deal agreed, all will want to see it implemented as quickly as practicable. The regulations under Clause 10 can help fast-track the processes. These regulations can modify the application of the 2007 Act processes for bringing about these governance changes in the particular circumstances of this agreed devolution deal. Such regulations, which would require the approval of both Houses of Parliament, can be made only with the consent of the local authorities to whom they apply.
However, we do not see these regulations bringing into play different fundamental principles underpinning the Secretary of State’s consideration of matters as provided for by the existing statutory processes for making governance changes. We see them modifying such processes, such as the processes in the 2007 Act which I have mentioned in the example I have just described. Where the processes of governance change involve the Secretary of State being required to have regard, for example, to the need to reflect the identities and interests of local communities, and to secure effective and convenient local government, this will continue to be the case. Accordingly, the amendment proposed is not necessary and I would hope that, given this explanation, the noble Lord will agree to withdraw it.
Amendments 44H, 44J, 44K and 44L appear to envisage a situation in which a change to unitary governance arrangements is supported by the local authorities that have agreed that such restructuring should form part of a devolution deal, and in relation to which the Secretary of State would then make regulations, but they cannot agree on the detail of such restructuring. In these circumstances, it provides that the Secretary of State may nevertheless make regulations, either with the consent of the principal authorities to whom the regulations are to apply; or after consideration of any demonstration of support from key organisations and citizens in the affected area; or, where provided, on the advice of the Local Government Boundary Commission for England. On the face of it, this amendment would provide the Secretary of State with some flexibility to determine the arrangements to be put in place where these cannot be agreed by the affected council, and to do so by drawing more widely on the views of others within the authorities or, indeed, other bodies.
However, this is to suggest that it is the Secretary of State himself who in some circumstances should be determining the aspects of the devolution deal. In reality, and as we have discussed, the process that we are putting in place and the flexibilities we seek to provide are all focused on ensuring that any proposals for a devolution deal put to the Government, and which may or may not include structural change, are negotiated and agreed with the Government by all the councils concerned. The purpose of any subsequent regulations made by the Secretary of State is to implement the proposals that have been agreed as quickly and effectively as is practicable and with the consent of the local authorities to which those regulations would apply. It is not the role of the Secretary of State to use the regulations he makes to paper over any cracks or to impose any kind of solution that does not reflect the deal that has been agreed.
At this point, I say that I have a lot of sympathy for the points made by the noble Lord, Lord Liddle. I can see exactly the problems to which he is referring. In a way, it is a test of the leadership in that area to agree. To amend that in some way undermines the whole process of devolution and the fact that this is an enabling Bill. I think that we had a corridor conversation at one point, and I am very happy to talk to the noble Lord on a one-to-one basis—if he was running Cumbria, he might have sorted something out by now because he seemed to have it absolutely right on how to do it. However, it does have to be locally led, but I am very happy to sit down with him and perhaps discuss some of the issues and see whether there are other mechanisms by which Cumbria’s ambitions could be realised.
Amendment 45A seeks to delete the provisions in the Bill providing that any regulations made under this clause are not to be considered to be hybrid. This approach of disapplying the hybridity processes from secondary legislation that makes provision about particular areas is well precedented. Our aim, as I have explained to the House, is to agree bespoke devolution deals with particular areas. To do this, we envisage following a process that begins with the Government having conversations with areas about their proposals, their ambitions and the aspirations of their communities. Through these conversations, agreement will be reached between the Government and an area on the deal; that is, the agreement about the powers and budgets to be devolved to the area and about the governance arrangements to be put in place to support these powers being confirmed on the area. Strictly, of course, those arrangements will be with the democratically elected representatives of that area. In developing their proposals and reaching agreement, those representatives will engage with businesses, communities and local people in that area; in short, they will engage with those who will be affected by and will benefit from the devolution deal.
The parliamentary process is to provide Parliament with the opportunity to agree or, if it sees fit, reject the devolution deal that the Government and an area have concluded. Parliament will have before it in the Explanatory Memorandums details of the devolution deal that the secondary legislation under consideration is seeking to implement. As I said in debates last week, I am prepared to consider whether it might be appropriate for further information to be made available about any devolution deal under consideration. In these ways, Parliament will have available to it all the information it needs to reach a decision on the secondary legislation, and those affected by the legislation will, through the local deal-negotiating processes, be able to make the inputs they may wish to the deal. There is thus no need in the case of these instruments to apply the hybrid procedures.
Further, and as we have discussed in previous debates, once the negotiation of any devolution deal has been concluded, we are anxious to ensure that the proposals can be implemented quickly and to the benefit of all concerned. The hybridity process would delay the delivery of those benefits. I hope that the noble Lords will agree not to press this amendment.
Amendment 48B would insert a new clause placing a statutory duty on the Secretary of State to provide a report to Parliament on the involvement of communities and local electors in the process of devolving power from central government to local and combined authorities. I completely agree that devolution proposals should show how communities will be engaged. However, the important thing here is not putting in place a tick-box requirement in legislation. Instead, the key issue is how central and local government work together to make sure that all deals include agreement on how power and responsibility will be shared with communities and individuals to mutual advantage. As with other aspects of a bottom-up exercise, obviously we would welcome applications from areas with ideas for incentives for this as part of any deal. The noble Baroness, Lady Royall, talked about the importance of counties; naturally we would love to hear from counties.
We believe that devolution to neighbourhoods can deliver better outcomes and more efficient services in many cases. We are aware of lots of examples of neighbourhoods and parishes taking on services. Cornwall, for example, has set out a framework for devolution to town and parish councils and community groups. We will be actively asking how local authorities will work with communities and neighbourhoods in delivering devolved services, and I have asked my officials to work with places in developing further ways to incentivise this.
There are already mechanisms—for example, parliamentary Questions and debates—by which Parliament can call Ministers to account. The secondary legislation to complement each deal will be scrutinised by both Houses of Parliament and approved by them. This is a process that involves a detailed Explanatory Memorandum being laid before Parliament.
A process for evaluating the progress on deals will be discussed with each area on a case-by-case basis. For example, as part of its devolution deal, Greater Manchester will be required to put in place an extensive programme of evaluation, agreed by the Treasury. Evaluations will be public documents, available to all Members of the House. Accordingly, I do not believe that it is necessary to place a statutory duty as per these amendments.
I have a final point in response to the noble Lord, Lord Woolmer, who made a crucial point about wider endorsement by the public. While this is not the London mayor, and Greater Manchester and Cornwall are not London, I see the London mayor as an example of where, as time has gone on, not only has the mayor been better understood by the public but the engagement of both Mayor Livingstone and Mayor Johnson with the people of London has enhanced that role and made it a very compelling one. In previous years it was a question of, “Who will we get to stand as mayor?”, but it has now become an attractive and competitive thing to do—witness the number of people from all parties who are putting themselves forward for it. I take the noble Lord’s point, and I do not think we should forget it in these discussions.
With these explanations and assurances, I hope that the noble Lord will feel content to withdraw the amendment.
Lord Shipley
My Lords, I am grateful to the Minister for her response to Amendment 44F, and in particular for her reassurance that collaborative working arrangements between a rural area and a combined-authority urban area would not be impossible if an amendment was not approved as part of the Bill.
I thank the noble Lord, Lord Liddle, for giving a very good example of what I was talking about relating to the transport corridor between north Cumbria and the north-east of England. We just need to be certain that we do not need statutory arrangements in place with a combined authority in the north-east that would enable, or make it easier for, the north of Cumbria to engage with that.
Mention was made, I think by the Minister, of the work of Cornwall. Tribute should be paid to Cornwall not only for what it has done with its governance structure—it is now a unitary council—but for the way in which it has moved forward with the devolution agenda. I hope that in the course of the next few years other areas will see that as something that can be followed. I welcome the debate that we have had on this and beg leave to withdraw the amendment.
Lord Shipley
“( ) Before making regulations under subsection (1), the Secretary of State must be satisfied that the local government electors in the appropriate local authorities have been properly consulted by the local authorities who are consenting to the regulations under subsection (3).”
Lord Shipley
My Lords, I can be brief because the noble Lord, Lord Woolmer, has addressed part of the aim behind this amendment. As it stands, the Bill gives the power of consent on governance arrangements to local authorities. Amendment 45 requires that,
“the Secretary of State must be satisfied that the local government electors … have been properly consulted”.
In one sense and at its simplest, that could be a referendum. However, it is not quite the same thing as a consultation because that enables a debate without there necessarily being a vote to follow it. But if there is not to be a referendum, and I understand the arguments against, we need to be clear that there has been a consultation which is extensive, meaningful, and results in the proposal commanding broad public support. I beg to move.
Lord Beecham
My Lords, I have to say that I regard this amendment as somewhat unreal. I had the pleasure of working in three places during the recent general election: first, in my own authority of Newcastle; secondly, in the only seat that Labour retained in Scotland, clearly thanks to my superhuman efforts; and thirdly, in Stockton-on-Tees. The relevance of the last is that more posters were exhibited in Stockton-on-Tees for the Thornaby Independent Association than there were for all the other political parties put together; it is an association for the Thornaby part of the constituency.
The notion that electors are committed to the structures which have been created over time is somewhat fanciful. The good residents of Clara Street, in the ward of Benwell in the west end of Newcastle, which I have represented for approximately a fortnight longer than the Minister has graced this earth—that is, dare I say it, just under 50 years—are not consumed with interest in the governance structures of the local authority. I shall use the phrase again: it is quite unreal. Of course they talk of nothing else but the constitution of council committees in my ward and other places. What the amendment seeks to do is prescribe that, in some undefined way, the Secretary of State has to be satisfied that local government electors have been “properly consulted”, whatever that means, on the details of the procedures laid out in Clause 10. The clause covers the governance arrangements of local authorities, their constitution and membership, and the structural and boundary arrangements in relation to them. It goes on to state,
“‘governance arrangements’ means the executive arrangements, committee system or prescribed arrangements operated by a local authority under Part 1A of the Local Government Act 2000”.
In those 48 years, I have not had a single question addressed to me by a constituent on any of these matters. It may be that I am in an unusual position, but I suspect not. It may be that the constituents of the noble Lord, Lord Shipley, in another part of Newcastle where he was a long-serving councillor, were somewhat more engaged with the minutiae of governance structures, but I am somewhat sceptical that that occurred even then. What is suggested in the amendment is effectively undefined and unworkable, and it is not something we can support. I regret to say that when the Minister, as I expect she will, says that it is not necessary or that she does not understand it, or possibly both, I will concur with her entirely.
Baroness Williams of Trafford
I am sorry to hear that the noble Lord will regret that we concur; we quite often concur. It is not at all unreasonable to consider that, as the elected representatives of those areas seeking devolutions work up their proposals, they will have considered carefully what the communities, local people and businesses in their areas want and expect. It is not at all unreasonable to believe that those elected representatives will have thought deeply about how to implement the proposals they are seeking, what those proposals will mean for those areas, and how those proposals will affect the local people who live or work in those areas. We can be confident that local representatives have ensured that they have engaged with their communities and their electorate to whatever degree, and in whatever manner, they judge necessary in respect of the many different elements that may be in the proposals they put to the Secretary of State.
In these unprecedented processes to deliver devolution, it is not right that we start inserting detailed requirements about the Secretary of State having to second-guess those democratically elected locally, or to be required to form a view as to whether, in his opinion, those democratically elected local representatives have acted as they should. Therefore, I hope that the noble Lord will withdraw this amendment.
Lord Shipley
I am grateful for the contribution of the noble Lord, Lord Beecham. I will say two things in response. First, perhaps he would like to have a conversation with the noble Lord, Lord Woolmer, who took a very different view a moment ago about the importance of consulting local people. I agree with the noble Lord, Lord Woolmer. If you want a government structure to stand the test of time with public support, the public has to be engaged at an early stage rather than a later stage. The second point I make to the noble Lord, Lord Beecham, is that some combined authorities are now undertaking the very same consultations that I was talking about. Indeed, the one very close to the noble Lord, Lord Beecham, in the north-east of England is undertaking a public consultation about future governance arrangements. I welcome that. It is hugely helpful that it does.
We will reflect on what has been said and possibly come back with something on Report, but for the moment I beg leave to withdraw the amendment.
Baroness Janke
“Referendums to undo change to mayor and cabinet executive
In the Local Government Act 2000, omit section 9NA (effect of section 9N order).”
Baroness Janke (LD)
My Lords, I draw your attention to this anomaly because it relates to my own city of Bristol. By way of explanation I will give an account of the circumstances that have led up to this. In 2012, there was a referendum held by order of the Secretary of State in 12 English cities about whether they would have an elected mayor. Bristol was the only city that said yes to the elected mayor. In Part 1A of the Local Government Act 2000, the different permitted forms of government and the ways that local authorities can change these forms of government are set out. Section 9N refers specifically to a referendum conducted by this order. These provisions state that if people vote in favour of the mayor and cabinet at a referendum, then the local authority may not move away from that local government model. Bristol is therefore the only authority that may not change its system of governance.
I believe, as do many colleagues of all parties in Bristol, that this is singularly unfair. It is not a question of whether the mayor should be there or not: it is a question of the rights of the local population. Some were saying earlier that people are perhaps not interested in the form of governance. I say to noble Lords that people in Bristol are extremely interested in it. History tells us that not all elected mayors have been a success. Local referendums have been held; petitions have been put together; and mayors have been either reinstated or the system has been changed to ones that people feel are more suitable, more transparent or more appropriate to their area. The people of Bristol should not have that right taken away from them. If we want to be fair, consistent and transparent as we talk about this Bill, this part of the Act needs to go. If Bristol and the surrounding authorities become a combined authority, there will be very many mayors and a lack of clarity as to the roles of the different mayors. I am not against a metro mayor—a strategic mayor—but there needs to be the support of the local population and clarity about who does what, and what the powers of the people are.
We talked about trust with the local electorate and restoring the trust of politics. Many people in my city feel that they have been deceived by the Government. At the time of the referendum, they were not told that they would have no way to alter this system. They were made many promises, which turned out not to be delivered by the then Government, because only one city opted for the elected mayor. I move this amendment in the interests of correcting the situation and making the situation in Bristol as it is in all other English cities. I hope that I might find support for it. I beg to move.
Lord Beecham
My Lords, on this occasion, I am happy to support the amendment from the Liberal Democrat Benches. The noble Baroness has made a perfectly sound case and, indeed, one that should be extended wider in the sense that, as I understand it, the deal that will be offered to local authorities will be the kind that was imposed on Bristol; namely, that once a mayoral system is adopted, it will be permanent. That is wholly unsatisfactory.
If the previous amendment we debated had been confined to the issues of mayoralty, for example, as opposed to the internal workings of the authority, I would have been a great deal more sympathetic to what the noble Lord, Lord Shipley, was moving. However, it seems indefensible that a structure can be created and imposed, effectively, on a local community and its electorate with no possibility of change as the price for whatever deal the Government agree to negotiate with the combined authority. I hope again that the Government will think twice before locking local government into a system without not merely having consulted the electorate but without having their approval, let alone that of the constituent authorities.
Baroness Williams of Trafford
My Lords, I have listened with interest to the comments of the noble Baroness, Lady Janke, and the noble Lord, Lord Beecham. I know that the noble Baroness feels strongly about providing the people of Bristol with the same opportunities to change their system of governance should they so choose by means of a valid petition for a governance referendum to the council. I am aware that during the passage of the Deregulation Bill through this House in February 2015, she tabled a similar amendment. I am also aware that she introduced on 8 June a Private Member’s Bill, the Referendums (Local Authority Governance) Bill, that would have the same effect.
As we have discussed in the past, we cannot accept this amendment on the grounds of both precedent and principle. The precedent for introducing mayoral governance following a referendum instigated by Parliament was set when the London mayor was established. In this case, Parliament instigated a referendum through enacting primary legislation. The electors then voted for London having a mayor and, by a further Act of Parliament, the arrangements were introduced. There is no provision in these arrangements for the people of London to vote that they no longer want a mayor.
The Government followed the same broad precedent in putting in place the legislative arrangements that have led to the establishment of mayoral governance in the city of Bristol. In this case, Parliament, through approving by a resolution of both Houses an appropriate order under the Local Government Act 2000, instigated a referendum. The people of Bristol voted for a mayor, and that form of mayoral governance was established under the Local Government Act 2000. As in the case of the London mayor, mayoral governance in Bristol can be changed only by an Act of Parliament.
Lord Beecham
What particular knowledge does Parliament have about the condition of Bristol? Whence does it derive its intimate knowledge and concern for the residents of that city? Why should Parliament refuse to allow them a voice? The Government contrived a referendum, and it went the way they wanted, but is that to remain immutable? It seems a terrible proposition when Parliament can release the authority and return the decision to the people of the city.
Baroness Williams of Trafford
The point that I was making was that Parliament had created this situation so it would be for Parliament to undo it. That is not to say that it could not be undone, but it would have to be undone by Parliament.
Baroness Janke
I thank the Minister for her response. I am clear that Parliament cannot bind itself to future legislation. I am grateful that the Minister has made the case clear. I should like to be advised what parliamentary action could be taken, certainly before Report. It is important to gain trust in moving to the new combined authorities, so will the Minister consider ways in which we might change this anomalous situation and move forward on the same basis as everyone else? I beg to withdraw the amendment.
Lord Shipley
“Independent review, support and governance
(1) It shall be the duty of the Secretary of State to lay before each House of Parliament each year a report about devolution within England and Wales pursuant to the provisions of this Act (an “annual report”).
(2) An annual report shall be laid before each House of Parliament as soon as practicable after 31st March each year.
(3) The Secretary of State may by regulations make provision for an Independent Commission or Advisory Board to undertake a review and perform an advisory role in relation to—
(a) reviewing orders and procedure arising from the Secretary of State’s decisions; and(b) requests for orders received from combined or single local authorities.”
Lord Shipley
My Lords, the amendment aims to help drive forward positive progress on devolution within England. It says that the Secretary of State should,
“lay before each House of Parliament each year a report about devolution”.
It suggests that:
“The Secretary of State may by regulations make provision for an Independent Commission or Advisory Board”,
to undertake a review and perform an advisory role in assessing at a national level and across Whitehall what has been achieved.
Broadly speaking, the amendment derives from the conclusions of the City Growth Commission, which established five progress tests on devolution in England—the first on funding, the second on Civil Service and parliamentary reform, the third on partnerships, the fourth on speed and direction of travel and the fifth on cities’ capacity. The aim of our amendment is to help the process and the aims that the City Growth Commission put in place. I beg to move.
Baroness Williams of Trafford
My Lords, this is an enabling Bill to put in place the primary legislative framework for the devolution of powers and budgets in England to boost local growth in England. Devolution in Wales is to be subject to separate legislation which the Government are committed to bringing before the House. The question of the devolution of powers to areas within Wales will largely be a matter for the Welsh Government and the National Assembly for Wales.
More fundamentally, as we discussed in earlier debates on this Bill, while it is important that Parliament should be able to question and hold the Government to account both on their pursuit of devolution and decentralisation and on the progress being made in those areas which have agreed devolution deals, a statutory requirement on the Secretary of State to report annually is not necessary. There are already mechanisms by which Parliament can ask Ministers to account for anything within their remit. These are opportunities that both noble Lords and Members of the other place take regularly.
A process for evaluating the progress of devolution deals will be discussed with each area on a case-by-case basis. For example, as part of its devolution deal, Greater Manchester will be required to put in place an extensive programme of evaluation agreed by the Treasury. There will be public documents available to all with an interest in the area on the progress it is making. Accordingly, it is not necessary to place statutory duties on the Secretary of State, which would be a duplication of a well-tried process.
With that explanation, I hope the noble Lord will feel able to withdraw his amendment.
Lord Shipley
My Lords, I am grateful to the Minister for her response. We will look carefully at what she has said and consider whether there is a need to pursue this matter further on Report. For the moment, I beg leave to withdraw the amendment.
Lord Shipley
“Governance arrangements of local authorities in England: election of councillors
(1) Section 36 of the Representation of the People Act 1983 (local elections in England and Wales) is amended as follows.
(2) After subsection (1) insert—
“(1A) Rules made by the Secretary of State under subsection (1) must ensure that each vote in the poll at an election shall be a single transferable vote.
(1B) A single transferable vote is a vote—
(a) capable of being given so as to indicate the voter’s order of preference for the candidates for election as members for the constituency; and(b) capable of being transferred to the next choice when the vote is not needed to give a prior choice the necessary quota of votes or when a prior choice is eliminated from the list of candidates because of a deficiency in the number of votes given for him.”
Lord Shipley
Amendment 47 takes us to the heart of an issue that we have talked a great deal about over the three days in Committee. We have discussed the creation of one-party states; the need for accountability and legitimacy, and for properly functioning overview and scrutiny structures; and the need to ensure that the public back devolution and the powers and responsibilities that come with it.
We have expressed many concerns in Committee about the creation of the one-party state. One solution to the problem is to introduce proportional representation, using the single transferable vote, into local government. It would strengthen governance, increase transparency and improve accountability because there would be more opposition councillors. That might change the membership of the combined authority and would certainly alter the make-up of overview and scrutiny committees.
Amendment 47 would prevent a one-party state from arising. As more has been devolved in recent years across the UK, so the powers devolved have been accompanied by changes to more proportional voting systems. As more political parties exist and grow stronger, so our governance structures need to reflect that. Proportional representation enables that. They have it in local elections in Scotland. In England, five parties have significant public support in local elections and it is right that the electors who support those parties all feel represented. A system of proportional voting helps not only in delivering fairer overall representation but also, through STV, enables voters to choose an individual as their preference within their party of choice rather than simply having to vote for the candidate selected by that party in their ward.
Earlier, I mentioned Scotland, where the single transferable vote was used in council elections in 2007 and 2012. In Scotland there are no longer uncontested council seats and there are no one-party states that do not reflect that party’s share of the vote. In England and Wales there are more than 100 councils where one party has more than two-thirds of all seats. Scotland has none. In England in 2011, 24 councils saw 10% or more of their seats uncontested. Scotland has not had an uncontested election since STV was introduced in 2007.
I want this Bill to succeed in its broad strategic ambitions but I do not think it will without public support for the governance structure. Hence our concern that local government, combined authorities and elected mayors should all command public support. The elected mayor in this Bill is to be elected by the supplementary vote system. But more broadly, the use of the single transferable vote system in elections would help us to achieve public legitimacy and accountability in the structure of governance. It will prevent a one-party state arising and it will ensure adequate overview and scrutiny. It will almost certainly increase voter turnout because everyone’s vote will count. This amendment is a solution to the problems that we have identified with the democratic legitimacy of the combined authority structure. I hope it will command the Government’s support. I beg to move.
Lord Tyler (LD)
My Lords, I am delighted to support my noble friend. In recent years, Parliament has been prepared to find fairer voting systems for everybody else: for Northern Ireland, for Scotland and for Wales, and even for the European Parliament. But of course the House of Commons has been a step too far. That does not mean that your Lordships’ House should not look carefully, in the context of this debate, at the failure of the present system to provide effective and representative local government. In recent weeks a number of Labour Peers, who have previously been opposed to electoral reform, have expressed support for it. I was taken by the contribution of the noble Lord, Lord Cormack—I am sorry he is not still here—who said in our debate on 15 June, expressing some support for my views, that,
“at the beginning of a new Parliament, there is a strong case for a commission or committee of both Houses—I am a great believer in committees of both Houses—to look at our electoral system thoroughly, dispassionately and in an unbiased way to see how we can improve it and make it clearer and more consistent, with the fundamental aim of engaging the interest of people, particularly young people and those who do not necessarily have a long history of residence in this country”.—[Official Report, 15.6.15; col. 1061.]
The noble Baroness, Lady Royall, made a similar point about disengagement and re-engagement a few minutes ago.
Local elections in England and Wales are so badly distorted by the system, as my noble friend said, that, in theory at least, we have to look carefully at what they are doing to the confidence that our fellow citizens have in the system. But we now have hard evidence of what can be done by an improvement to the system, as my noble friend has said. Thanks to Dr Lewis Baston, who has undertaken an analysis of the two rounds of STV votes in Scotland, there has been a considerable increase in fair-minded assessment. Under the STV system in 2007 and 2012 for local authorities in Scotland, the immediate increase in the number of those who actually had an impact on the result was dramatic, going from 40% or 45% to 75%. In Dr Baston’s terms, these are “happy voters”—they have had a result. Even more significantly, he goes on to show that if second and subsequent preferences are effective, the percentage of those who are satisfied can rise to 90%. There will be control freaks, in all parties, who take the view that this is dangerous territory because it gives so much choice to the electorate. Frankly, I think it is the consumers of the local democratic process who we should be interested in. It is clear that they are extremely satisfied with the way in which it now operates in Scotland. When he or she votes they get a much more representative outcome and, I think, a resultant quality of service and accountability. From an elector’s point of view, this is surely the moment we have to move on.
I draw your Lordships’ attention to the fact that a large number of the cities, boroughs and counties in England where a majority has been given, on a minority vote, to one particular group or party for a very long time have been the ones that have failed. That is why it is extremely important that we listen to those who have identified these problems in England and Wales and we should look particularly at the evidence given by the Electoral Reform Society to us—all those involved in this Bill—that there is a real danger of a rise in cronyism, petty corruption, undue secrecy of decision-making and widespread disenchantment with the whole political process. Unless we make some change to this Bill, that will extend to the constituent authorities and the combined authorities under the Bill.
Lord Beecham
Would the noble Lord like to comment on the situation in the Greater Manchester Combined Authority, where most of the councils—Manchester, Wigan, whose leader is no longer in the Chamber but is a Member of this House, and indeed Trafford—have been of a particular political colour for very many years, and yet they are the origin of the Bill that is before us?
Lord Tyler
Whether or not they are the origin of the Bill that is before us, I think the noble Lord will recognise that there are authorities in the country—he and I could both name them—where the fact that one party has controlled it for ever and a day without effective scrutiny or opposition has not been conducive to good governance. Again, as Robin Cook said—and I worked very closely with him—good governance requires effective scrutiny and good opposition.
Baroness Hollis of Heigham (Lab)
My Lords, is that not the privilege of the local electorate? If they choose to return a particular colour of politics, that is their choice. Is the noble Lord not saying that he would overrule that choice in the name of some abstract transparency that is easily available through other means?
Lord Tyler
My Lords, that is nonsense. The noble Baroness should simply look at what has happened in Scotland. We now have a practical example. There no longer are these one-party states in Scotland. There are now far more effective local authorities as a result.
Lord Kennedy of Southwark (Lab)
My Lords, I declare that I am an elected member of Lewisham Council in south London. This has been an interesting debate but changing the voting system to a form of PR is not something that I am in favour of, although this would be only for the election of councillors in England.
In 2011, we did of course have a referendum on moving to a new system for elections to the House of Commons. The system put forward was AV. I know that that is not a proportional system but it was the system agreed by the then coalition Government, put to a referendum of the voters of the United Kingdom and rejected. There is nothing that I have heard in this debate or elsewhere that makes me think there has been a change in the heart of the voters in England and that what people want is to elect their councillors by single transferable vote, having stuck with first past the post elections to Westminster only three years ago. I did, however, agree with the noble Lord, Lord Shipley, when he talked of looking at governance structures from time to time. I think that that is right. That does not take me down the road of moving to single transferable votes for the election of councillors.
There are issues, as the noble Lord, Lord Tyler, referred to, about the number of voting systems that we use to elect people to various public bodies, positions and Parliaments in the United Kingdom. Where a body is elected by a proportional system, it should remain a proportional system, but I would like to reduce the number of systems we use. It is very confusing for the voter to elect people when we are using, at least, first past the post, single transferable vote, closed list systems, top-up lists and the supplementary vote. Supplementary vote is one of the worst voting systems we use. I have been to many counts where the supplementary vote system was used. There are often a considerable number of spoilt ballot papers because people put the X in the second column instead of the first column so the vote is completely discarded, which is a bad thing. I do not think that these people intend to spoil their ballot papers; it is just that they have not understood that they need to put an X in the first column and then one in the second column as well.
Could the noble Baroness in her response make reference to the myriad voting systems we now have in the United Kingdom and how that could be a little less confusing for the voter? I am sure that from the Dispatch Box we are all agreed that changing the system for the election of councillors in England is not something that either of us supports. Nor is there evidence that it is something that the public want. At this stage, there is no need to move down that road.
Baroness Williams of Trafford
My Lords, we debated this previously in earlier debates. Amendment 47 would amend the Representation of the People Act 1983 to provide that all local elections in England and Wales would be by single transferable vote.
For the single transferable vote system to function effectively, multi-member electoral areas would be required. As many existing electoral areas in England have only one councillor representing them—for example, nearly all county councils—it would require a review of local government electoral areas in England by the Local Government Boundary Commission for England. It could therefore not be introduced, even if it were desirable, within any short timescale. It would also cost more and take longer to achieve a result because of the more complicated count processes.
The noble Lord, Lord Kennedy, asked me to list the myriad electoral systems. The Mayor of London is elected by the supplementary vote system. European elections use the d’Hondt system of PR and local government is first past the post. That is three that I can name; I am sure that there are more. But I hope that on the basis of this short debate, the noble Lord will feel content to withdraw the amendment.
Lord Shipley
My Lords, I listened to the very brief response from the Minister. This will be an issue that we will want to come back to on Report. I find it difficult to understand why this is deemed a step too far in England and Wales when it is not a step too far in Scotland and has proved to be an enormous success. There are occasions when we should learn from the Scottish experience, for example with participation rates, an abolition of uncontested elections and an end to one-party domination. Of course, in the context of first past the post at parliamentary level, we have a one-party state out of Scotland with all but three seats in the hands of one political party. If we had proportional representation using an STV system in the parliamentary elections in Scotland, that would not be the case. In local government there is STV and it has had a profound and positive effect.
Our concern throughout this Committee has been to prevent absolute power through the elected mayor, combined authority and the overview and scrutiny function lying with the same political party. In some cases, a combined authority would have no opposition councillors of any kind on it, caused by the voting system that we are using. I give notice that I think we will come back to this on Report—but, having said that, I beg leave to withdraw the amendment.
Lord Tyler
“Governance arrangements for local government: entitlement to vote
In section 2 of the Representation of People’s Act 1983 (local government electors), in subsection (1)(d) for “18” substitute “16”.”
Lord Tyler
My Lords, this House will do itself a real disservice if it is not prepared to look at the example that is already taking place in Scotland. This happens to be exactly my message on this amendment, too, but my noble friend Lord Shipley made that point very well just now.
I start by reminding the House of these words:
“We have heard arguments for a change in the voting age. However, my concern is that that is part of a wider debate and it would not be appropriate—as the noble Lord, Lord Beecham, said—for any such change to be implemented in these quite specific circumstances. I have concerns as well about the administrative complexity of running an election in an area based on a register that would include 16 and 17 year-olds and running other council elections or referenda in the same area, quite likely on the same day, on a different basis with a different franchise. These are circumstances in which the risk of confusing the electorate is very real and this can only weaken, rather than strengthen, our local democracy”.—[Official Report, 22/6/15; col. 1464.]
I am sure that the Minister recognises those words, because they are hers. I compliment her not only on the wisdom of that contribution but on the fact that she used the word “referenda”, which sounds much nicer than referendums.
I thought that the noble Baroness, Lady Williams, was giving an infallible answer to the Labour Front Bench about the franchise for the mayoral elections. It would indeed be confusing if 16 and 17 year-olds were allowed to vote for a mayor but not in the general or local elections that might well be taking place on that same day. I and my Liberal Democrat colleagues entirely agree. We believe that all our fellow citizens should be enfranchised on the same basis for all local authority elections. Our amendment would deal neatly with all the Government’s very proper objections of practicality and potential confusion. On that basis, we can now move forward with the amendment by consensus.
Of course this will not satisfy all our fellow campaigners, since our ultimate objective is to expand the electorate in all elections in this way, but it would mean that we would have some logic, symmetry and standardisation in the continuing reform process. I have been campaigning for this extension of the franchise for many years. I have presented Private Member’s Bills in a succession of Sessions and in the current Parliament. They have enjoyed widespread support across the House. I am especially grateful for the consistent support of the noble Lord, Lord Lucas, on the Conservative Benches, the noble Lord, Lord Adonis, on the Labour Benches and the noble Baroness, Lady Young of Hornsey, on the Cross Benches. Most recently, the Labour Party has officially endorsed this campaign and we are delighted that noble Lords on the Opposition Front Bench have co-signed our amendment.
I admit that my original enthusiasm for this extension of the franchise was based on my own experience of the growing maturity of this age group, their increased responsibilities and their acknowledged fact that their citizenship course should lead inexorably to voter registration and then participation in the democratic process. There is good reason to think that young people are more likely to register to vote, and to start a lifetime of actually voting, if they are still in the home environment. Once they leave home, whether for jobs or further education, they often become more elusive. All the other distractions kick in and their involvement in the life of their home area weakens or ceases altogether. Those in the 18-plus age group all too often disappear off the electoral scene.
Of course, on average, the first vote cast by a 16 year-old in a general election would probably take place when he or she is 18. Nevertheless, once registered at 16 the likelihood is that they will continue on the register, if only because the ERO will be responsible for keeping them there and there is an obligation, backed by a fine, to continue giving the regular information needed to stay there. As the well-respected Intergenerational Foundation has identified, there is a growing democratic deficit caused by the increasing longevity of the UK population, which is well represented in this House. Quite simply, the young citizens with the most long-term interest in the consequences of their vote are outnumbered by ever larger numbers of pensioner electors.
Lord Kennedy of Southwark
My Lords, this proposed new clause to be inserted after Clause 10 gives effect to the policy of my own party and that of the Liberal Democrats to allow citizens upon reaching the age of 16 to vote in elections. In this case, the entitlement is for local government elections only. I suspect that this amendment is not going to receive a favourable response from the Government, which is most unfortunate.
The amendment proposed by the noble Lord, Lord Tyler, and supported by the noble Lord, Lord Shipley, my noble friend Lord McKenzie and me is one that the Government really should have a more open view of rather than the all too familiar no that we have been getting when this issue has been raised in recent times. I am well aware that the noble Lord, Lord Cormack, who is not in his place at this late hour, is not a supporter of this policy. However, when we spoke in your Lordships’ House recently, he made some excellent points that I agreed with very much. They regarded the need for much more citizenship education, which I think is very important. I see a programme of that sort of education leading to actually being able to register and to vote at 16. We do not have that at the moment, which is very much to be regretted. The arguments for allowing people to vote at 16 have been rehearsed many times before. It has been a policy in the manifesto of the Labour Party and, of course, the Liberal Democrats. It is also a policy of the Scottish National Party, the Greens and, of course, the Scottish Conservative Party, whose leader, Ruth Davidson MSP, said that she was a fully paid-up member of the vote-at-16 club. I am not sure what the position of Plaid Cymru is, but I am sure that it would support the policy as well.
As the noble Lord, Lord Tyler, said, the game changer was the decision taken to allow people at 16 and 17 to vote in the Scottish referendum last year. As he said, the young people embraced their civic duty with pride and a real sense of responsibility, and they were part of the decision on the future path that their country decided to take. It was the right thing to do and it is generally accepted across civil society that it was a good thing. After the referendum, the Scottish Parliament voted unanimously to allow votes at 16 for all elections to Holyrood, and next year 16 year-olds will vote for the new Assembly in Scotland. I am sure that the Welsh Assembly will take a similar view. We are in a position whereby, in different parts of the United Kingdom, there are different ages at which people can vote, which is not a good place to be. It is a mess, and one that this House should address.
What is also interesting is that in the three Crown dependencies close to Great Britain, you can vote at 16: in the Isle of Man and the Bailiwicks of Jersey and Guernsey. You can also vote at 16 at certain elections in Germany and Norway. I have no doubt that this change will happen, and sooner than most people think, and for me it cannot come soon enough.
Has the Minister seen the report from the Election Commission on the progress of moving to IER? Here we are talking about votes of 16 and 17 year-olds when, due to the action of the previous Government—who of course included the Liberal Democrats, so they cannot get away with this one—as of May 2015, the number of 16 and 17 year-olds actually registered to vote has dropped by 47%. There are now only 247,705 people registered to vote as of February 2014. That is a shocking figure and one that both parties in the coalition should be rightly ashamed of. Perhaps in responding the Minister would agree with me that EROs need to take the issue of engagement properly and work particularly to get these young people back on to the register, working with schools and colleges, as takes place in Northern Ireland. It was right when the Labour Party called for EROs to be given a duty to get everybody aged 16 and 17 on to the register.
In conclusion, I support the amendment, and I am sure that the policy change will happen. However, we have a real problem with young people not being on the register, and we need to do something about that.
Lord Shipley
I add two facts for ministerial consideration. One fact that really struck me about the Scottish referendum was the very high turnout rate of 75% of 16 and 17 year-olds, when for the 18 to 24 year-old age group it was only 54%. That is very marked. What it demonstrates is a clear interest in current affairs and their futures. The question is whether an age group that can demonstrate such a commitment to thinking about their future should be denied a vote generally.
Secondly, decisions are made regularly by local councils which impact on the daily lives of 16 to 18 year-olds. A very good example is the cost of public transport for young people—the cost of bus services, urban rail systems and so on. I have come to the conclusion that the voice of those young people is not adequately heard. I am in favour of votes at 16 and have been for many years, but I am even clearer now that the time has come to implement the change that Scotland has trail-blazed.
Baroness Williams of Trafford
My Lords, there is no doubt that the Scottish referendum and debate was unique, certainly in my lifetime, in engaging the public in the way it did. Participation in that election by people from all age groups, including 16 and 17 year-olds, was like nothing we have ever seen before. We can all look at it, wonder why we do not engage better with people from all age groups and reflect upon it. Amendment 48 would change the franchise for those entitled to vote in local elections in England and Wales to include 16 and 17 year-olds. As we have discussed, the Bill provides that the franchise for electing mayors for a mayoral combined authority is the same as that for all local elections in England, where the voting age is 18.
More broadly, of course, the voting age for parliamentary elections is set at 18, and beyond that the voting age in most democracies, including most member states in the EU, is also 18. Only Austria in the EU allows voting for 16 year-olds. We have heard the argument about the franchise in Scotland, but this was decided in Scotland, as is its devolved right, just as it is right that decisions about the franchise for elections that take place in England should be decided by this Parliament. I am sorry to be a party pooper at this time of night, but the Government have no plans to lower the minimum voting age and I am clear that the Bill is not the place to take steps to change the arrangements for local elections. I am sure that even proponents of lowering the voting age to 16 agree that, were it to happen, it should be only following detailed debate.
I have not read the report on IER but I wholeheartedly agree with the noble Lord, Lord Kennedy, about EROs engaging in getting people in general registered to vote, and certainly those younger age groups. On that basis I hope that the noble Lord, Lord Tyler, will feel happy to withdraw his amendment.
Lord Kennedy of Southwark
My Lords, I am pleased about the Minister’s final remarks, because I think the drop is catastrophic: 47% have dropped out in just over a year and that collapse is a consequence of IER. We have to deal with that; it is catastrophic.
Lord Tyler
My Lords, this late at night I am grateful for any crumbs that fall from ministerial tables. I suppose I should be grateful for that last comment. I shall take up, for a second, the argument that this is not appropriate legislation into which this reform should be inserted. The Long Title of the Bill includes:
“to make provision about local authority governance; and for connected purposes”.
That is critical to the whole consideration of the Bill. We are trying to revive important parts of the local governance of this country, and if the franchise is not relevant to that I do not know what is. Of course, at this time of night it would not be appropriate, as the Minister said. We have not had a very full debate: I have no doubt that we will have a full debate on Report. Therefore, for the time being, I and my colleagues are happy to withdraw the amendment.
Lord McKenzie of Luton
“Devolution in London
(1) Within six months of the passing of this Act, the Secretary of State must publish a report on a greater devolution of powers in London, including on whether to make provision for the Secretary of State to—
(a) transfer a public authority function to a joint committee of London councils, and(b) establish a joint board between London boroughs and the Mayor of London to support further devolution in London.”
Lord McKenzie of Luton
My Lords, this issue was brought before us by London Councils—I am grateful for its briefing. This is by way of a holding amendment, because of the time involved. Subject to the debate this evening, we envisage a more specific amendment on Report.
Over the past year it is reported that London government—London boroughs and the Mayor of London—have worked to develop a proposition for devolution in London. From this joint work it has emerged that further devolution will ideally require strengthened governance arrangements at the pan-London and sub-regional levels, without creating a layer of unnecessary bureaucracy. The Bill represents a welcome step towards greater devolution across the country but as yet does not provide a direct route to secure the statutory underpinning for the strengthened arrangements that are believed to be necessary for London. Therefore, London Councils firmly supports the proposed new clause, as it believes that it not only speaks directly to its concerns but provides a framework for developing robust governance arrangements in the capital that support further devolution to London at a pan-London and sub-regional level.
Lord Tope (LD)
My Lords, I added my name to this amendment but, sadly, too late to get it printed on the Marshalled List. As a long-time London councillor, I am more than pleased to support the purpose of the amendment which, as the noble Lord, Lord McKenzie, said, has come from London Councils. I am very grateful to the noble Lord for describing the briefing so fully. At this time of night I am certainly not going to repeat all that, but I would like to emphasise some of it.
At Second Reading, I made particular reference to the position in London. As currently drafted, the Bill clearly does not fit with the unique structure of London government. However, that is not, in itself, a reason why we should not enable further devolution to London and within it and the Bill does not quite meet that. In response to me at Second Reading, the Minister said:
“London boroughs are absolutely not precluded from coming forward with their ideas for devolution”.—[Official Report, 8/6/15; col. 717.]
I am sure that she intended to include the Greater London Authority as well as the London boroughs. It is all very well to say they will come forward with their proposals for devolution. As the noble Lord, Lord McKenzie, said, they have been working on this jointly for some time now and will come forward with proposals. However, the proposals may well reach agreement, not just between the boroughs and the GLA but with the Government as well, but if the legislative structure is not there to enable them to be put into place, it is going to be a very frustrating exercise. The Bill is the obvious opportunity to ensure that the legislative framework is there to enable that further devolution to happen in London.
The noble Lord, Lord McKenzie, made a couple of specific references to what the GLA and London boroughs have in mind. I will repeat it specifically, because I want the Minister to assure us tonight, either that the legislative provision is already there under existing legislation or, if it is not, that they will seriously consider ensuring that there is provision in this Bill. This is an opportunity we have to take. Specifically, as the noble Lord, Lord McKenzie, said, they want provision to enable a joint partnership between London boroughs and the mayor. This is not just permission to co-operate. They can do that without permission. It is to have the governance arrangements necessary to implement that.
Secondly, we are already familiar with a lot of joint working between a number of London boroughs, but we are talking about the creation of joint partnerships between them. Again, we are not simply saying, “It is a good thing; get on with it”. That is happening already and has been for some years. We are talking now about the creation of the necessary statutory governance arrangements to make it happen.
This is the legislative opportunity to do this, if that provision is not already there. London Councils and the GLA, on whose advice I act, do not believe it is. If we do not do it in this Bill, it is a missed opportunity. It is quite likely that there will not be another opportunity in this Parliament and there is no reason at all why London should be left out of the move to devolution simply because it has a different structure to the rest of the country.
Baroness Williams of Trafford
My Lords, I am very happy to use this probing amendment to set out how I see the position in relation to London. I did indeed say at Second Reading that there was nothing to preclude London boroughs or the GLA from coming forward. Perhaps I will expand on that slightly this evening. It is for the London mayor and the boroughs to continue to work together and to agree proposals, which the noble Lord tells me are ready, for greater devolution of powers to London. These could include provision to transfer public authority functions to a joint committee of councils or the establishment of a joint board between the boroughs and the mayor. We will consider whatever the mayor and London boroughs wish to propose, and no doubt they will be making a strong case as to how any proposal they make would provide better outcomes for Londoners. As with any other area, we are ready to have conversations with them, and look forward to those proposals coming forward.
The amendment, however, would turn the process on its head, because it would be the Secretary of State who kicked things off with his report. This is not the approach that we want to follow, as I am sure noble Lords will have established by now, because we believe that such an approach is far less likely to deliver genuine and effective devolution that will improve to the greatest extent the outcomes places face and the economic performance of particular areas.
I hope that on that note the noble Lord will feel able to withdraw the amendment.
Lord McKenzie of Luton
My Lords, I am grateful to the noble Lord, Lord Tope, for his support for this amendment and to the Minister for her reply. If I understood it, I think she was saying that under what is proposed it will be perfectly feasible that the boroughs and the GLA et cetera simply need to come forward and make their case. However, is she saying that what is sought under the new arrangements does not require any change to primary legislation? That is the issue here. Perhaps she could just answer that specifically.
Baroness Williams of Trafford
My Lords, as far as I am aware, it does not. I draw noble Lords’ attention to the manifesto commitments on further devolution to the London mayor as well. I hope that that reassures noble Lords.
Lord McKenzie of Luton
I am grateful for that and think that I am reassured by it. I think that it needs a quieter reading than at this hour—perhaps in the morning on the train. If, effectively, it does not need primary legislative change, that is fine. I think that we still have scope to bring something more specific back at Report if that proves not to be the case. I know that the Minister is stacking up lots of meetings at the moment, but it would be very helpful to have a specific meeting with London Councils, to make sure that the case it is making is fully heard and that it understands the technical position that she has outlined.
Baroness Williams of Trafford
My Lords, before amendments are withdrawn et cetera, I can confirm that, and have actually already started to have a conversation with one London authority.
Lord McKenzie of Luton
On that basis, I beg leave to withdraw the amendment.